Glacier County’s FY 2018-19 Independent Auditor’s Report on the County’s financial statements is complete and on file with the State of Montana. Included in the report prepared by WIPFLI, a Great Falls auditing firm, are “Notes to the Financial Statements” stating $4,777,261 is owed to “school district(s)” adding, the “short-term liability will be paid in the subsequent fiscal year.”
Glacier County Chief Financial Officer Chancy Kittson was asked which school district(s) were owed the nearly $5 million and if the amount had been repaid in FY 2019-20. As of press tine, Kittson had not responded.
In last year’s audit report, WIPFLI noted, Glacier County’s “2018 bank reconciliation shows a bank account that is overdrawn in total by $2,317,372…It is not clear which agency funds lent the amounts and whether the owners of the assets in the agency funds agreed to the interfund borrowing.”
The auditors listed 16 significant findings in the FY 2019 report, which is four less than last year’s two-year audit. County officials have not announced the date for the audit exit conference to review the audit findings. According to the Glacier County Commissioners in an earlier meeting this month, Kittson prepared the County’s responses to the findings, which are included in the report.
Of last year’s 20 audit findings, the County has implemented six corrective actions; partially implemented seven corrective actions; and have not implemented corrective action on the remaining seven, which are repeat findings in FY 2019.
A copy of the report is available online:
Type Glacier in the “search” box and then click on the Glacier County FY 2019 audit file to download it. The findings are explained, in detail, on pages 61-71 of the report.
A summary of the findings and the auditor’s comments appear below.
The auditors performed test of the County’s compliance with certain provisions of laws, regulations, contracts, etc., which resulted in the following findings.
•Excess Reserves: The auditors found the Bridge ($41,670), District Court ($131,408) and Senior Citizens ($38,735) funds had excess reserves as of June 30, 2019. The County responded it will “develop and implement” a policy to address the finding with a target implementation date of Sept. 30, 2020.
•Budget Amendment: The County amended its 2019 budget on Jan. 21, 2020, seven months after the end of the fiscal year, in violation of MCA 7-6-4006(4). “The County amended the budget to cover unanticipated expenditures and transfers.” The County responded it adopted a policy to address the finding.
•Exceeding Budgetary Authority to Spend: The County exceeded its budgetary authority in several funds for FY 2019 by $1,990,459, based on the budget amendment adopted on Jan. 21, 2020. As a result, the County is not in compliance with MCA 7-6-4005. The County responded it adopted a policy addressing the finding and “is committed to monitoring compliance” with the policy and state law.
Material Weakness Deficiencies
According to the auditors, “A material weakness is a deficiency or combination of deficiencies in internal control resulting in the “reasonable possibility that a material misstatement of the County’s financial statements will not be prevented, or detected and corrected on a timely basis.”
•Ambulance Fund Accounts Receivable and Revenues: Procedures were not followed to ensure supporting schedules were maintained; EMS receivables and revenues were not posted as they occurred. The Treasurer’s Office should post ambulance receivables and revenues when they’re received. According to the County’s response to the findings, “The Ambulance Fund will cease as a County operation July 31, 2020.”
•Cash allocations between funds: Differences in County’s funds related to the schools can cause discrepancies with the school districts that the County has a fiduciary responsibility for. Cash in the protested tax fund was $419,939 less than the protested taxes receivable and an explanation was not given. The County responded, “Correcting these outstanding concerns are of the highest priority for the County.”
•Corrections of errors: The County’s prior year financial statements were misstated. Internal controls over financial reporting do not appear to be in place to prevent errors. The County’s response noted the adoption of policies to address the finding.
•Segregation of Duties: The auditors pointed out lack of segregation of duties with the timecard and payroll process and there is no internal control for a review of payroll transactions or journal entries into the software program. The County responded they will “expand policy to enhance internal controls…”
•Accounting Policies and Procedures: Glacier County did not have up-to-date fiscal policies and procedures in FY 2018-2019. New policies, however, were adopted by the County effective July 1, 2019.
•Bank reconciliations: Bank reconciliations were not performed on a monthly basis. The auditors noted “it appears FY 2020 reconciliations are being performed more regularly.” The County responded the “Treasurer’s Office is currently utilizing an independent contractor to assist in completing bank reconciliations.” State of Montana officials confirmed last month that, at that time, none of the County’s cash reconciliation reports for FY 2020 had been accepted.
The auditors explained a significant deficiency or combination of deficiencies in internal control “is less severe” but “important enough to merit attention by those charged with governance.”
•Capital Lease Accounting: The County entered into a capital lease to acquire radio equipment in September 2017 but did not reflect it as a liability resulting in the 2019 Financial Statements being misstated. The County responded it adopted policies to address this.
•General Obligation Bond Payment Activity: In 2017, additional payments were recorded on the fund financial statements but they did not relate to the nursing home general obligation bond and the error was carried into 2019 financial statements. The 2019 financial statements were misstated before the correction was made. The County responded it adopted policies to address this finding.
•Inventory Records: A process is not in place to ensure significant quantities of materials and supplies inventory are recorded as County assets. The County adopted policies to address this finding.
•Accounts Payable: A complete accounts payable listing was not maintained as of June 30, 2019. The auditors pointed out, “Without maintaining a complete accounts payable listing the County’s management does not have a complete picture of who it owes money.” The County adopted a policy to address this finding.
•Grant Accounting: Grant transactions were not being property recorded in the period in which they occurred, resulting in grant revenues being misstated by $15,533. The County adopted a policy to address this finding.
•Controls over Payroll: The auditors reported, “It was noted that the internal controls over payroll appear to be ineffective. One employee timecard was not approved. Numerous sampled timesheets did not have the correct approved wage rate or the wage rate was lacking approval altogether. The timesheets used a different wage rate than what was approved.” The County responded it will “enhance current policy” to address this finding.
•Controls over Expenditures: Management does not have appropriate controls over expenditures and procurement over capital assets. “Two transactions selected did not have sufficient documentation to support the expenditure. In addition, four of the five capital asset additions were missing sufficient bid support.” The County responded it will “review to assess compliance” with its policy.