8 different findings listed in Highland County's 2022 audit
The Ohio Auditor’s Office released Highland County’s audit for 2022 on Tuesday, June 18, with the audit including findings for recovery and of “material weakness,” “noncompliance” and “significant deficiency,” totaling eight findings altogether.
As previously reported, the 2021 Highland County audit released in May 2023 — completed under the tenure of former auditor Bill Fawley — pointed to a number of problems with the county’s standards. That audit included one finding of recovery and four findings of noncompliance.
A total of eight findings were listed for 2022, which was Fawley’s last full year in office. This year’s audit included reissuing four findings from 2021 that were not corrected.
The current Highland County auditor, Alex Butler, has a response with a “corrective action plan” to address these findings, many of which are already being taken care of, according to the audit.
The summary of the auditors’ findings for 2022 stated that they found evidence of material weaknesses and significant deficiencies in internal control reported at the financial statement level and material noncompliance at the financial statement level.
Two findings for recovery — both of which have been repaid — were listed in the 2022 audit. The first were late fees in the amount of $9,620, for the county’s failure “to remit and file portions of Ohio Public Employees Retirement System (OPERS) withholdings timely, resulting in penalty.
“In accordance with the foregoing facts and pursuant to Ohio Rev. Code §117.28, a Finding for Recovery for public monies illegally expended is hereby issued against Melanie Anderson, Payroll Clerk, and W. William Fawley, County Auditor and the County's employee dishonesty coverage carrier, CORSA, jointly and severally, in the amount of $9,620, and in favor of the Highland County Payroll Clearing Fund, in the amount of $9,620,” the audit says.
(Similarly, in the 2021 audit, a finding for recovery was issued against Fawley and Anderson for failure “to remit and file portions of School Income Tax and Employee withholding to the State,” leading to fees and interest in the amount of $6,012,” and failure “to remit Ohio Public Employees Retirement System (OPERS) withholdings timely,” in the amount of $3.)
According to the audit, “On May 16, 2024, $9,620 was repaid to the County’s Payroll Clearing Fund.”
In addition to the finding being repaid, the corrective action plan says that “the position of payroll specialist” has been added to the county auditor’s office. This position is responsible for keeping track of “bi-weekly and monthly checklists of payroll bills and taxes” and “supporting documentation,” which is also “reviewed by the Auditor for accuracy and timeliness of payments.”
The other finding was a related to a finding of recovery issued against the City of Hillsboro in their 2022 audit, as reported earlier this year. A finding for recovery against the city was issued in January in the amount of $25,357, then reduced to $20,054 in February.
As previously reported, former Hillsboro Municipal Court Judge David McKenna issued an order Sept. 8, 2021 that “the city shall pay accumulated benefits” for a retiring municipal court employee “according to the city policy and bill the Highland County commissioners for their proportional share of the full amount.”
In the city’s 2022 audit, the state auditor’s office noted that the Highland County Board of Commissioners initially disagreed with the city's Sept. 17, 2021 request for $18,506 for the county's portion of the clerk’s severance payout. There was a back-and-forth between McKenna and Highland County Prosecutor Anneka Collins, through several letters, regarding whether the payment was proper.
According to Highland County’s 2022 audit, the county eventually agreed to pay $11,425, which state auditors say was $940 over the amount they should have expended.
“Based on the recalculation of the Municipal Court Clerk’s severance payout under the City of Hillsboro’s policy, Highland County’s portion should have been $10,485, resulting in an overpayment of the reimbursement to the City of Hillsboro in the amount of $940,” Highland County’s 2022 audit says. “In accordance with the forgoing facts and pursuant to the Ohio Revised Code Section 117.28, a Finding for Recovery for public money illegally expended is hereby issued against the City of Hillsboro in the amount of $940, in favor of the Highland County’s General Fund. “
According to the audit, the City of Hillsboro “repaid $940 to Highland County’s General Fund” on Feb. 20, 2024.
The other six findings were “related to the financial statements required to reported in accordance with GAGAS [Generally Accepted Government Auditing Standards].”
Finding 2022-001 is reissued from both 2020 and 2021, as it is a finding of noncompliance with Ohio law regarding certifying resources.
According to the finding, the Ohio Revised Code requires that “on or about the first day of each fiscal year,” the county’s fiscal offer should certify “the total amount from all sources available for expenditures from each fund set up in the tax budget.” The Budget Commission is to then “revise its estimate of the amounts that will be credited to each fund from such sources, and shall certify to the taxing authority of each subdivision an amended official certificate of estimated resources.”
State auditors determined the county auditor “did not obtain a certificate of estimated resources from the Budget Commission in 2022,” which was “not detected by the County due to deficiencies in the budgetary compliance and monitoring control policies and procedures.
“Failure to obtain the required amended certificate of estimated resources can lead to improper budgeting and limits the effectiveness of management monitoring,” the audit says.
According to Butler, this matter was corrected for fiscal year 2023, when “the County did certify to the Budget Commission the total amount from all sources available for expenditures from each fund and obtain the approved amended certificate of estimated resources.”
The second finding, also reissued from 2020 and 2021, was regarding the county’s annual financial report. The audit states that Ohio law “provides that each public office shall file a financial report for each fiscal year,” with Ohio Administrative Code also requiring “the County to file annual financial reports which are prepared using generally accepted accounting principles (GAAP).”
However, the county’s financial report again “[reported] on the cash basis of accounting rather than GAAP,” state auditors found. “The accompanying financial statements and notes omit certain assets, liabilities, deferred inflows/outflows of resources, fund equities/net position and disclosures that, while presumed material, cannot be determined at this time.
“The County may be fined and subject to various other administrative remedies for its failure to file the required financial report. Failure to report on a GAAP basis compromises the County’s ability to evaluate and monitor the overall financial condition of the County. To help provide the users with more meaningful financial statements, the County should prepare its annual financial statements according to generally accepted accounting principles.”
In the county’s corrective plan, this issue is the one with the latest anticipated completion date — Dec. 31, 2025 — as it says “The County is considering the cost and benefit of reporting on a GAAP basis for FY 2025.”
The third finding (reissued from 2021) was one of material weakness “due to deficiencies in the County’s financial statement monitoring and review process.”
The audit lists the following errors: “Board of Developmental Disabilities fund property tax revenues were overstated and intergovernmental receipts were understated by $360,313, due to the incorrect posting of rollback and homestead receipts. Repair Motor Vehicle License fund capital outlay was understated and debt proceeds were understated by $374,911 due to an error during the compilation. General Capital Improvement fund intergovernmental receipts were overstated and debt proceeds were understated by $271,000 due to an error during the compilation. Board of Developmental Disabilities fund intergovernmental revenues were overstated by $602,963; miscellaneous receipts were understated by $50,000 and charges for services were understated by $552,963, due to the incorrect posting of charges for services receipts.”
Those errors were corrected; however, the audit says that “The County made additional immaterial errors in classifying receipt and disbursement transaction line items in various funds in the Statement of Cash Receipts, Disbursements, and Changes in Cash Fund Balances in amounts ranging from $50 to $173,886. The County did not correct the financial statements for these errors.”
The corrective action plan says that Butler “will work more closely with staff to provide oversight of intergovernmental revenue posting” and that the staff has received “additional training.”
Similarly, the fourth finding for 2022 (reissued from 2021), was one of material weakness “due to deficiencies in the County’s financial statement monitoring and review process.” leading to them listing “actual expenditure amounts as final appropriations on Budgetary Statements.” The following errors (which have since been corrected) were noted, according to the audit:
• General fund final appropriations were understated by $1,093,902.
• Public assistance fund final appropriations were understated by $516,405.
• Repair Motor Vehicle License fund final appropriations were overstated by $669,705.
• Board of Developmental Disabilities fund final appropriations were understated by $444,023.
• Board of Developmental Disabilities fund actual expenditures were understated by $379,882.
• Children Services fund final appropriations were understated by $78,517.
• American Rescue Plan fund final appropriations were understated by $5,321.
Butler said that corrective action on this issue is “ongoing,” and that he “will work more closely with compilers to ensure budgetary statements are accurately prepared and recorded.”
The fifth finding is one of material weakness regarding payroll procedures, specifically with the Board of Elections office. According to the audit, employees “use a variety of timesheet methods” and manually calculate payroll and employee leave.
Auditors found “multiple instances of timesheet and timecard proofs not being signed as approved;” “multiple timesheets per employee per pay period with various instances of approval and/or unapproved [that] did not always agree;” “multiple variances of time worked due to manual timesheet record keeping;” and “instances of leave requested but not included on timesheet records.
“The Board of Elections follows the Policy and Procedures Manual of the County Commissioners and Policy and Procedures Manual of the Board of Elections,” the audit says. “There are no formal policies or procedures related specifically to Board of Elections payroll procedures, compensatory time accruals and usage. Additionally, there are no controls in place over payroll procedures.
“The above conditions could result in employees being improperly compensated and in leave being taken that an employee was not entitled to take. The County should adopt policies and procedures appropriate for the Board of Elections, specifically outlining the procedures related to payroll and leave accrual and usage. Additionally, the Board of Elections should institute controls over monitoring and approval of payroll and leave.”
According to the county’s corrective action plan, the Board of Elections staff are working “diligently to make sure that all time sheets and leave requests are now signed and recorded in a timely manner;” have “implemented new guidelines;” and have made “personnel changes.” In addition, the BOE office “submits time proof cards to the county payroll specialist prior to running payroll,” the plan says.
Finally, a finding of significant deficiency was listed for issues with “an accounting system change in 2022, which also changed the way departments prepared pay-ins to the County Auditor and Treasurer's office.
“In previous years the Auditor and Treasurer’s offices required completion of pay-in forms prior to receipt of monies,” the audit says. “Forms were required to be completed by department officials, providing all the required information. This allows for pay-in information input into the system to be verified prior to processing.
“When switching to the new system in 2022, departments created pay-ins electronically. Two copies for the pay-in were printed. One copy was given to the Treasurer's Office for review. However, no documentation existed showing the pay-ins were reviewed, such as a signature or initials.”
The matter has been corrected, according to the county’s plan.
“Standard practice is now for each department representative and Treasurer’s office staff to review and sign the pay-in form prior to acceptance and input of monies into the accounting system,” the plan says.
The complete 99-page audit can be viewed at https://ohioauditor.gov/auditsearch/Reports/2024/Highland_County_22_Hig….
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