County receives 2024 audit

Iowa State Auditor Rob Sand recently released the 2024 audit report for Montgomery County.
No issues of non-compliance were noted in the 2024 audit report.
The County’s revenues totaled $15,960,348 for the year ended June 30, 2024, a 14.6% increase over the prior year. Expenses for county operations for the year ended June 30, 2024 totaled $14,200,665, a 12.1% increase over the prior year. The significant increase in revenues and expenses is due primarily to an increase in various culvert project expenses and related reimbursements from the Iowa Department of Transportation.
Sand reported 13 findings related to the receipt and expenditure of taxpayer funds. The findings address issues such as lack of segregation of duties, material amounts of capital asset and infrastructure additions and deletions, accounts receivable and accounts payable not properly recorded in the county’s financial statements and lack of proper bank reconciliations. Sand provided the county with recommendations to address each of these findings. Eight of the findings pertaining to the county were repeated from the prior year. The county board of supervisors is tasked with a fiduciary responsibility to provide oversight of the County’s operations and financial transactions. Oversight is typically defined as the “watchful and responsible care” a governing body exercises in its fiduciary capacity.
County Auditor Jill Ozuna broke down the finding and shared the county’s responses to the findings, which had all been accepted by the state auditor’s office.
“Segregation of duties is something we all have problems with because we’re a small county. Every small county has that problem. We just do our very best to make sure that we are doing our checks and balances the best we can to meet those needs the best way we can.”
Under financial reporting, the state auditor noted a deficiency of internal control over financial reporting exists when a design or operation of a control does not allow management or employees in the normal course of performing their assigned functions to prevent or detect and correct misstatements of the financial statements in a timely basis. The county policies did not require and procedures had not been established to require independent review of year and cut off transactions and capital asset transactions to ensure the county’s financial statements are accurate and reliable. The state auditor’s conclusion was for county officials and management of the conservation foundation should continue to review their operating procedures to obtain the maximum internal control where possible, documented by signatures, initials or other support to document segregation of duties within the offices. Ozuna responded to the auditor that her office will work with departments to make sure capital asset additions and deletions were automatically recorded, and it was accepted.
Under bank reconciliations, the criteria and effect internal control system provides for internal controls related to ensuring proper accounting for all funds by maintaining appropriate accounting records and reconciling book and bank balances. Bank reconciliations can help ensure the accuracy of reported amounts. The monthly reconciliation of book to bank balances were prepared by the treasurer’s office from July, 2023 through November, 2023. However, these did not properly reconcile. In addition, bank reconciliations were not reviewed periodically by an independent person for proprietary. Cause policies have not been designed and procedures have not been implemented to ensure bank reconciliations are properly prepared.
“The recommendation was to improve financial accountability and control and monthly reconciliations of the book and bank balances should be properly prepared. Reconciliations should be reviewed by an independent person and the review should be independent, should be documented by the signature and initials of the reviewer and the date of the review. The bank reconciliation review should include evidence that the bank balances and reconciliation items were verified by the independent reviewer response. The treasurer’s office is now preparing monthly bank reconciliations, which are reviewed by the auditor’s office,” explained Ozuna.
The report also noted delinquent property tax reconciliations. Delinquent tax reconciliations were not prepared due to policies not being established and procedures having not been implemented. To reconcile delinquent property tax, to ensure the accountability of property tax collections and receivables.
“The recommendation was that delinquent property tax reconciliations should be prepared and independently reviewed. And differences investigated and resolved in a timely manner. The response, the treasurer’s office found the report is run correctly in the solution software. However, it needs to be run again as it changes to reflect the correct years, and that response was accepted,” Ozuna stated.
As for reconciliation of public health, billings, collections, and delinquent accounts, Policies have not been established and procedures have not been implemented to reconcile billings, collections, and receivables, and maintain delinquent account listings, which could result in unrecorded or misstated revenues and receivables. The recommendation was that the public health department should develop procedures to reconcile billings, collections, and receivables. A listing of delinquent accounts should be prepared on a monthly basis. The department should designate an independent person to review the reconciliations and monitor delinquents. The review of the reconciliations should be documented by the signature and or initials of the reviewer and the date of the review.
“I responded to the state auditor that the Montgomery County Public Health coordinator, Samantha Beeson, is working on new reconciliations that will be acceptable for the audits, which was accepted,” commented Ozuna.
Other findings in the report highlighted certified budget disbursements during the year ending June 30, 2024 exceeded the amount budgeted in the debt service function prior to budget amendments at year end. In addition, disbursements in certain departments exceeded the amounts appropriated prior to the budget amendment at the year end.
“The auditor’s recommendation was that the budget should have been amended in accordance with chapter 331.435 of the Code of Iowa before disbursements were allowed to exceed the budget. Chapter 331.434(6) of the code of Iowa authorizes the board of supervisors by resolution to increase or decrease appropriations to one office or department by increasing or decreasing the appropriation of another office or department, as long as the function budget is not increased. Such increases or decreases should be made before disbursements are allowed to exceed the appropriation. My response was that the Board of Supervisors will thoroughly review month-end expense reports and do a budget amendment if needed, which was accepted,” Ozuna said. “ I’ll also note though that the debt service amount that went over was a fee amount, and that was because when we did the tuck pointing, that was budgeted in that current fiscal year and not the prior fiscal year, so it was missed in that year.”
The audit report also highlighted questionable expenditures. These expenditures are detailed as follows: Card services, late fee for interest was $27; UPS, late fee and interest, $2; Hy-Vee, napkins, foam cups, and plates, $60; Ideal instant hot, cold water for employees, $65. Amazon ice maker for $90. Ozuna broke down the expenditures.
“No one should ever assess late fees to us, regardless if the payment’s late or not. However, sometimes it slips and it happens. The Hy-Vee cups, and plates, I don’t remember which office that was. The Ideal water, same thing, it was another department that has potable water. So it’s misconstrued whether or not that meets public purpose, because there is potable water at that location. It’s the same thing with the Amazon ice maker. In any department that would not meet public purpose, unless maybe it was for health or something, I don’t know. But in their opinion, that doesn’t meet public purpose,” Ozuna advised. “The recommendation is that the board of supervisors should determine and document the public purpose served by these types of expenditures prior to authorizing any future payments. If this practice is continued, the county should establish written policies and procedures, including requirements for public purpose documentation. In response, I said that we will document these in the future.”
No expenditures of county money or travel expenses of spouse or county official or employees were noted. No business transactions between the County and County officials or employees were noted either.
The state audit did call into question restricted donor activity. Per chapter 68B of the vote of Iowa, county officials are prohibited from receiving and soliciting gifts from a restricted donor or a party to any one or any combination of sales, purchases, leases, or contracts to, from, or with the agency in which the donee holds office or is employed.
“According to the audit, the county general assistance department received free items such as cookies, moisturizing hand soap, or a mystery gift of up to $19.99 value with the purchase of office supplies. These items are susceptible to personal use. The recommendation was that the county should consult with a legal counsel to ensure the Iowa gift law is adequately communicated and understood by all staff. In addition, the county should establish policies and procedures regarding proper uses of these types of items and ensure additional oversight to be performed to monitor compliance. Our response was that we will review our policies and procedures countywide and make appropriate changes,” Ozuna explained.
There were no instances of noncompliance with the deposits and investment provisions. Surety bond coverage of the county officials and employees is in accordance with the statutory provisions. As for board minutes, no transactions were found that should have been approved in the board minutes, but were not. However, meeting minutes from January, 2023 through 2024 were not signed by the board of supervisors. The recommendation was that meeting minutes should be signed to authenticate the official record, and in response, the state auditor was advised that past meeting minutes will be signed upon approval of the board of supervisors.
 For the year ending June 30, 2024, the county auditor did not prepare a reconciliation for each city to reconcile TIF receipts with total outstanding TIF debt. To assist in meeting this requirement, the state recommended the county auditor should prepare a reconciliation of each city’s TIF receipts and certified TIF debt. In response the county auditor will work to prepare annual reconciliations of tax increment financing for each city in accordance with code. It was also recommended that the county treasurer’s office should obtain and retain an image of both the front and back of each canceled check as required. Response, the treasurer’s requested the bank to add the image of the back of the checks to banking statements. Ozuna said this has been corrected as of January, 2025.
For the year ending June 30, 2024, the county’s GAAP basis annual financial report included material errors, revenues, expenditures, assets, liabilities, and fund balances were reported inaccurately with the general funds, special revenue funds, and debt service funds. It was recommended that the county should establish procedures to ensure the annual financial report submitted materially agreed to county records.
“My response is that the county will establish and follow procedures to ensure financial reporting is prepared in conformity with general accepted accounting principles. For 2024, due to a lot of things the accountants had to do for state auditors, getting all the other things done, they didn’t get our accruals done on time, that’s why our GAAP AFR is inaccurate because it wasn’t completed until the end of January. That has since been resolved. Our accruals were actually done November 26 last year,” stated Ozuna.
The last item noted was the employee group health fund. For the year ending June 30, 2023, claims exceeded 2% of the general fund budget. As a result, the county was not exempt from filing requirements for the year ending June 30, 2024. The county did not obtain an actuarial opinion and did not file a certificate of compliance, actuarial opinion, and an annual financial report with an insurance commissioner as required by 509A.15 of the code of Iowa. The recommendation, the county should establish procedures to ensure compliance with chapter 509.15 of the code of Iowa.
In response, the county will make every effort in the future to comply with chapter 509A.15 of the code of Iowa concerning all actuarial opinion and county’s partially self-funded health insurance benefit plan, which was accepted.