After 610 hours and $96,500, the independent auditor’s report for FY 2017 and FY 2018 reiterated the same conclusion as the audits from FY 2015 and FY 2016: “…the County has a large net negative cash position in its governmental funds. These conditions raise substantial doubt about the County’s ability to continue as a going concern.”
The 127-page report was prepared by the Great Falls auditing firm, WIPFLI. The report states, “We were not able to obtain sufficient appropriate audit evidence to provide a basis for an audit opinion.”
Numerous times throughout the report, the auditors prefaced their findings with the statement, “We were not able to obtain sufficient appropriate audit evidence about certain financial statement amounts…”
Glacier County’s audit report lists 20 findings for the two-year period. Of those, 13 are defined as “material weaknesses” in internal control. Material weaknesses are a deficiency or combination of deficiencies in internal control and “there is a reasonable possibility that a material misstatement of the County’s financial statements will not be prevented, or detected and corrected on a timely basis.”
Three of the audit findings were defined as “significant deficiencies” which are less severe than a material weakness, “yet important enough to merit attention…”
Finally, four of the 20 findings were defined as “non-compliance” issues or “questioned costs.” The auditors pointed out, “If the scope of our work had been sufficient to enable us to express opinions on the basic financial statements, other instances of noncompliance or other matters may have been identified and reported…”
A copy of the report is available online: https://svc.mt.gov/doa/lgs/AllAudits/sockeye_audit/i_c1416192-5713-e811-8134-005056aa65a0
Scroll down to “Documents” at the end of the page and double click on the Glacier County file to download it.
The findings are explained, in detail, on pages 106-125 of the report. A summary of the findings and the auditor’s comments appear below:
•Bank reconciliations “were not performed on a monthly basis” during FY 2017 and FY 2018 and the “year end bank reconciliations for both 2017 and 2018 do not appear to be accurate.”
The auditors also reported, “The current Treasurer (Don Wilson) was unsure of how the reconciliation was performed and could not answer questions about the variances.”
•Capital Assets Discrepancies were listed in the audit findings. The auditors noted a difference of $911,716 between the capital assets listed on the County’s 2017 financial statement ($12,171,848) and the County’s 2017 depreciation schedule ($13,083,564).
•Due From/To Other Funds Discrepancies issues cited by the auditors include, “The 2018 bank reconciliation shows a bank account that is overdrawn in total by $2,317,372.” Since the governmental funds have an overdrawn position, cash must have been lent to those funds from agency funds, states the report. “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.”
Agency funds are those funds held by Glacier County for another government agency, such as the Browning, Cut Bank, East Glacier and Mountain View School Districts; City of Cut Bank; Northern Rockies Medical Center; etc.
•Ambulance Fund Accounts Receivable and Revenues finding listed by the auditors pointed out “it was evident monthly entries were not posted to the (county’s) accounting system, even though the EMS department submitted monthly reports with balances to the Treasurer’s Office.” The auditor recommends, “The Treasurer’s office should post the EMS’s revenues and receivables” when it receives the report.
•Capital Lease Accounting did not list the County’s lease liability of approximately $1.1 million in 2017, but did show the correct liability amount in 2018.
•Grant Accounting was another area in which the Glacier County’s Treasurer’s Office was listed. According to the auditors, county departments notify the Treasurer’s Office three to four days before a grant reimbursement is expected and the Treasurer’s Office posts the grant revenue to the system. In Glacier County, however, the grant accounts are “misstated by an indeterminable amount for 2017 and 2018.”
•General Obligation Bond Payment Activity has discrepancies according to the auditor’s findings. A principal payment of $115,000 and an additional interest payment of $53,723 were made but the payments weren’t related to the Nursing Home General Obligation Bond.
“County officials speculated” the $115,000 could have “paid down a school bond liability” and it is not clear if the $53,723 check was “actually cashed.”
•Taxes Receivable was another area where the auditors found discrepancies of over $5.9 million in 2017 and nearly $300,000 in 2018. The protested taxes receivable balance did not agree with the cash held in the protested tax fund for either year and the County couldn’t explain why.
•Correction of Errors was a finding and was caused due to the lack of “internal controls over financial reporting.” Both the 2017 and 2018 financial statements contained “misstatements” that did not include “disclosure describing the nature and effects of the errors.”
•Segregation of Duties, or the lack of them, was cited by the auditors in the area of payroll and journal entries.
•Accounting Policies and Procedures for the County were described as “not detailed and appears to be out of date” and “appear not to be followed.” The auditors pointed out the financial statements for 2018 and 2017 do not agree to the County’s trial balances for the same time period.
•Year End Financial Closing Processes was listed as a finding and resulted in the auditors’ report stating, the County’s financial statements for 2017 and 2018 “cannot be relied upon.”
•Preparation of Financial Statements was another finding that resulted in the auditors pointing out, “The County does not employ or contract with personnel that are qualified to prepare and review their financial statements.” The auditors reiterated, “The financial statements are unsupported, have material errors and cannot be relied upon.”
•Lack of Inventory Records was a finding due to the Road Dept. holding culverts for later use but not listing them as county assets. “Assets were understated by an unknown amount” in both 2017 and 2018. The auditors found there is not a process in place to “ensure significant quantities of material and supplies inventory are recorded as assets in the County’s records.”
•Accounts Payable was a finding due to the County’s failure to maintain an accounts payable listing. Without maintaining the listing the auditors wrote, “the County’s management does not know who it owes at year end.”
•Internal Controls over Payroll Action Forms was a finding due to “the payroll action forms are either missing or incomplete.”
•Excess Reserves were noted for the Senior Citizens and Transportation funds for both 2017 and 2018. The auditor’s report found the county is not in compliance with state law.
•Delinquent Filing of Annual Financial Reports (AFR) was cited due to the County failing to file its AFR for 2017 and 2018 on time. This was not done on time, despite the County retaining an outside CPA firm to assist them with the preparation of the AFR.
•Exceeding Budgetary Authority to Spend was a repeat finding again for 2017 and for 2018. The total excess funds in 2017 was $1,035,555 and in 2018 it was $80,746.
•Capital Assets Procurement was a finding due to the County not complying with the state law for purchases over $80,000 and not maintaining evidence it obtained the appropriate number of bids for certain purchases.
In 2017, there were three County purchases over $80,000 and County officials could not provide evidence of public posting of bids nor the required number of bids for any of the three purchases.
In 2018, there were three fixed asset purchases over $80,000 and the County could not locate evidence of public posting of bids for two of the three purchases. County officials could not locate evidence of the required number of bids for any of the three purchases.