SAUK VILLAGE FINANCIAL MESS - No Documentation Needed!

This is the sixth 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 |  Three plus year into the Administration of David Hanks and we still see a reckless pattern of financial mismanagement at Village Hall. 

Hanks has said repeatedly over the course of the last few years that the village has “had to borrow $500,000 each year from the water fund” in order to make payroll.  Well, according to statements made by Village Finance Director Mohan Rao the Hanks Administrations has had to borrow some $900,000 from the water fund and $200,000 from the Noise Mitigation Fund during this most recent fiscal year.  There has never been a vote by the Village Board of Trustees to borrow such money from the water fund, as has been the case during previous administrations.  The Village actually received more money from the State of Illinois than Hanks put into his budget.  Basically, Hanks is using “fuzzy math” when it comes to his budget mismanagement and when it comes to taking money from the water fund.

The following is an excerpt from the Village’s most recent Audit Report Management letter:

11.       Documentation of Employees Salaries/Hourly Rate (Repeated from Prior Year)

We noted certain instances where employees’ personnel files did not contain formal documentation of the current rate of pay.  We recommend that formal documentation of all such changes be included in the personnel file, and authorized by the departmental supervisor or another appropriate individual.

(Editorial Note: Seems simple enough right?  So why is this repeated from the prior year?)

12.       Controls over Cash Receipts (Repeated from Prior Year)

The Finance Director (Mohan Rao) often records large cash receipts via a manual journal entry, and deposits the receipt to the bank, in order to ensure that the receipt is deposited an expeditiously as possible.  However, this result in a deviation from standard Village procedures.  We recommend that all cash receipts, and other transactions, be processed under the Village’s existing internal controls on a timely basis.

13.       Capital Asset Disposals (Repeated from Prior Year)

The Village recorded significant capital asset additions in the current year, but did not record any disposal in either the current year or the preceding fiscal period.  The Village should consider whether, based on the nature of additions, disposals are occurring and not being recorded.  Additionally, the Village should carefully review its capital asset details to identify potential items that are no longer owned, and/or no longer in use

(Editorial Note:  So how do they know if assets belonging to the village aren’t disappearing?)

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!”