The Herald Bulletin

Overnight Update

Local News

January 23, 2013

Summitville’s financial books riddled with errors

State audit covered 2010 and 2011

SUMMITVILLE, Ind. — The town of Summitville’s books are riddled with errors, inaccuracies and mistakes, according to a new audit released by the State Board of Accounts.

The report covers 2010 and 2011, and identified bank accounts that didn’t reconcile, county option income tax money earmarked for public safety that wasn’t recorded properly and numerous other accounting problems.

“Because of the errors in maintaining the finance records,” the report states, “the original financial statements presented for examination were incorrect.”

The Board of Accounts reviews the financial statements of all government units in Indiana including cities, towns, utilities, schools hospitals and state colleges and universities. It also conducts special investigations to reveal fraud or noncompliance with local, state and federal laws.

Current town officials who are responsible for correcting the problems and bringing Summitville’s books back into compliance with state law and accepted accounting standards, could not be reached for comment on Tuesday.

In addition to bookkeeping problems, the agency also raised concerns about reimbursements for health insurance deductibles.

In 2008 and 2009, for example, the Town Council adopted resolutions that said the town would no longer pay deductibles. Instead, each town employee would receive payments into a health savings account, which could be used for that purpose.

Despite those decisions, however, in 2011 insurance deductible payments for medical bills were made to a former street superintendent for 2009, 2010 and 2011. Town Council minutes covering these payments were inadequate.

“However, according to the resolutions in effect during the periods noted and the vagueness of the council minutes, the payments to the street superintendent during 2011 totaling $8,247.25, were questionable due to lack of documentation regarding board approval,” according to the audit.

These issues were discussed several times with the former clerk-treasurer and street superintendent as well as the Town Council president.

The Town Council reviewed information supplied about the payments and, last October, retroactively approved deductible payments for 2008-2011 totaling $7,332.61. The street superintendent repaid the town $807.16, but still owes the town $107.48, according to the audit.

Health insurance premiums also came under scrutiny. Specifically, the town agreed to pay private health insurance premiums for three town employees.

Summitville was billed for the premiums under a “List Bill” agreement. None of the policies were considered group insurance coverage. Employees were told their employer was making no payment contributions, and that 100 percent of the premium cost would be deducted from each employee’s paycheck.

In 2010 and 2011, however, the town paid all but $15 of each employee’s monthly health insurance premium, at a public cost of $24,402 and $34,750, respectively.

“Public funds may not be used to pay for personal items or for expenses which do not relate to the functions and purposes of the governmental unit,” the agency states. “Any personal expenses paid by the governmental entity may be the personal obligation of the responsible official or employee.

Board of Accounts auditors also criticized town officials for not correctly filling out IRS forms for payroll taxes and incurring penalties and interest; had to pay hundreds of dollars in late fees and finance charges because certain bills were paid late in 2010 and 2011; and for error on claims presented to the town for payment.

Find Stu Hirsch on Facebook and @StuHirsch on Twitter, or call 640-4861.

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