By rick kron
Leader staff writer
Both Sherwood and Lonoke had problems with their 2009 financial reports, according to information released by the state legislative audit.
The state has not audited any other area city’s 2009 financial records yet, but does review all city budget practices annually.
In Sherwood, the district court was unable to account for “or identify $118,384 remaining in the bank with receipts issued for cases not yet adjudicated and payments made on all unpaid time accounts,” deputy legislative auditor June Barron wrote in a Sept. 30 letter to the city.
The annual state audit indicated that the offices of the mayor and police chief “were in substantial compliance,” but the clerk/treasurer’s office and the district court’s hot check division was not.
The audit noted that the city’s fixed asset listing did not reflect accurate totals for beginning balances, additions, deletions and ending balances by department, as required by state law.
The audit also found that the hot check division of the district court did not always make accurate and timely settlements for merchant restitution, as also required by state law.
Auditors also noted a deficiency in the clerk/treasurer’s office. According to the audit committee, a deficiency exists when the design of an internal control does not allow management or employees to prevent or correct errors promptly.
In the clerk/treasurer’s office, the auditors felt that safeguarding, depositing, disbursing and recording transactions was not sufficiently spread out among the employees to reduce the risk of fraud or other problems.
City Clerk Angela Nicholson responded to the auditors findings, stating that her office would “segregate the duties relating to initiating, receipting, depositing, disbursing and recording cash transactions to the extent possible with the current staffing levels.”
In Lonoke, auditors found problems or concerns with the offices of the mayor, the district court clerk and the police chief.
Lonoke’s audit was completed earlier this summer.
In the mayor’s office, bids were not solicited for $79,676 worth of mosquito chemicals, but state law requires bids on any purchase over $20,000.
In the district court, an ending balance of $20,798 was found to have not been accounted for on cases not yet adjudicated.
The funds appear to have been left over from unidentified cases, according to the state audit.
In the police department there was a shortage of $1,588.
Auditors found receipts totaling $1,160 not deposited and $428 in checks deposited but not receipted.
The individuals responsible were not identified in the report, but two city employees reimbursed the city $1,260, leaving $328 unaccounted for.
Auditors also said not enough employees were involved in handling finances, which increased the risk of fraud.
City officials told the auditors that they would spread financial duties as much as possible as a corrective measure.
