CLAYTON — An audit by the state Comptroller’s Office has found that the village Board of Trustees failed to properly audit financial claims before paying them, and failed to obtain written quotes for all bids solicited.
The audit found that between June 1, 2019, and Dec. 31, 2020, the village board regularly failed to follow the fundamental steps laid out in municipal law when it comes to paying out village money, according to a report released Sept. 3.
At each board meeting, trustees review a list of claims made in the weeks since the last meeting, and authorize payments by a vote. The Comptroller’s Office was told by village Mayor Norma J. Zimmer and an unnamed trustee that the board does not do a complete audit of each claim.
“Instead, Village department heads are responsible for reviewing and approving their respective claims to verify that each claim is a proper charge and that the goods and services have been received,” the audit report reads. “Department heads also write their initials on a claim to evidence their review and record the expenditure account code on the claim for accounting purposes.”
The report notes that the village clerk’s office had all claims and supporting documentation available for review, but trustees reported they did not regularly review them. They only looked at the documents when a specific question arose that couldn’t be answered by the limited documentation provided at the meetings, according to the report.
Out of 86 claims paid out during the audit period, totaling $1,087,095, there were no improper payments made, the Comptroller’s Office found. However, a regular monthly premium for employee health insurance, totaling $13,091 per month, was not listed on any monthly reports provided to trustees and was never approved for payment.
“Based on our review of abstracts and discussions with the treasurer and mayor, the monthly health insurance invoices, which totaled $495,104 during our audit period, were not included on abstracts provided to the board and there was no review of the related claims by anyone other than the treasurer,” the report reads.
The report states that the village clerk explained the error, saying they were unaware electronically paid invoices needed to be included in the monthly reports of claims to be paid. Only claims to be paid by paper check were included in those reports to the board.
Additionally, the Comptroller’s Office found two payments, totaling $52,000, made to the local Chamber of Commerce without the appropriate documentation. According to the agreement between the village board and the Chamber of Commerce, the village reimburses the chamber for annual publicity, advertising and marketing services provided, when the chamber submits receipts for its costs.
While the village board did obtain copies of the annual brochures produced under the agreement, it authorized two $26,000 payments, one in fiscal year 2019-20 and another in fiscal year 2020-21, without receiving the actual receipts.
Upon receiving the proper receipts, the auditors found that the Chamber had actually incurred more than $26,000 in costs for both years, but did not produce the agreed-upon amount of brochures or rack cards. The agreement specifies the Chamber will provide 85,000 brochures per year, but in 2019 and 2020, they produced 80,000. In 2020, they printed no rack cards at all, though the agreement stipulates they will provide 10,000 per year.
“We contacted a representative from the Chamber who told us no rack cards were printed for the 2020 season due to the COVID-19 pandemic,” the report reads. “Had officials obtained the receipts and compared them to the agreements, they may have identified that the Chamber was not providing all products and services outlined in the agreements. The Mayor had no explanation for why the Village did not obtain receipts from the Chamber to support the payments.”
The auditors also found significant issues with the way the board handles bids for public works and purchases. Under village policy, officials are required to obtain two written quotes for projects or purchases priced between $1,000 and $4,999, and three written quotes for those priced between $5,000 and $34,999.
That’s out of line with state municipal law, which requires local governments to advertise for competitive bids when purchases will exceed $20,000 and public works contracts will exceed $35,000. According to the audit report, village officials outlined a plan to amend the villages policy to require three written quotes for purchase contracts between $5,000 and $20,000, to bring their policies into line with state municipal law.
The review of village purchases from 34 vendors found that 27 of those vendor purchases did not have any supporting documentation available for review. Of the $239,411 in purchases made during the audit period, $141,269 was spent with no evidence of the competition required by village law.
The audit details a number of situations where the village made purchases, typically for water and sewer upgrades or Department of Public Works equipment, where the proper steps — to ensure the village was receiving the best price for what it was purchasing — were not followed. For example, the village paid $7,295 to repair an oil leak for a plowing truck without searching for an alternative vendor to the one they used, and provided no information to back up that decision.
“These exceptions occurred because the board relied on department heads to obtain and document the required quotes,” the audit reads. “There was no process in place for the Mayor or board to monitor or enforce compliance with the policy because department heads were not required to attach quotes to claims or provide other documentation demonstrating purchases complied with the policy.”
Ultimately, the auditors found that while no improper purchases were made, the village board did not always do its due diligence to ensure the goods and services purchased were procured for the best price possible. They offered a list of suggestions, including that the board should conduct a complete and deliberate audit for all claims before agreeing to pay them, ensure all claims are presented for approval by the full board, and update village regulations to ensure they align with municipal law.
Additionally, village officials should obtain written quotes for all goods and services with costs below the bidding threshold, and document each action taken when purchases are made on an emergency basis without the usual quote or bid process.
On Wednesday, Mayor Zimmer said she was happy with the results of the audit, which she said pointed out some important changes that need to be made.
“I was so pleased with what he finally came up with,” she said of the auditor. “I don’t think he hit us badly at all, I was pleased. We’re making the corrections and that’s about it.”
In a letter responding to the audit, Mayor Zimmer and the village board accepted the audit’s findings, and pledged to follow the recommendations. Mayor Zimmer wrote that all financial claims requiring board approval for payment will now be provided to the board for review automatically. Trustees will sign off that they’ve reviewed the claims before they will be voted on.
They will also begin including the monthly health insurance bill in the list of claims to be authorized at each meeting, collect proof of services rendered from the Chamber of Commerce before paying their expenses and update their procurement policies to align with state law.
Mayor Zimmer also pledged that, starting Nov. 1 once the procurement policy has been updated, all department heads will be required to include supporting documentation for the claims they submit for board approval, and the board will ensure that those documents are accurate and present before authorizing payment.
“We appreciate your review and comments,” the mayor wrote. “They help us evaluate the decisions and processes we follow.”