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Nevis audit findings suggest changes in paperwork

By Jean Ruzicka

The Nevis Council reviewed the 2014 audit this week, learning the general fund saw no major changes and cash balances are going up annually.

General fund receipts totaled $351,866; disbursements were $333,462 last year. The water and sewer funds “saw slight losses, but are much better than previous years,” Jon Roscoe of Miller McDonald told the council, attributing the 2013 mid-year rate increase.

The general fund’s main revenue sources are property taxes and Local Government Aid, $201,144 and $53,936, respectively in 2014. LGA has remained relatively flat recently, while property taxes have increased $42,252, 26.6 percent.

The general fund’s main cost to operate is payroll, wages and benefits consisting of $115,976 or 35 percent of total disbursements.

The municipal liquor store’s sales and gross profits were up. Gross profit on sales was $274,084 in 2014, compared with $253,276 in 2013. The liquor store’s “net position” at the beginning of the year was $127,377 and $143,784 at year’s end. Gross profit has increased each year over the past five years.

The liquor store’s gross profit is 43.9 percent, compared with the state average of 40.8 percent. Operating expenses percent of sales is 36.3 compared with the state average of 36.9

In addition to the auditor’s report, a letter included “opportunities for strengthening internal controls and operating efficiency.”

The auditors stipulated “restriction on use” of the document, stating, “The information is intended solely for use of the members of city council and management of the city of Nevis and is not intended to be and should not be used by anyone other than these specified parties.”

The memos were given to council members prior to the meeting. But the addendum was not included in documents provided to either newspaper. Administrator Carol Fridgen stated the contents were not intended to be a discussion item.

But Minnesota Newspaper Association attorney Mark Anfinson said, subsequent to the meeting, neither Miller McDonald nor a city clerk has the authority to override state law on newspaper and public access to documents that have been distributed to council members at a public meeting, whether they are discussed or not.

Neither certified public accountants, nor clerks, have the authority to override state law, he said.

The documents were subsequently presented to both reporters by council members.

The suggestions include developing a policies and procedures manual pertaining to the city’s finance and administration.

The “other audit findings and issues” state, “The city is not following the vacation personnel policy. The policy allows for a maximum carry forward of 80 vacation hours from year to year. One employee was allowed to carry forward 120.5 hours of vacation on their anniversary date.”

“Liquor store inventory counting” also came under scrutiny.

“The sheets used to document the inventory counts completed by staff included the quantity on hand. Each employee checked the item they counted against the perpetual system quantity on hand. These activities should be segregated to reduce the risk of errors or fraud,” the report states.

“We recommend that the employees receive a report with only the items being counted. Then a manager or a separate employee should compare the quantity counted against the perpetual quantity on hand.”

“Outstanding checks” were also among the “findings.”

“The city’s bank reconciliation includes checks that have been outstanding for greater than one year. The city should follow up on old reconciling items on the bank reconciliation and determine if any checks need to be reissued,” the addendum states.

“Also, the city needs to comply with Minnesota’s escheat laws, where unclaimed wages outstanding greater than one year and checks outstanding greater than three years are remitted to the state of Minnesota for holding.”

In other action, the council:

n Approved extending the Nevis Liquor Store’s on-sale to be open Sunday, July 5 for the pig races and to extend sales to Muskie Park.

But similar action for the July 24-25 Muskie Days was tabled, pending discussion on controlling entries and exits for those carrying liquor. The council asked for a C&C representative to attend the next meeting.

n Approved the Nevis Firepersons Relief Association discontinuing sales of pull tabs at the Iron Horse Bar and Grille, chief Kerry Swenson indicating it is “not cost effective.”

n A resolution allowing the Park Rapids Amateur Hockey Association to conduct pull-tab gambling at the Iron Horse failed.

n Approved hiring the band Body Shots for $600 Saturday, Aug. 1 to entertain during the liquor store’s Community Customer Appreciation Day.

The council also okayed hiring a band at a cost of up to $1,500 on the 4th of July. The band would play from 8 p.m. to midnight.

n Reported a liquor store loss of $3,670 in April.

n Learned the Laundromat was burglarized, information being sought, deputy Josh Oswald reported.

n Approved a quote of $2,180 from Forest and Floral Garden Center to complete city office landscaping.

n Agreed “to rebuild Lowell Koebnick’s road,” Wildwood Avenue, which is in need of Class 5 gravel.

n Declined a donation request from members of the Nevis Family, Community and Career Leaders of America, four of whom are traveling to Washington, D.C. in July to compete at nationals.

“It’s not in the budget,” mayor Chris Norton said. “We will have to decline. But we wish them well.”

n Approved Robert Gilmore and Mathew Chafos as new members of the Nevis Fire and Rescue Department.