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Milan Audit Uncovers Adjusted Utility Bills, Undeposited Funds, Late Fees

Posted On December 06, 2016

By Mike Perleberg

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(Milan, Ind.) – Failure by a former official to deposit utility payments and pay the town’s taxes and bills led to the Town of Milan’s finances being scrutinized by the Indiana State Board of Accounts.

The Indiana State Board of Accounts issued a 13-page special investigation report on November 21 reviewing the town’s accounting books and bank accounts. It looks at a period from February 1, 2013 until March 21, 2014, when Dale Holbert had served as Milan’s clerk-treasurer.

“Our investigation was limited to the records related to utility customer collections not deposited, payments of penalties, interest, and other charges paid, disbursement procedures, Annual Financial Reports, utility non-sufficient fund checks, and utility customer account adjustments. The purpose of our investigation was to determine if the accountability for cash and other assets are satisfactory and that the transactions related thereto are in compliance with the laws and regulations of the State of Indiana,” Milan town officials were told in a letter from the SBOA this past May.

The report details how Holbert did not deposit $2,117.19 in utility payments and $200 in customer deposits. The town was also charged a total of $5,983.23 in penalties, interest, and other charges for payroll withholdings, sales taxes, and employment tax not sent on time, bank overdraft fees, and late charges to vendors who were not paid timely.

The state investigator also determined that Holbert had made adjustments to customer utility accounts without documenting the purpose of the changes. The audit found no information that the adjustments were used to cover-up a misappropriation of funds, but noted that officials who make undocumented or unwarranted adjustments can be held personally responsible.

SBOA officials identified internal control deficiencies in the Town of Milan. Those included no segregation of duties in the Clerk-Treasurer’s Office because Holbert was the only employee. There was also a lack of due diligence that collections are posted and reconciled daily and deposited in a timely manner. Lastly, Holbert and the Milan Town Council did not have procedures in place to provide for the accountability of funds in the event Holbert was absent or incapacitated.

“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.

An exit conference was held with current Milan Town Board members Noel Houze, Donald Call and Melissa Baker, clerk-treasurer Debra Fugate Hackman, and town attorney Larry Eaton to discuss the report on May 12.

The report concludes by noting that Holbert reimbursed the town $8,300.42 – the total of the undeposited funds, penalties, interest, and other charges – on October 29.

The State Board of Accounts said it has provided its findings to the Indiana Attorney General’s Office and the Ripley County Prosecutor’s Office. No charges have been announced as of Tuesday.