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July 24, 2024

Audit: County Treasurer Lacks Skills And Abilities To Perform Job –

By John Kraft & Kirk Allen

On October 1, 2023

Franklin County, Ill (ECWd) –

Franklin County (Illinois) recently completed a Forensic Audit (read it here) of the Franklin County Treasurer’s office.

According to the auditor, “The county treasurer lacks the skills and abilities to successfully perform the job duties required in this position.”

The Franklin County Board had frequent issues and delays in receiving financial reports from the Treasurer for around two years, including financial reports to the external auditor, which resulted in the Annual Financial Reports being submitted more than six months after their due date to the Illinois Comptroller.

The board directed a forensic accounting be completed on the treasurer’s office.

Here are some of the auditor’s findings:

  • Treasurer’s office lacks sufficient personnel to perform the duties of the office
  • Unable to reconcile bank accounts within a reasonable time, if at all
  • Treasurer resists others who want to review his work
  • Treasurer ill-prepared to answer questions at meetings, outdated information provided to board members
  • Checks are signed electronically, which could permit checks being “signed” without approval of County Clerk
  • No approval process to add vendors – when coupled with electronic signatures it could create a problem
  • No county board oversite because of the Treasurer being uncooperative and unresponsive to requests for financial records
  • Treasurer reconciles the accounts of the checks he writes from
  • No random audits to prevent errors and fraud
  • Treasurer routinely delay providing financial information to the county’s external audits for the annual audits
  • Treasurer delayed and made it difficult to provide financial information to the forensic auditors
  • Information, once provided, was unorganized, and not relevant to the analysis, causing more time and work to be expended
  • Consistent errors and misstatements by the Treasurer since he took office
  • Incorrect journal entries, funds deposited into wrong accounts, and significant shortfalls in bank accounts
  • Unusual transactions made by the Treasurer at the end of the audit period
  • Checks not written in sequential order
  • Checks written from treasurer’s office written back to treasurer’s office totaling $4,320,585.37
  • Checks from county residents not deposited on a timely basis
  • Undeposited checks found in Treasurer’s desk drawer
  • Treasurer denied auditor’s request to let a former treasurer’s employee (still a county employee) extract data for the audit
  • Treasurer could not answer basic questions of the county board
  • Treasurer lacks sufficient government accounting knowledge and education
  • Treasurer lacks organizational skills
  • Limited segregation of duties
  • Failed to maintain positive cash balances in several county bank accounts
  • Property tax distribution not paid within 30 days of installment due date

Uninvestigated information the auditor was made aware of:

  • The IMRF pension account had a negative balance and had been put in the wrong fund. This account should never have a negative balance
  • The contingency account, which is not a cash account, was shown as drawing interest, even though it is only a ledger account and is not in a bank or other :financial institution. There was also an unusual in-and-out journal entry between the master account and a subaccount
  • The State’s Attorney Anti-Crime Fund, which usually has a balance of approximately$500,000, is now down around $266,000. In January 2022, the balance was around $470,000
  • The Sheriff’s Forfeiture Account has incurred around $1,160 in account fees through the end of 2022, even though the bank has previously reversed these charges when contacted. Because of this, the Sheriff’s Office has asked to close the current account and move it to a bank where the Sheriff’s Office can monitor it The Sheriff and the Board Chairman all approved the transfer, but the Treasurer vetoed the move
  • Made payment not authorized by the Board:  Most recently, the Chairman of the Board advised that the Treasurer has paid off a multimillion-dollar debt without Board approval. The interest rate paid on that debt was substantially below the interest rate the County was earning on the money. As a result of paying off that debt, the County will lose approximately $100,000 per year in additional revenue

Auditor’s quote: “One need not look further than the infamous fraud perpetrated on Dixon, Illinois to see how catastrophic the lack of oversight can be. Rita Crundwell embezzled approximately $54 million while she was the Comptroller and Treasurer of Dixon, Illinois.”

Incidentally, this auditor is not listed in the database to conduct audits in Illinois, but that does not mean they cannot conduct business in Illinois. We are attempting to verify if the Illinois state’s database is correct.

 

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3 Comments
  • John K
    Posted at 23:03h, 01 October Reply

    “Limited segregation of duties”

    That is auditor-speak for “You need to add more administrative staff.” Auditors instinctively do not like small agencies / boards / commissions / departments / units of governments.

  • Michael Hagberg
    Posted at 09:37h, 02 October Reply

    Thank you for performing this oversite of out government officials.

  • P. Willie
    Posted at 07:42h, 01 November Reply

    It should be noted that this was not an audit and the consultant was very clear to indicate as such. It was a forensic analysis performed by a consultant which is very different. There were quite a few mistakes in the report made by the author and a lot of innuendo. If the County Board had any concerns of financial malfeasance within the Treasurer’s Office then the State’s Attorney should have been contacted and a court order issued to produce the necessary documents. Nevertheless, like most of the elected positions within the state, there is no statutory requirement for experience or ability to get elected as a County Treasurer in Illinois, It is customary to rely on the incumbent staff to provide the support and expertise to run an office with a newly elected official. The guy who was elected was/is an accountant, on paper, to a voter, it appears that he had the qualifications.

    The best thing the County Board could do to protect the County’s assets would be to hire a qualified staff auditor as an employee of the County Board office to perform a constant review of the transactions of the County Treasurer’s Office and report back to the Board. As for the question, “who’s gonna pay for this?”, consider it cheap insurance.

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