SAUK VILLAGE FINANCIAL MESS - Why follow the law, who is going to question them?

This is the fourth in a series of revelations of the 2014-15 Audit Report.  The Village was delinquent in filing their audit with the Illinois Comptroller (due December 26, 2015).  The Audit report (see attached link at the end of this report) reveals the status quo with the Village finances continues with 3 years into David Hanks’ Administration.

SAUK VILLAGE |  Why does David Hanks have Village Administrator J.W. Fairman poking around in things better left to professionals such as the Uniform Crime Reporting instead of the Village’s financial mess?  Mayor David Hanks and his administration have failed to address over 19 serious issues with the Village’s audit, most of which are repeated from the prior year according to the audit report.

None of these 19 items has come out publicly, nor have they been discussed by Hanks with his Village Board. 

The following are a few items that were found in the Village’s annual audit report Management Letter:

3.       Tax Increment Financing Fund (Repeat from Prior Year)

The Village presents certain deposits, held with the trustee/paying agent (which is Amalgamated Bank) for the payment of principal and interest maturities on the Village’s tax increment financing (TIF) and other general obligation bonds, and transactions associated with those accounts, within the Debt Service Fund.  As a result, it is unclear to the users of the Village’s financial statement the extent of the balances and transactions associated with each of the Village’s TIF Districts.  We recommend that the Village consider recording all such activity in funds that are specific to each TIF district.

4.       Accounts Payable Detail

The Village lacks an adequate detail of accounts payable that reconciles to the general ledger balances by fund.  Various non-audit services were required to assist the Village in preparing a detail that reconciled to the general ledger.  We recommend that the Village consult with its account software support firm to ensure that a detailed accounts payable report, by invoice, is available.  We also recommend that the Finance Director (Mohan Rao) review invoice posting dates to ensure that invoices are posted to the correct accounting period.

     5.       Interfund Advances and Transfers (Repeated from Prior Year)
 

Various interfund advances and transfers have been made, either without the formal authorization of the Board of Trustees, or in excess of Board-approved budgeted amounts.  We recommend that all interfund advances and transfers be brought to the Board of Trustees for formal approval, especially in situations where actual amounts exceed budget.

Illinois law states:  65 ILCS 5/8-1-3.1 “Borrowing from financial institutions. The corporate authorities may borrow money for corporate purposes from one fund for the use of another fund providing such borrowing shall be repaid within the current fiscal year.”

Trustee Derrick Burgess during fiscal year 2014-15 was the only Village Trustee that demanded that the Village Board vote on such transfer of funds.  Hanks and his allied Trustees have taken on a practice of merely giving “consensus” which is not a formal process.  Village Trustees Burgess, Cecial Tates and Kelvin Jones have all demanded that such transfers take place with a public vote.  “Taxpayers have a right to know how elected officials are spending their money” Burgess said.

“When this administration ‘borrows’ money from the water fund or from other funds, there has not been a public vote.  This has not taken place during this last fiscal year.  This not only violates Illinois law (65 ILCS 5/8-1-3.1) but it circumvents the authority of the Village Board” Tates said.

An expert on Illinois Municipal Finance, intimately familiar with Sauk Village’s financial history reviewed the Village’s audit and management letter and stated the following:   “I don't believe any of these are just normal issues.  In a well run environment, none of these issues should occur.  There should always be a system of "double-check" in order to eliminate any possibility of wrongdoing.  We have many of these safeguards in place to prevent fraud and provide transparency with taxpayer’s money.   What I don't get is the lack of attention being paid to account receivables.  What exactly does everyone working at Village Hall do?  Why is it that the Finance Director has no backup from existing staff? What does this so called Village Administrator or the Mayor do? (by the way the Finance Director  seems to have a lot of authority according to this report)?  This report is pathetic!”

SAUK VILLAGE FINANCIAL MESS - No Pride, No Progress!

This is the third in a series of revelations of the 2014-15 Audit Report.  The Village was delinquent in filing their audit with the Illinois Comptroller (due December 26, 2015).  The Audit report (see attached link at the end of this report) reveals the status quo with the Village finances continues with 3 years into David Hanks’ Administration.

SAUK VILLAGE |  Pride and Progress may be the Village’s motto but when it comes to the finances of Sauk Village, there’s not much to be proud of nor clearly has there been any progress.   Mayor David Hanks and his administration have failed to address over 19 serious issues with the Village’s audit, most of which are repeated from the prior year according to the audit report. 

The following are a few items that were found in the Village’s annual audit report:

3.       Journal Entries (Repeated from Prior Year)

The Finance Director (Mohan Rao) initiates and records substantially all manual journal entries, without formal independent review.  This lack of review increases the risk that fraudulent financial reporting, or a misappropriation, could occur and remain undetected.  Although the Board of Trustees reviews the monthly financial data, we recommend that another individual with financial expertise and knowledge of the Village’s chart of accounts review and initiate each manual adjustment that is identified and posted by the Finance Director.

4.       Wire Transfers (Repeated from Prior Year)

The Finance Director (Mohan Rao) initiates and records substantially all wire transfers, without formal independent review.  This lack of review increases the risk that a misappropriation of Village funds could occur and remain undetected.  We recommend that another individual with financial expertise review and initial each wire transfer advice.  Additionally, automatic notification should be sent by the bank to a responsible individual other than the Finance Director.

5.       Working Cash Fund (Repeated from Prior Year)

The Working Cash Fund has made interfund loans to the General Fund, and those loans have not been repaid in accordance with State Statutes.  Under 65 ILCS 5/8-7, the Village is permitted to transfer all or part of the Working Cash Fund to the General Fund in anticipation of the collection of taxes levied for general or special corporate purposes; however, the Working Cash Fund is to be reimbursed within a certain period of time as specified in the Statutes.  The statutes further provide for the abolishment of the Working Cash Fund by resolution of the Village Board, whereupon the Fund may be transferred to the General Fund, at the end of the fiscal year; however, a municipality that has abolished the working cash fund may not establish another working cash fund for four years, after the date the fund was abolished.  Additionally, any general obligation bonds that were previously issued for working cash purposes must be retired before a municipality may establish a new working cash fund.

Presently, the Village is recording property taxes, levied for purposes of payment of principal and interest on the Working Cash Bonds, to the Working Cash Fund, and in turn making a transfer to the Debt Service Fund.  We recommend that the Village set up transactions to be recorded in the proper fund. 

Nothing has been done to correct these Material Weakness from the prior year’s audit report, and we see what the lack of oversight of taxpayers’ dollars can clearly result in another scandal just like with the Village Treasurer.

An expert on Illinois Municipal Finance, intimately familiar with Sauk Village’s financial history reviewed the Village’s audit and management letter and stated the following:   “I don't believe any of these are just normal issues.  In a well run environment, none of these issues should occur.  There should always be a system of "double-check" in order to eliminate any possibility of wrongdoing.  We have many of these safeguards in place to prevent fraud and provide transparency with taxpayer’s money.   What I don't get is the lack of attention being paid to account receivables.  What exactly does everyone working at Village Hall do?  Why is it that the Finance Director has no backup from existing staff? What does this so called Village Administrator or the Mayor do? (by the way the Finance Director  seems to have a lot of authority according to this report)?  This report is pathetic!”

SAUK VILLAGE FINANCIAL MESS - Politics over Progress

This is the second in a series of revelations of the 2014-15 Audit Report.  The Village was delinquent in filing their audit with the Illinois Comptroller (due December 26, 2015).  The Audit report (see attached link at the end of this report) reveals the status quo with the Village finances continues with 3 years into David Hanks’ Administration.

SAUK VILLAGE | Instead of discussing ways in which his administration can address the serious issues with the Audit Report, David Hanks cancels yet another Village Board Committee of the Whole meeting scheduled for Tuesday March 1^st.  He and Trustees he supports continue politics over progress, instead of asking questions and seeking solutions to the vast problems within the Audit.   Trustees Rosie Williams, Lynda Washington and Ed Myers continue to support the inaction by Hanks and his administration.

The Village Treasurer James Griegel is under an indictment by the Will County States Attorney and is under a Federal Investigation for alleged misappropriation of funds for the Police Pension Fund remains on the taxpayer’s payroll!  Griegel allegedly took “thousands of dollars” from the Police Pension Fund.  This has happened under the watch of Mayor David Hanks and the complete financial mismanagement which the Trustees he controls (Williams, Washington and Myers) enable him to do. 

The recent audit report has revealed 19 material weaknesses.  A material weakness in a audit is a “deficiency, or a combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the Village’s financial statements will not be prevented, or detected and corrected on a timely basis.  We (the auditors) consider the following deficiencies in the Village’s internal control to be material weakness”

Excerpt from the 2014-15 Audit: 

2.       Lack of Segregation of Duties (Repeated from Prior Year)

Similar to many other organizations of the Village’s size, substantially all accounting functions of the Village are performed by a single individual.  As a result, some of the aspects of internal accounting control which rely upon adequate segregation of duties are missing in the Village and a general lack of internal controls exists, increasing the risk of fraud or errors may occur and remain undetected.

 

Nothing was done to correct this Material Weakness from the prior year’s audit report, and we see what the lack of oversight of taxpayers’ dollars can do with the Village Treasurer scandal.
 
An expert on Illinois Municipal Finance, intimately familiar with Sauk Village’s financial history reviewed the Village’s audit and management letter and stated the following:   “I don't believe any of these are just normal issues.  In a well run environment, none of these issues should occur.  There should always be a system of "double-check" in order to eliminate any possibility of wrongdoing.  We have many of these safeguards in place to prevent fraud and provide transparency with taxpayer’s money.   What I don't get is the lack of attention being paid to account receivables.  What exactly does everyone working at Village Hall do?  Why is it that the Finance Director has no backup from existing staff?

***CLICK HERE*** FOR A FULL COPY OF THE AUDIT REPORT

SAUK VILLAGE FINANCIAL MESS - Your Tax Dollars

This is the first in a series of revelations of the 2014-15 Audit Report.  The Village was delinquent in filing their audit with the Illinois Comptroller (due December 26, 2015).  The Audit report (see attached link at the end of this report) reveals the status quo with the Village finances continues with 3 years into David Hanks’ Administration.

SAUK VILLAGE | While David Hanks praised Trustees Rosie Williams, Lynda Washington and Ed Myers for voting for unbalanced budgets in a social media post.  “Thankfully, last year the majority of the board (Williams, Washington and Myers) passed a worse-case scenario budget” Hanks stated on his post.  Residents and taxpayers should be steaming mad at how the Village’s finances are handled, these are your tax dollars.  Not necessarily what they’re spending your money on, but the manner in which it is handled by David Hanks and his administration.  Hanks proposes yet another “worse-case scenario budget” and plans on presenting a budget which he states “may reqire(sic) more cuts than last year”.

Trustee Derrick Burgess voted against the budget and appropriation ordinances presented by Hanks calling it once again “irresponsible and unbalanced”.  Trustees Cecial Tates and Kelvin Jones also voted against the Budget and Hanks voted to break the tie.  With that said, over $1 million dollars has been “borrowed” during the last year to keep the village’s accounts flush and to make the village's payroll.  All that despite Hanks claiming that the budget was balanced.  The Village’s water fund and several other funds have been tapped to pay the bills and not repair the infrastructure or other intended purposes resulting in interfund borrowing.

The recent audit report has revealed 19 material weaknesses.  A material weakness in a audit is a “deficiency, or a combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the Village’s financial statements will not be prevented, or detected and corrected on a timely basis.  We (the auditors) consider the following deficiencies in the Village’s internal control to be material weakness”

1-      Audit Adjustments (Repeated from Prior Year)

Numerous adjusting entries were identified, proposed to, and accepted by management, and recorded in the Village’s financial statements, as of and for the year ended April 30, 2015.  Several of the adjustments were material to the financial statements, individually and in the aggregate.  The adjustments affected various asset, liability, deferred inflow, net position/fund balance, revenue, expense/expenditure, and other financing sources and uses accounts.  We recommend that the finance department (Mohan Rao) reconcile all account balances to the supporting schedules, document and other sources of information in a timely manner, in order to ensure that accurate financial reporting, during the year and at year end is achieved.  Those procedures should include but not be limited to the following:

·         Review of accounts receivable detail ledgers to determine the adequacy of the allowances for doubtful accounts.

      ·         Reconciliation of prepaid items to supporting details

·         Allocation of property tax receipts to individual funds based on the appropriate tax levy extension for each distribution.

·         Reconciliation of unbilled utility revenue balances to detail ledgers

·         Grants recorded in an appropriate manner based on the terms of the grant agreement.

·         Reconciliation of other tax receipts to state and other taxing authority reports

·         Review of construction, equipment, and other invoices to determine propriety of capitalization, depreciation and accrual of retainage of a liability.

·         Reclassification of held checks as a current liability.

·         Reconciliation of accounts payable and accrued compensated absences balances to supporting details.

·         Reconciliation of recorded debt principal and interest payments to maturity schedules.

·         Proper recording of debt issuance.

·         Reconciliation of interfund transfers in and transfers out, to ensure that all interfund transfers are properly recorded in the transfer accounts in the general ledger.

An expert on Illinois Municipal Finance, intimately familiar with Sauk Village’s financial history reviewed the Village’s audit and management letter and stated the following:   “I don't believe any of these are just normal issues.  In a well run environment, none of these issues should occur.  There should always be a system of "double-check" in order to eliminate any possibility of wrongdoing.  We have many of these safeguards in place to prevent fraud and provide transparency with taxpayer’s money.   What I don't get is the lack of attention being paid to account receivables.  What exactly does everyone working at Village Hall do?  Why is it that the Finance Director has no backup from existing staff? What does this so called Village Administrator or the Mayor do? (by the way the Finance Director  seems to have a lot of authority according to this report)?  This report is pathetic!”

 

 

***CLICK HERE*** VILLAGE AUDIT REPORT LINK

FINANCES GET LITTLE ATTENTION BUT PUBLIC COMMENT TAKES CENTER STAGE

SAUK VILLAGE |  The Village Board met last night and were presented with the Village's Audit Report.  The audit showed few surprises and virtually no change in financial position of the Village according to the Susan Jones of Miller, Cooper & Co LTD of Deerfield, Illinois.

Trustee Derrick Burgess asked about the issuance of immediate checks and then having them approved after the fact by the Village Board.  Susan Jones said that is not common and that there should be few exceptions to for immediate checks, payments should go through the normal payment process.  Burgess also asked about borrowing funds from the water fund or other funds, the auditors said that there appears to be adequate documentation and general ledger information, however, the Village Board should vote to borrow money according to Illinois Statute and in some cases that has not happened.

Trustee Cecial Tates said he only had a matter of minutes to review the audit report and asked if they would be returning so that he could review the report and prepare his questions.  Mayor David Hanks said that any questions could be directed to Village staff at a future date. 

While the audit review was underway, Trustees Lynda Washington, Rosie Williams and Ed Myers sat mute for the twenty minute time it took for the auditors to present the audit.  Each of them did, however, chime in when it came to Public Comment and each had their own opinions and comments.  Rosie Williams suggested that the Ordinance for the public comment period be no longer than 60 minutes, but the discussion of the matter took 1 hour 13 minutes.

Burgess merely wanted the Village Board to get rid of its current restriction that says the public can only comment on "agenda items only".  "Why should we restrict what the public has to say.  We do have a First Amendment and the Illinois Attorney General has issued binding opinions that state public bodies cannot restrict the content for public comment" Burgess said following last nights meeting.  Burgess does not want residents intimidated when they come up for Public Comment by threats of arrest or removal from the meeting

Myers and Williams, who comprise the Ordinance Committee will once again take up the matter at a Special Meeting on Friday.  Williams, who was not present at the Village Meeting Tuesday night was on the telephone during the entire time will apparently be required to attend in person Friday, as someone attending a meeting by conference call cannot constitute a quorum according to state law.

"Why is it that public comment take more time and it seems every one of the trustees who remained silent during the auditor's presentation all spoke up on public comment" Tates said after the meeting.  "It's interesting to see where their priorities are".

During the Public Comment period of the meeting Bernice Brewer asked why Hanks has not removed the Village Treasurer James Griegel who admitted to purchasing heroin for sex and allegedly admitted to embezzlement from the Police Pension Fund.  Hanks' response "we're not talking about the Village Treasurer".

VILLAGE BOARD VOTES DOWN RESTRICTING PUBLIC COMMENT

SAUK VILLAGE |  After months of back and forth and delays by Mayor David Hanks, the Public Comment Ordinance finally had a vote, after over 30 minutes of debate, and the vote failed 4 to 2.  Trustees claim that the recommendations by the Ordinance Committee were just too restrictive and did not go far enough to permit the public to comment.  Trustees also said that it essentially this was the same ordinance already on the books. 

Originally Trustee Cecial Tates introduced the idea of expanding public comment during Village Board Meetings to any topic on the agenda.  Currently the rules only permit Public Comment on "agenda items only" during the Village Board meetings held on the 2nd and 4th Tuesday with Hanks routinely telling residents "that is not on the agenda" and that they he would not permit the question or comment to be stated.  There are currently two pending complaints filed with the Illinois Attorney General regarding Sauk Village's Public Comment period which are still under review.  Another recent incident of the public getting shot down was School District 168 Board President Philip Bazile who was told he could not address the Village Board concerning matters involving the School Board.

Trustee Derrick Burgess introduced the original Ordinance to the Trustees about six months ago.  The ordinance which Burgess introduced at that time merely did away with the restriction which only allowed public comment on agenda items only.   "Look the Attorney General and the Open Meetings Act laws are clear, they state that the public has a right to comment during our Village Board meetings.  We do not have a legal right to restrict public comment" Burgess said following the meeting. 

Trustees Burgess, Tates and Kelvin Jones were joined by Lynda House in voting against the measure while Trustees Ed Myers and Rosie Williams (who voted by phone) supported the move which virtually kept the same ordinance in place.  The ordinance which failed did add new provisions imposing  penalties to the public who violated the ordinance.  "I do not believe people want to be arrested for coming to a Village Board meeting, speaking their mind because it violates David Hanks' petty, capricious and arbitrary rules" Tates said after the meeting.

Burgess offered an alternative Ordinance, which took the Village's original ordinance and merely did away with the language "on agenda items only".  Burgess said that it was the exact same ordinance which was drafted by the village's current Attorney when it was originally passed.  Tates suggested that since the issue is on the agenda the Village Board should vote on the Ordinance offered by Burgess.  Village Attorney Matthew Burns of Odelson and Sterk said that the vote on Burgess' proposed Ordinance would not be proper because it was not on the agenda.  Tates disagreed and said that it's the same ordinance and same action.  "If one Ordinance does not pass and the other does then there is no violation of the law" Tates said.  Burgess wants the matter on the Village Board's Committee-of-the-Whole meeting for next week with a vote to follow the week after.

Hanks believes that the Ordinance needs to go back to the Ordinance Committee.  Burgess said it does not that the Board does not accept their recommendation.  "The Board voted 4 to 2 and does not accept the recommendation of the Ordinance Committee, why send it back to them other than to delay another vote and delay the public's questions.  What is he (Hanks) afraid of"? Burgess said following the meeting.  Myers agreed that the Ordinance Committee already looked at the matter gave their recommendation.

"Many public bodies do not need to adopt the recommendations of committees, this Village Board is no different.  We need to allow the public the opportunity to speak to their elected officials.  They have delayed this, and put more road blocks to deny the public their right to speak" Tates said following the meeting.

THERE'S A RUMBLING IN SAUK VILLAGE...

OPINION EDITORIAL - There's a rumbling in Sauk Village!  Indeed a rumbling!  Many voters are fed up with Sauk Village's Mayor David Hanks, Village Clerk Debbie Williams and the treacherous-trio of Bobble Headed Trustees Rosie Williams, Lynda Washington and Ed Myers!  This was easily seen in the 2015 election as not a single person endorsed and supported by David Hanks or Debbie Williams won election to the Village Board!  Nor did a single candidate supported by Hanks and Williams garner even 40% of the vote in 2015!  The voter apathy was a telltale sign of the exasperation of the residents of Sauk Village over the abject failure of the Hanks/Williams administration.   Somehow this group have gotten the idea that the Village is their own personal fiefdom.  

Many residents, including long-time residents, are fed up with the abuse of their authority, the political theatrics and circus atmosphere and are sick and tired of paying the Mayor and Village Clerk a salary when meetings are routinely cancelled and the business of the Village is not getting done in an open and transparent process.   Keep in mind, these individuals were elected to hold OPEN and PUBLIC MEETINGS, identify issues facing Sauk Village, share solutions to those issues and vote IN PUBLIC for the solutions they have, reach out and compromise and working together!  Yet the residents and taxpayers do not see this happening from this administration and his allies!  These individuals are not lobbyists supporting one group or another, they were. elected to represent all community members.  Clearly they have failed in their duty and their oath!    If the residents want to attend a show or a sporting event they could very well go to the movies or a sporting event.  Seeing the childlike theatrics of Hanks with his condescending attitude and contempt for Village Trustees he does not agree with is outrageous!  Hanks' predecessor never conducted himself in such a childlike manner,  and I never agreed with how he handled village business or issues facing Sauk Village. 

Supporters of David Hanks, Debbie Williams and the treacherous-trio of bobble heads believe that cutting Village Meetings to only two per month; a 40% reduction, is a "cost savings initiative"!  While I agree it will reduce the Village Trustees stipend, it would only be fair that the Mayor and Village Clerk should "give back" the identical percentage of their salaries.  Traditionally, Trustees are paid for 5 meetings per month (2 board committee, 2 board meetings and 1 trustee chaired committee) at $125 per meeting that they "actually attend" (emphasis added on "attend") for a total annual savings of $18,000.  So, if the Mayor and Village Clerk volunteered to "give back" 40% of their salaries, Hanks reduction in pay would save taxpayers some $7,600 per year and Williams reduction in pay would save the taxpayers another $6,800 per year saving the Village a total of $32,400!  All of which could be given to Parks and Recreation for programs! BUT!  Now we would see if these two really cared about "cost savings".  

Village Board meetings are business meetings and should not be used as a bully pulpit for Hanks and Williams to pontificate nor an acting stage for Lynda Washington's play!  REALLY A PLAY?  Hanks and Williams supporters believe that the 3 Un-Trustees that don't support Hanks should not be paid because they offer no viable solutions for the Village's problems. My question to them is:  What "viable solutions" have David Hanks, Debbie Williams, Rosie Williams, Ed Myers or Lynda Washington proposed?  Nada, None, Zilch!  The Village's General Funds Deficit continues to grow, the Village's finances are an absolute mess, David Hanks' treasurer is indicted and he's still on the payroll, Village Employees continue to file grievances and lawsuits that are instigated by David Hanks himself!  

Hanks has had total control of the Village Board and the Village since 2012...What improvements have been realized in the Village since then?  Where are the solutions to these problems that he and his supporters constantly squawk about?   For some strange reason, they blame the 3 Un-Trustees.   So who is to blame for Sauk Village's steady decline?  David Hanks, Debbie Williams and the treacherous-trio of bobble heads!    

You better believe there is a rumbling in Sauk Village and the taxpayers are definitely restless!  The residents' of Sauk Village signed and filed a petition of NO CONFIDENCE in this administration, the very first ever filed against a Mayor by the People of Sauk Village!  The lack of confidence contributed to the tidal wave that swept two bobble heads out of office in 2015.  As this administration's antics continue into 2016, they can expect a tsunami in 2017 that is aimed to sweep this garbage out of office and give the residents of Sauk Village a CLEAN START and a chance at a new beginning!    

 

EDITORIAL NOTE:  I would like to thank the supporters of David Hanks and Debbie Williams for inspiring this editorial.  A loyal reader sent me a diatribe posted on social media.