By DANIEL SUDDEATH
NEW ALBANY —
State auditors again cited weaknesses in the city’s internal controls for financial bookkeeping, but New Albany officials believe they have rectified the issues.
The Indiana State Board of Accounts released its annual audit of New Albany this week. The report — which was for 2012 — listed questions over transactions and financial reporting of Mayor Jeff Gahan’s administration.
The audit covered Gahan’s first year in office, and auditors faulted the city for lack of segregation of duties, failing to analyze risks associated with preparing financial statements and sparse monitoring of internal controls related to bookkeeping.
“Governmental units should have internal controls in effect which provide reasonable assurance regarding the reliability of financial information and records, effectiveness and efficiency of operations, proper execution of management’s objectives, and compliance with laws and regulations,” auditors stated in the report.
“Among other things, segregation of duties, safeguarding controls over cash and all other assets, and all forms of information processing are necessary for proper internal control.”
The audit found issues with bookkeeping and internal controls for general fund and federal grant expenditures in 2012.
Auditors initially found seven federal grants totaling more than $1.5 million in expenditures had failed to be reported, but adjustments were made at the recommendation of the state and accepted by the administration to ensure the financial statements for the projects were correct.
The audit also stated that 55 percent of claims tested did not have proper documentation that they had been approved by the New Albany Board of Public Works and Safety. By state law, claims aren’t to be paid unless a fully itemized invoice has been filed with the city’s fiscal officer and approved by the body receiving the services or supplies.
“Many claims were not listed on the claims dockets submitted to the board for approval,” auditors stated in the report.
While the city was dinged for its internal controls over financial transactions, auditors didn’t find any significant issues with expenditures or cash balances.
Prior Mayor Doug England’s administration was cited for transferring funds between city accounts without proper approval as well as citations over insurance payments that were made incorrectly.
Internal control and monitoring of financial records have also been consistent red marks for New Albany, but City Controller Linda Moeller stated in the city’s response letter to the board of accounts that progress is being made.
“Following a review of past [state] audits the city has made significant strides with regard to bank reconcilement,” she stated in the letter, which was dated Nov. 14.
“Sixteen of the 18 bank accounts are reconciled on a monthly basis. Two accounts had a long-standing history of report insufficiencies and the city took corrective measures.”
The city has also hired the local accounting firm Rodefer Moss to reconcile bank accounts for sewer and sanitation funds.
“We were happy there were no material deficiencies,” Gahan said on Monday, referring to more serious citations.
“I think the check-up is good for us and we learned some new methods for reporting financial data to each other. We feel good about it and we’ve already taken some steps to incorporate their suggestions.”
On the web
• The 2012 New Albany audit can be viewed online through the State Board of Accounts website at www.in.gov.