Accountant unable to reconcile Menahga’s ledger, bank activity

The Menahga City Council agreed to additional accounting and internal control examinations by Eide Bailly LLP at their May 10 meeting. It passed on a 4-1 vote, with council member Art Huebner opposed.


Forensic accounting will continue at Menahga City Hall.

The Menahga City Council agreed to additional accounting and internal control examinations by Eide Bailly LLP at their May 10 meeting. It passed on a 4-1 vote, with council member Art Huebner opposed.

In March, Eide Bailly was hired to compare the city’s general ledger with bank account activity between Nov. 1, 2020 and Jan. 31, 2021.

After examining the Dec. 2020 general ledger, Eide Bailly identified $481,930 outstanding credits and $1,832,393 outstanding debits that they were unable to reconcile to the city’s bank account.

They also identified $99,701 in outstanding bank deposits and $287,983 outstanding bank disbursements that they were unable to reconcile with general ledger entries for the same month.


The city uses one checking account for its general, municipal liquor, COVID-19, economic development revolving loan fund sewer and water funds.

In a letter dated May 10, Eide Bailly wrote that the need for more information and the city’s budget limitation of $5,000 for the project meant they were unable to complete the reconciliation.

“Based on our examination, a detailed breakdown of the source of cash deposits in addition to a thorough examination of point-of-sale records is required to reconcile cash. A cash deposit detail could not be provided upon request as the city does not readily maintain this type of information,” the letter stated.

The letter continued that the city’s general ledger for each fund “does not provide enough detail to reconcile which deposits apply to payments received. Additionally, cash from each fund appears to be commingled and is not itemized within the accounting. For these reasons, we are unable to provide a complete reconciliation to sufficiently identify accounting errors or other anomalies.”

Eide Bailly recommended an accounting examination of additional months to reduce the number of outstanding items. The city will be billed in increments of $5,000.

The firm suggested an examination of the city’s current policies and procedures “to identify weaknesses within the internal controls.” The city will be charged a flat fee of $12,500.

Coding errors within the city’s accounting software, called Banyon, are the issue, City Administrator Curt Kreklau said. “We know how much money we have. We know where it’s at.”

Those errors can be fixed now, Mayor Liz Olson pointed out.


Kreklau recommended delaying further examination, and Huebner agreed.

Olson suggested that the city auditor work with Eide Bailly during the 2020 audit, which was set to begin this week.

Council member Durwin Tomperi asked about cash deposits co mingling with all revenue sources. “How do you decipher where they all go?”

Kreklau said the point-of-sale system is supposed to portion that out. Eide Bailly is referring to a receipts distribution report, which doesn’t match, he explained. “So they’ve got a lot of work to find those individual transactions.”

Olson asked about cash receipts, “so why wouldn’t you just send that in to them.”

Kreklau said they did share the information with Eide Bailly.

“I feel we can’t stop now,” Olson said, making the motion to approve further investigation.

Tomperi said, “If forensic auditors can’t reconcile it, and you’re blaming Banyon on data entry not jiving, why wouldn’t we go through the process so we get a clean start and move forward?”


Tomperi said it was a cheap investment in the long term, noting he was in business for 30 years and has looked at hundreds of financial statements. “If I was running a business with this kind of data coming back from an forensic auditor, I’d be running scared and my banker would be pulling me by the ears and saying, ‘What’s going on here?’”

Kreklau said, “I want this fixed, too.”

In related business, the council approved a debt study to be completed by Ehlers Inc. A previous study was completed in 2015. Ehlers will prepare cash flow projections for each of the city’s general obligation bonds.

Second COVID outbreak

The council learned there was a second outbreak of COVID-19 at Greenwood Connections.

At the time of the council meeting, there were two residents and five staff members who tested positive.

Greenwood Connections Administrator Laura Ahlf noted that both residents were fully vaccinated and doing well. One had mild symptoms, the other was asymptomatic.

In her report, Ahlf wrote that unvaccinated staff complained to the Greenwood Connections Board who felt “that they are being blamed for the recent outbreak and shamed by the certificates on the wall showing who has been vaccinated and the facility is pushing the vaccination on them.”

Ahlf reported there is only a 30 percent vaccination rate among staff. The certificates are not to shame anyone, she noted, adding some facilities are posting certificates on their Facebook pages. The facility is following Minnesota Department of Health guidelines and the facility is expected to educate staff.


“We will continue encouraging vaccines, as we are expected to do so,” Ahlf wrote.

In other business, the council did as follows:

  • Approved spending up to $700 to complete a one-mile biking and hiking trail on city property, northwest of the city’s compost pile. While an easily navigable trail, Tim Ellingson said users would be willing to sign liability waivers.

  • Accepted Ewanika’s Unlimited Repair LLC’s estimate of $9,000 to $11,000 to repair the city’s street sweeper.

  • Approved the purchase of four outdoor security cameras, at a cost of $4,073, from West Central Telephone Association. Two will be placed at the city beach and two at the city campground.

  • Approved the purchase of a pipe rack and tool box for the city’s utility truck, not to exceed $4,000.

  • Approved electrical work at Greenwood Connections, estimated at $35,800 by Barberg Engineering.

  • Denied a counter proposal from Hunterville Township for a fire contract.

  • Heard from local realtor Joannie Liimatta that Wild Walleye is listed for sale.

Shannon Geisen is editor of the Park Rapids Enterprise.
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