An auditor for the city of Haileyville has suggested the city council request the Oklahoma State Auditor and Inspector conduct an investigative audit after finding significant deficiencies in the city’s internal control including a number of past due accounts owed by current and former city officials through August, large monthly bank deposits that do not comply with Oklahoma state law, missing receipts books , improperly prepared daily logs and improperly categorized revenue.
In the audit, unanimously approved by the Haileyville City Council on Thursday, auditor Ralph Osborne CPA of Bristow recommended the City of Haileyville consider requesting the Office of the Oklahoma State Auditor and Inspector conduct an investigative audit.
The yearly audit found material weaknesses and significant deficiencies in the city’s internal control over financial reporting.
“A deficiency in internal control exists when the design or operation of a control does not allow management or employees...to prevent or detect and correct misstatements on a timely basis,” according to the audit.
The material weakness finds included the Haileyville Public Works Authority records, accounts receivable and bank deposits, according to the audit.
According to the audit, a material weakness is “A deficiency or combination of deficiencies in internal control such that there is a reasonable possibility that a material misstatement of the entity’s financial statements will not be prevented or detected and corrected on a timely basis.”
The audit found accounts receivable (money due the city) for the PWA are reported as $73,189. The average monthly revenue for the PWA shown in the financial statements is $28,328. The PWA has 2.58 months revenue in accounts receivable.
In the audit, Osborne said that he examined the accounts receivable records for the PWA and found a number of past due accounts including large amounts in accounts receivable owed by current and former city officials through August 15.
“One account I looked at had a balance owed as of August 15, of $4,381,” Osborne said. “The account was reportedly a person who had moved out of town. However, the audit history for the account shows various amounts of water used during the period from December 14 through August 12.”
Found in the audit were PWA records showing monthly deposits in amounts of $47,697, $18,518, $48,651 and $31,170, according to the audit.
“Oklahoma state statutes require daily deposits as a means of protecting cash receipts.The PWA should require this as a means of protecting cash receipts. Keeping large amounts of cash in an unsecured facility increases the risk of loss by theft or misuse and according to the audit, holding checks without depositing them daily increases the risk the check will be returned insufficient,”according to the audit.
The audit listed the significant deficiencies found as missing receipt books, daily receipt logs and improperly categorized revenue by source.
According to the audit, a significant deficiency is a deficiency or combination of deficiencies in internal control that is less severe than a material weakness yet important enough to merit attention by those charged with governance.
Missing receipt books and receipt books with receipt numbers removed were found, according to the audit.
According to the audit, the city should require all receipt books to be maintained intact without removing any receipts.
Also found were daily receipt logs for days other than shown on the receipt and other receipts were marked as cash where a check was received and correction fluid used to cover a names in the log book, according to the audit.
The audit also found that accounting records appear to improperly categorize revenue by source. One example showed the Haileyville Public Works Authority records show sanitation revenue as $26,748. The Authority paid a reported $82,567 to the sanitation contractor, according to the audit.
The PWA increased the user fee from $10 to $15 in December of 2009, according to the audit, this amounts to a 50 percent increase and “When accounting records are poorly maintained, the Authority is unable to determine the effect of various increases in fees,” according to the audit.
When asked for comment by the McAlester-News Capital , Haileyville Mayor Monica Tevebaugh said, “I am unable to comment at this time because it is under investigation by the Haileyville Police department.”
Contact Jeanne LeFLore at firstname.lastname@example.org.