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!”