A legislative audit of the city of Delaplaine report covering the period 2018-2019 has produced 14 findings including three repeat findings.
And while Delaplaine Mayor Eli Murray has said his town and auditors are working the issues, the 2nd Judicial District prosecuting attorney has referred the matter to the Greene County Sheriff’s Department.
In terms of audits, a “finding” is a discrepancy requiring corrective action. Most of the findings (12 of 14) dealt with financial activities. Two of these findings are repeats, one of which had been a finding in each of the three preceding audits dating back to 2013.
Of the other two findings, one was lack of either a list of fixed assets or a policy established by the city council defining fixed assets. This finding was also a repeat from the previous audit. And the last finding reflected that there was no recording in the city council minutes that the council had reviewed the findings of the previous audit.
The report, released by the Legislative Joint Audit Committee on Sept. 10, noted:
The Fire Department entered into an agreement with the Recorder/Treasurer and Assistant Fire Chief, who are married, for repayment of $9,647 “borrowed” from the Department through a lump sum payment of $4,000 and 24 monthly payments of $236. Towns are prohibited from loaning their credit to any individual. The discovery prompted a closer look, which revealed an additional $4,786 paid to or on behalf of three employees for unallowable purposes, bringing the total to $14,433. The town’s corrective action noted its intent to comply in the future with governing statutes.
The town’s General Fund disbursements exceeded budget appropriations by $13,409 (46 percent) in 2019, and by $12,405 (47 percent) in 2018. In addition, the 2019 budget was not adopted by ordinance or resolution. Also, budgets were not provided for the Street Fund. The finding was a repeat from the previous audit. The town’s stated corrective action was to “make sure budgets are not exceeded.”
Town Council minutes did not document the review of the findings and recommendations of the prior report and corrective action taken by the Town Council. The town’s corrective action was to “make sure to document in the minutes according to” governing statutes.
A detailed fixed asset listing was not established and the governing body did not adopt a policy defining fixed assets. The corrective action, as noted by the town Recorder/Treasurer, was to “get with the Mayor and prepare this” and “at next meeting take care of adopting a policy to define such fixed assets.”
No Internal Revenue Service (IRS) quarterly report 941 Forms were available for 2019 or 2018. Auditors therefore could not determine if the amounts of taxes remitted were proper. In addition, Arkansas Department of Finance Form AR3 was not provided for 2019. This was a repeat finding from the three previous reports dating back to 2013. The town’s corrective action was to “[find] out how to do these and properly take care of this issue for the future.”
Fire Equipment and Training Fund bank accounts did not include copies of the back side of cancelled checks; Fire Equipment and Training Fund 2019 and 2018 cash receipts journal was not properly classified and the 2019 cash disbursement journals was not properly posted; and pre-numbered checks were not always issued for disbursements in the Fire Equipment and Training Fund. Corrective actions, as included in the response to the findings, include pledges to “properly post journals,” to “always use pre-numbered checks for the department’s disbursements,” and forbearance of online purchases unless vendors can bill the department. Corrective action for the lack of copies of the backs of checks produced the observation that the bank used by the town does not provide such copies to anyone. The assistant fire chief pledged to “address this with the council also and see if we can get this taken care of legally.”
Other findings included failure to prepare bank reconciliations for the General, Street and Fire Equipment and Training Funds, failure to issue pre-numbered receipts for all revenues received in those three funds, failure to properly post 2018 General Fund cash receipts journal and the 2019 Street Fund cash disbursements journal, and failure to post annual financial statements. Corrective actions included pledges to perform reconciliations on the three accounts, issuance of receipts for any monies received to the city for any reason, and posting of journals and financial statements.
The report has been referred to 2nd Judicial District Prosecuting Attorney Scott Ellington for consideration and action as appropriate. According to Jessica Smith of Ellington’s office, such action could be a cautionary letter if there appears to be no need for a criminal investigation.
“I have received and reviewed the Legislative Audit findings,” said Ellington in a text message on Thursday. “I have asked the Greene County Sheriff Department to look into this matter. As of today it remains under investigation.”
Mayor Murray said Thursday that his town and the auditors have been working together on a daily basis to resolve the issues identified by the findings.
“We’re trying to get everything straightened out,” he said.