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Auditors release Vidalia findings
from The Concordia Sentinel
July 5, 2018 - ListenUpYall.com

Findings concerning the previous administration and a number of recommendations for the present one were released in an audit Monday by the Louisiana Legislative Auditor.

Auditors “performed an assessment of the Town’s internal controls over programmatic and fiscal operations,” according to the report. “The assessment resulted in findings of possible violations of state law and/or town policy in seven areas and recommendations for improvements in those areas, as well as 12 others.”

Among the findings in the audit was one noting that in June 2016, “the Town’s previous administration paid former Mayor Hyram Copeland $82,692 (before payroll deductions) for 2,074 hours of accumulated personal and vacation leave” and “also paid former Chief of Police Arthur Lewis $36,517 (before payroll deductions) for 1,049 hours of accumulated personal and vacation leave,” adding that “the current administration was unable to provide time sheets or leave slips to document hours worked and leave taken to support the payments.”

Copeland’s attorney David LaCerte of Sternberg, Naccari & White LLC of Baton Rouge, addressed the findings and said formal records were maintained and provided to auditors.

“The law is clear,” LaCerte said in a statement to the Sentinel, “Former Mayor Copeland was owed his unpaid leave balance upon retirement and was treated no differently than any other employee.”

Vidalia Mayor Buz Craft said many of the findings cited in the audit have been addressed and corrected. He said he addressed the findings in a letter to auditors.

“This was not a forensic audit but one for better practices,” he said.

Craft requested the audit.

Auditors reviewed documents at town hall in August and September 2016, Craft said.

He said he is “very proud of the work” that has been done during the past two years to “restore financial order. We’ve got great people in place and we’re doing it right.”

To follow are the auditors findings in the order they appeared in the 62-page audit:

Municipal Classification: City officials were not able to confirm whether Vidalia’s designation has officially been changed from a “city” to a “town,” as required by Louisiana Revised Statute (R.S.) 33:341. Although Vidalia is officially classified as a city, the 2010 Census population of 4,299 indicates it should be classified as a town because it no longer has 5,000 or more residents. Vidalia is a Lawrason Act municipality.

Local Government Budget Act: The Town did not comply with all requirements of the Local Government Budget Act (LGBA) and continues to budget expenditures that exceed the total of estimated funds available for the ensuring fiscal year in its general fund.

The following required elements were omitted from the Town’s fiscal year 2017 and 2018 budgets:

-- Budget message that includes the preparer’s signature;

-- Proposed budget adoption instrument that defines the authority and powers of management and governing body in making changes to budget; and clearly presented side-by-side detailed comparison of information for the current year (year-to-date actual receipts and revenues received and estimates of all receipts and revenues to be received the remainder of the year; year-to-date actual expenditures and estimates of all expenditures to be made the remainder of the year itemized by agency, department, function, and character; and the percentage change for each item of information).

The Town also adopted a general fund deficit of $859,267 (ending fund balance) in its 2017 original budget and a deficit of $3.6 million in the adopted 2018 budget.

Paying Leave Balances of Former Mayor and Former Chief of Police: In June 2016, the Town’s previous administration paid former Mayor Hyram Copeland $82,692 (before payroll deductions) for 2,074 hours of accumulated personal and vacation leave. The previous administration also paid former Chief of Police Arthur Lewis $36,517 (before payroll deductions) for 1,049 hours of accumulated personal and vacation leave. The Town’s current officials provided system leave balances but were not able to provide time sheets or leave slips to document actual hours worked and leave taken to support the payments to the former mayor and former police chief. Current officials were also not able to identify a specific ordinance or policy that would have allowed the former mayor and police chief to accumulate or be paid for unused leave without documentation of leave balances.

In a statement to the Sentinel, Copeland’s attorney, LaCerte, said:

"Former Mayor Copeland, through his decades of honorable service to his community, accumulated paid leave in the same manner as any other city employee.

“The law is clear, Former Mayor Copeland was owed his unpaid leave balance upon retirement and was treated no differently than any other employee. The Louisiana Wage Statute dictates that wages are due upon resignation and case law is clear that paid leave qualifies as wages under the law. Additionally, the Attorney General Opinion cited by the LLA states that Mayors are ‘entitled to payment of accrued leave provided that formal records were maintained that reflect that the leave was accrued and unused.’

“Formal records were in fact maintained and examples of such are attached to the LLA response as an exhibit.

“As per the City Clerk, this same system remains in place for the current administration. Former Mayor Copeland thanks the LLA staff for their important work, but disagrees with any conclusion calling his paid leave into question."

Paying Leave Balances of Other Former Employees: The Town’s leave policy, which Town officials represented has not been updated since 1992, is not clear regarding how leave taken is documented, how much leave can accumulate, when leave expires, and how unused leave will be paid out upon employment termination. In addition, the existing policy indicated that unused personal leave accumulates to a maximum of three times the employee’s annual personal leave. This equates to a maximum 72 or 108 hours carried forward each year, depending on an employee’s hourly classification. However, a June 2016 leave report indicates that six employees were paid by the previous administration for more than the carry-forward amounts, for an excess of at least $11,054. One of these employees was paid for 323 personal leave hours.

Payment of Employee Share of Health Insurance Premiums: The Town disclosed that the previous administration paid both the employer and employee portions of health insurance premiums for three employees while they were on workman’s compensation, as well as a Board member, in violation of Town policy. Although the Town’s current administration has been working to recoup the employee portion of payments, they had not recouped total amounts owed of approximately $25,000 as of January 2018.

Open Meetings Law: The Town may not have complied with the Open Meetings Law (R.S. 42:4.1, et. seq.) on at least one occasion. We noted that a meeting to discuss the former Mayor’s legal fees was held by the former administration in an executive session, even though the meeting did not appear to meet executive session criteria. Also, meeting minutes were not being posted on the Town’s website under both the former and current administrations. We were further informed by Town officials that “polling” and/or “walking quorums” may have occurred on a couple of occasions.

Incentive Pay: The Town made $109,725 of incentive payments to 162 employees and elected officials, consistent with its practice in prior years. However, the qualifications for receiving such payments were vague and did not appear to comply with the requirements as set forth in AG opinions (AG Ops 06-0321; 02-0315; 00-481; 99-137; 97-190; 95-210; 93-227; 92-295) and La. Const. Art. VII, §14(A).

Written Policies and Procedures: The Town did not have a comprehensive policies and procedures manual that addresses all critical functions of the Town, although it has begun working to develop such a manual. Written policies and procedures are necessary to provide a clear understanding of what should be done, how it should be done, when it should be done, and who should do it. In addition, written policies and procedures aid in the continuity of operations and for cross-training staff or training new staff.



Credit Cards: The Town did not have proper controls or documentation for its credit cards. We noted problems with the Town’s documentation, including missing credit/fuel card statements, missing receipts, missing documentation of business purpose for purchases, fuel card entry exceptions, and segregation of duties. Further, we noted that the Town paid approximately $311 in late fees and interest charges and inadvertently paid a credit card bill on behalf of the Concordia Economic & Industrial Development District.

The Town has one credit card, one Walmart store card, and 62 fuel cards for general Town use.

The Town also has another credit card and 34 fuel cards for police department use. However, the Town could not produce a complete listing of the persons to whom these cards were assigned.

Contracts, Leases, and Business Agreements: The Town did not maintain a complete listing of active contracts or leases and did not have formal contracts for certain business agreements, including its Town attorney. The Town’s previous administration also had only an informal agreement with the Economic Development Director and made payments for salary and benefits to the Director without a job description, work schedule, time sheets, or supervisory oversight, a practice that continued during our assessment. In addition, the Town did not monitor contract terms for existing contracts. We noted that the Town’s current administration could not produce evidence of deliverables under a marketing research contract with Retail Strategies, LLC, for which the contractor had been paid $37,500.

Payroll and Personnel: The Town did not have adequate segregation of duties relating to payroll. For example, the clerk and assistant clerk could add employees to the payroll system, input pay rates for employees, input hours worked into the system, generate pay checks, and distribute pay checks.

We also noted that the Town was not using its payroll system to track changes made to payroll data (e.g., pay rates); not all employees’ time sheets were reviewed or signed by a supervisor; leave was not accurately accounted for in some cases (i.e., we noted individuals that had a negative ending leave balance); performance appraisals were not being conducted for all staff; employees did not have current job descriptions; and personnel files were incomplete and disorganized.

Accounts Receivable and Collections: The Town did not maintain a comprehensive list of receivables, making it difficult for management to verify whether the Town was receiving all monies owed. We also noted problems with segregation of duties over cash collections and physical controls over cash.

Purchasing and Disbursements: The Town did not have proper segregation of duties over purchasing duties and did not have a formal, centralized purchasing system (i.e., each department has its own purchasing process).

Utility Systems: The Town’s previous administration lost more than $300,000 on its utilities (gas, water, electric, and sewer) based on the 2016 audit report. In addition, the Town did not have an ordinance setting forth utility rates and cut-off procedures. Finally, the Town’s current administration had a past-due utility receivables balance of more than $90,000 as of October of 2016 (60+ days overdue). Failure to collect money owed to the Town may be a violation of La. Const. Art. VII, §14(A).

Travel: The Town did not have sufficient documentation to show that all routine and non-routine travel was necessary and related to Town business; did not maintain travel logs in vehicles; did not rely on Fuelman card data to monitor vehicle use; and did not mark all Town vehicles as public vehicles. The Mayor also asked us for guidance regarding the best options for his municipal travel and vehicle.

Hydroelectric Plant Royalties: The Town’s ordinance over royalty revenues does not clearly outline the priorities relating to uses of the revenues. Town Ordinance No. 588 governs the use of revenues derived from the Town’s participation in the S.A. Murray Hydroelectric Generation Station. The ordinance directs that the hydro plant revenues may be used for seven purposes in order of priority, and some Town employees have questioned whether the revenues have been used in accordance with the priorities set forth in the ordinance. Based on our review of the ordinance and discussions with Town employees and the contracted manager of the funds, we cannot determine the proper application of the priorities because the ordinance language is not clear. The contracted manager also agreed that provisions were unclear and that the ordinance needed to be clarified.

Convention Center Losing Money: The Town continues to lose money on the operations of its Convention Center. The fiscal year 2015 annual audit report showed a loss of $659,000 for the Convention Center, and the fiscal year 2016 audit report showed a loss of more than $1 million. The Town’s 2017 final budget estimated $128,300 of revenue and $519,850 of expenditures, while the 2018 budget estimates $81,050 of revenue and $446,500 of expenditures.

FEMA Public Assistance Reimbursements: At the time of our visit, the Town had not pursued reimbursement for two open and obligated Public Assistance projects related to flooding events in 2011 and 2016. The Town has subsequently requested and received reimbursement of $167,660 of the total $257,443 estimated amount due to the Town.

Budgeted Positions: A Board member questioned whether it was allowable for the Mayor to hire positions that were not specific line items in the budget. From our review of state law and applicable AG opinions, we believe that the Mayor can hire positions that were not “specifically” provided for by line item.

 

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