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Crosby audits are nearly done; accounting costs mount

Posted 3/15/16 (Tue)

By Cecile Wehrman
It’s taken nearly two years, two different accounting firms, the help of Tri County Regional Development Council (TCRDC) staff and retired City Auditor Carol Lampert, but the City of Crosby’s tangled finances are just about straightened out.
It’s cost the city about $262,000 to get to this point.
The largest portion of the cost, said Mayor Bert Anderson, is the result of work needed to reconstruct the Crosby Housing Authority’s records after a series of inexperienced -- and not well supervised -- employees fell down on the necessary reporting and financial documentation during 2013 and 2014.
Anderson said last week he is expecting to receive the final reporting on the city’s books very soon. While earlier in the process Anderson would not rule out potential criminal wrongdoing, he now says he believes it will be impossible to determine whether any funds are actually missing. The only money the city is definitely “out” he said, is an extra paycheck former auditor Lisa Fredrickson issued to herself in error. An extra paycheck issued to another employee has been paid back.
“What I feel worst about is the hundreds of thousands of dollars that have been used that could have been used for the betterment of the community,” said Anderson, instead of on cleaning up records.
By far the greatest problems in the books, he said, were on the Crosby Housing Authority side. The city had to infuse the agency with $100,000 to keep it in the black and pay out about $90,000 to TCRDC for administration work. Some of the money also paid for penalties and fees related to late filing or no filing of necessary state and federal reports, including Internal Revenue Service payments.
Everette Enno, TCRDC director, said no receipt book existed for the housing authority and computer records vanished, leaving him with only bank statements with which to reconstruct the housing authority’s books.
He even had to approach residents of Wallin Manor for any records or receipts they possessed, to prove rents were paid.
“We were not very popular for a while with our tenants,” said Enno.
Things are looking up, however.
“We’ve pretty much gone in now and I’d say it’s probably about 99  percent cleaned up,” said Enno, and the housing authority is back in compliance with the USDA and the IRS. Maintenance that had gotten behind is also being addressed.
Enno said it’s a good lesson for anyone serving on a board that involves staff handling funds.
“Basically, what happened is they didn’t pay attention for a while and things got out of hand really fast. I don’t think anyone went in there willfully doing something wrong,” said Enno, but the result was as devastating as if someone had.
“Things snowballed very, very quickly,” he said. “We had situations where we had large cash deposits made but there were no receipts for that cash deposit.”
“Over a very short period of time, everything imploded,” Anderson agreed. “As elected officials we’re entrusted with handling taxpayer’s money and this was not in any way shape or form handled responsibly at all.”
Moving forward, and as revenue falls, it will be helpful for council members to have an accurate history of the balances in each city department and be able to accurately track how money is being spent.
“The past two years all we’ve done is say we’re going to adopt the same budget,” said Anderson. “This year will be the first one we can actually see what we’ve spent. It will be good to get it back to where it ought to be.”
“At least now the board can look at everything and know where they are at,” said Enno.
The housing authority board, he noted, now meets monthly, receiving detailed financial reports at every meeting. A local manager, Vicki Olson, deals with renters in Crosby and TCRDC continues to manage the books.


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