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Cumby Mayor Doug Simmerman and City Judge Lana Adams/ Screen shot
CUMBY — An independent financial audit for the City of Cumby found areas of concern dating as far back as 2014 in the prior administration, and a report from the city’s newly appointed municipal judge “found that many things were not done legally or properly,” according to the June city council meeting.
Cumby received their independent financial audit from K. Evans and Associates at the regular meeting June 9. The audit was performed for the fiscal year ending Sept. 30, 2019 and did not include the time period under current administration, accountant Kirt Evans specified to the gathered council members and citizen audience.
The audit outlined the following concerns regarding the City of Cumby financials:
FINANCIAL FINDINGS
Internal controls: The City of Cumby has “significant” deficiencies in internal controls to their finances, the accounting firm found. “Internal controls [do] not allow management or employees, in the normal course of performing their assigned functions to prevent, detect or correct misstatements on a timely basis,” the audit read.
Fund accounting: The City of Cumby did not have separate account numbers assigned to separate accounts for the general fund and the water and sewer fund, and also had duplicate funds (for example, legal fee and legal fees), the audit found.
Cash accounts: The city had stale, dated checks from 2014, as well as uncleared paychecks which could “skew the cash balance on the books,” the audit found. Vendors were entered under two separate names, and there were approximately $30,000 worth of “voided entries posted twice,” the audit found.
RevTrack: The city uses the RevTrack system to process online payments, according to the city website. However, according to the audit, the city had approximately $80,000 in RevTrack payments which had not been sorted into water/sewer or court payments.
Citations: The city took in $748,873 in citation payments prior to Sept. 30, 2018, the audit found, but “the city was unable to provide adequate accounting records” regarding this sum of money.
Payroll: “During observation of randomly selected personnel files, we have observed incomplete files which include missing I-9 and W-4,” the auditors wrote.
The auditors also “observed override of accrued vacation hours” and noted that city employees had vacation time that fluctuated between 80 and 120 hours. Evans noted that overuse of vacation policy is “not that uncommon” and “easily corrected.”
Credit cards: “Credit card use was not properly accounted for,” the auditors wrote. “Business use of credit cards needs to be verified.” Evans explained that the city paid all or part of a monthly credit card bill but often did not look at the items that were charged to the card.
Insurance claim: The city received and paid out an insurance claim of $15,000 during their audit year, but the auditors were not able to find any additional documentation.
“I’m sure it hit the books,” Evans noted. “But there was ... no paperwork at all.”
Segregation of duties: Auditors observed that both signatories on checks were administrative employees, and the utility clerk processes all parts of a payment, from receiving it, putting it in the computer and depositing it at the bank.
“Approval and record-keeping should be segregated to prevent misappropriation of assets,” the auditors wrote.
Physical safeguarding of assets: Numbered checks and the utility payment drop box key are kept in an unlocked drawer, the auditors found. They recommended keeping both in a secure location.
Skill and knowledge: “Personnel and management lack skill, knowledge and experience to oversee … accounting procedures including performing financial statement preparation,” the auditors wrote.
The auditors recommended the city hire someone with such skill, knowledge and experience.
Water capacity: The city has reached 89% capacity on its water system, auditors noticed, but by law is required to only have a maximum of 85%. At this point, the city is in non-compliance with the law and cannot add any more water meters.
According to the audit, the city of Cumby draws in approximately $1.2 million per year between taxes, water and sewer fees, court fees and other sources of revenue. After all budgeted costs, the city will find itself with a negative balance of approximately $113,117 per year, the audit found. Figures presented at the council meeting by the current mayor, Doug Simmerman, show that in addition to bond service, the city has $80,601.28 in unpaid bills.
“Obviously we don’t like to see deficits, but hopefully you can get this to a surplus to where you can maintain your systems,” Evans noted to the council. “I am happy to report that most of these items are being dealt with and improvements are being made.”
The council unanimously accepted the financial audit from K. Evans and Associates.
COURT CONCERNS
Newly appointed municipal Judge Lana Adams shared a prepared statement with the council and citizen audience, in which she addressed concerns facing “the court side” of city business.
In the statement, Adams stated, “When [court clerk Quanah] Wright took the position last July, to say things were chaotic was an understatement.”
According to Adams, the municipal court has been “working with” Texas Ranger John Vance and “have found many things that were not done legally or properly.” Adams told citizens this included “not holding court since 2018.”
Her prepared statement also added “several stacks of money orders and cashiers checks that were inexplicably hidden in remote files that are uncollectible as many of those date back as far back as 2016.”
“Dwelling on the past ... is not productive as there is very little way to prove and prosecute those actions,” Adams wrote.
To help the court operate smoothly, Adams hired an additional administrative assistant, she said, and the court has now collected outstanding fees totaling $78,341.91. After paying state costs, the city’s share is $45,179.81, Adams stated. The city has held virtual digital hearings and hopes to hold in-person hearings soon, Adams said.
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In a previous version of this article, it specified the findings of the independent audit are not for the current time period. It has been updated to clarify that the same time period within the scope of the audit findings and court-alleged improprieties do not include the current administration.