City completes forensic audit

Staff Writer
Geneseo Republic

A forensic audit of the city’s accounts found no evidence of Geneseo funds being taken inappropriately by any employee.

However, the audit did uncover a lack of financial records and documentation, alderman Keith Kennett, chairman of the city’s administrative services board, told city council members on May 10.

Reading from a prepared statement, Kennett noted discoveries made by auditors with RSM?McGladery Inc. of Peoria.

Kennett said the auditors discovered:

• Financial transfers went through multiple bank accounts for no apparent practical reasons.

• Frequently the purpose of a financial transfer could not be verified.

• Deficiencies were noted with vendor payment files, monthly financial reports, the city’s Revolving Loan Fund, the wind turbine project and with internal check writing procedures.

Kennett said, “Of major findings, however, is the fact that the city’s general fund cash reserves dropped from $576,000 in 2008 to less than $158,000 in 2009.

“This left the city cash reserves critically low and created an operating deficit of $193,000 in 2009. From what can be pieced together, these funds were used to cover cost overruns on projects and employee compensations. This was occurring concurrently with declining tax revenues to the city,” he said.

Kennett said the audit also revealed that the “all-encompassing pooled cashed funds of the city had gone for an eight-month period without being reconciled.”

In his report to the council, Kennett said the city accountant, former mayor Pat Eberhardt and former administrative service board chairman Curt Spensley were responsible for the problems.

“None of these financial issues were made clear with the city council, which continued to blindly make financial decisions based on inaccurate financial information,”?he said.

“The facts indicate the oversight they provided was token at best.”

Kennett said all elected city officials serving during the time period audited (2008-2010) were ultimately responsible for the failings.

Kennett named himself and mayor Linda Van Der Leest, as well as Eberhardt, Spensley, Kevin Peterson, Wayne Ludwig, Josh Pierce, Arnie Schmid, Karen?West, Ed Deener and Lowell Ewert as “the elected officials serving during this period of time.”

He said, “Each had the sworn oversight responsibility required by their office.”

“While some aldermen did greatly question things and had concerns over the city’s finances, that still provides no exclusion of their fiduciary responsibilities ... the buck ultimately stopped with each of them,” he said.

Kennett said the audit cost the city approximately?$22,000.

At the May 10 city council meeting, aldermen also:

• Approved an ethical conduct procedure for city council members. Alderman Ewert voted against the measure.

In discussion, he’d asked for clarification on the nepotism section of the code of conduct.

“If there’s a city worker and an aldermen who aren’t related, but five years down the line, the city employee decides to marry the alderman’s cousin, then one of them has to quit?” he asked.

Kennett indicated that, yes, the ordinance would mean the alderman would have to leave office.

“I’m sorry. I can’t support this the way it is written,”?said Ewert.

The ordinance indicates no member of an alderman’s or mayor’s immediate family may be considered for employment by the city.

According to the wording of the ordinance, immediate family includes “spouse, parent, child, brother, sister, grandparent, all step-relationships, all in-law relationships, all half-relationships and any and all guardians or wards of the elected official.”

• Approved payment of $1,350 to Bush Turf Inc. for sod work done in Country Manor.

City engineer Greg Ryckaert said the payment is the final one for the Country Manor project.

“This is the final piece,” he said, adding the entire project “came in under budget.”