Lack of Internal Controls Results in Multiple Findings in Put-in-Bay Audit
For Immediate Release:
July 28, 2020
Lack of Internal Controls Results in Multiple Findings in Put-in-Bay Audit
Columbus – Auditor of State Keith Faber’s Office today released the 2018 Village of Put-in-Bay (Ottawa County) financial audit. With multiple findings from prior audits still not corrected, the Village of Put-in-Bay piled on numerous more findings for abuse, non-compliance, material weakness, a significant deficiency, and findings for recovery.
The volume and variety of findings highlights a lack of internal controls in the Village.
In these instances, the findings for abuse showed that the inability to fulfill duties in a timely manner cost taxpayers excessive amounts of money. While no laws were violated, these were instances of gross neglect to the Village. For example, the 2018 contract with BlueInGreen, LLC stated that if the Village did not sign the contract by June 22, 2018, the fee would increase $10,000 per month. The Village did not sign the contract until June 27, costing an additional $30,000. Additionally, in 2015, the Village received notice of a class action lawsuit that indicated the Village was eligible for a settlement. The Village just needed to submit the claim form by October 12, 2016 to receive up to $201,256 in the settlement agreement. The former Village Fiscal Officer did not inform the Council of the paperwork and it was not discovered until their termination in May 2018.
Furthermore, the report contained the following findings for recovery:
Finding for Recovery Against Former Village Administrator - $3,245
Robert Knauer was the Village Administrator until April 1, 2016 when he became Utility Assistant, as approved by the Village Council on February 8, 2016 and the Council approved a rate of $25.71 per hour for the position.
At the April 11, 2016 Council meeting, Council changed the rate of pay for Knauer to $18.72 via motion. At the January 6, 2017 Council meeting, they approved a three percent cost of living increase to all full-time employees bringing Knauer’s pay up to $19.28, and at the December 11, 2017 meeting, Council approved a rate increase for him to $21.00 due to obtaining his Class II license. At the February 14, 2018 Council meeting, Council motioned and passed a retroactive approval of Knauer’s pay to $25 per hour from June 1, 2016 through August 2, 2017 and $25.71 per hour from August 3, 2017 to present.
During fiscal year 2018, there was an error in calculating the payment of retroactively approved pay to Robert Knauer for the period of June 1, 2016 through February 14, 2018. Additionally, there was an error in calculation when his severance payment for unused sick time was being paid-out upon his retirement on April 27, 2018. As a result, he was over-compensated $3,245.
A finding for recovery for public monies illegally expended was issued against Robert Knauer, in the amount of $3,245 in favor of the Village of Put-in-Bay water operating ($3,127) and sewer operating ($118) funds, respectively.
Former Fiscal Officer Kelly Niese authorized the direct deposit resulting in the improper retroactive payment and Mayor Jessica Dress and Council Member Kelly Faris authorized the disbursement resulting in the improper severance payment.
Robert Knauer reimbursed the Village through a personal check on July 7, 2020 ($3,245).
Finding for Recovery for Improper Reimbursements - $1,640
According to the Village of Put-in-Bay Personnel Policy and Procedure Manual, the Village is to pay for or reimburse employees for reasonable and necessary expenditures made by employees while on official
Village business within the travel policy requirements. The policy also requires, in pertinent part:
- Prior travel approval from the Mayor’s Office is required for all travel done by Village employees, elected officials or appointed officials of the Village of Put-in-Bay;
- Overnight accommodations when traveling within a 75-mile radius of the Village will not be approved;
- Expenses incurred for meals with an overnight stay outside of a 75-mile radius while on official business will be reimbursed at actual cost with the approval of the appropriate administrative official. Such approval must be granted prior to the employee incurring the expense;
- An employee is eligible for such reimbursement only when travel has been authorized in writing by the appropriate administrative official, and when the travel extends overnight; and
- Non-allowable expenses include room service charges, tips in excess of 15% of the meal cost, barber, beauty parlor, or toiletries, and any otherwise allowable expense where no receipt is provided as documentation by the employee.
Employees were reimbursed for travel and training expenses in the total amount of $1,640 during 2018 that were not made in accordance with the applicable Village policies outlined above and do not serve a proper public purpose.
A finding for recovery for public monies illegally expended were issued against Carson Frase, Karen Goaziou, Kelly Niese, Matthew Mariano, Michael Woodside, Paul Steven Riddle, and Scott Sneller in the cumulative amount of $1,640, in favor of the Village of Put-in-Bay general ($1,612), water operating ($14) and sewer operating ($14) funds.
Under Ohio law, any public official who either authorizes an illegal expenditure of public funds or supervises the accounts of a public office from which such illegal expenditure is strictly liable for the amount of the expenditure. In this case, Fiscal Officers Kelly Niese, Joy Cooper, and Courtney Blumensaadt, Council Members Kelly Faris, Bernard Michael McCann, Jeffery Koehler, and Phillip Boyles, and Mayor Jessica Dress authorized disbursements resulting in the improper payments.
Karen Goaziou reimbursed the Village through personal check for her amount due on July 8, 2020 ($356).
Finding for Recovery Improper Credit Card Purchases - $4,403
The Village’s “Credit Card Policy” provides that “the purpose of the credit card shall be in the best interests of the Village of Put-in-Bay to clearly show expenditures and documentation of purchases” and that “valid and legal expenditures of the Village of Put-in-Bay may be incurred through the use of a Credit Card.” The policy further requires that “all expenditures through use of a credit card must be documented and forwarded to the Clerk-Treasurer…and the receipt must clearly show the expenditure and signature of the individual using the credit Card.”
The policy uses the same requirements for travel expenses while on village business as bulleted above. In addition, late fees, penalties and/or interest charges on a credit card do not serve a proper public purpose.
Employees made several unallowable purchases using the Village’s credit cards issued to the Fiscal Officer, Chief of Police, and Village Administrator in the total amount of $4,403 during fiscal year 2018. The disbursements were not within the applicable Village policies outlined above as they were related to travel within 75 miles of the Village, including tips in excess of 15% on meals while traveling, unallowable expenses such as unsupported disbursements and room service charges, as well as late fees, penalties, and interest on the credit card.
A finding for recovery for public monies illegally expended was issued against Courtney Blumsensaadt, Glenn Basting, Karen Goaziou, Kelly Niese, and Paul Steven Riddle in the cumulative amount of $4,403, in favor of the Village of Put-in-Bay general ($4,005), mayor’s court computer ($16), water operating ($209) and sewer operating ($173) funds.
Fiscal Officers Kelly Niese, Joy Cooper, and Courtney Blumensaadt, Council Members Kelly Faris, Bernard Michael McCann, Jeffery Koehler, and Phillip Boyles, and Mayor Jessica Dress authorized disbursements and are jointly and severally liable in the amount of $4,403.
Karen Goaziou reimbursed the Village for the amount she owed through personal check on July 8, 2020 ($79).
A full copy of this report is available online.
The Auditor of State’s office, one of five independently elected statewide offices in Ohio is responsible for auditing more than 6,000 state and local government agencies. Under the direction of Auditor Keith Faber, the office also provides financial services to local governments, investigates and prevents fraud in public agencies, and promotes transparency in government.