by Mari Radtke
Justin Jacobsma of Williams and Company has been conducting the annual examination of the Paullina, Iowa books for many years. He estimated 15-20 years. He is very familiar with the financial condition of the community. Before he gave the council an overview of his findings from his examination of the 2024 books, he provided an outline of the process to determine how he does his work for the City and reminded everyone that the state does have requirements they an examination mub comply with.
In 2022 a new mayor, Brenda Ebel Kruse removed a number of long time employees and business partners with Paullina. One of the casualties was former City Clerk Sandy Fritz. That opening left the financial management of Paullina in jeopardy. Despite much reporting and cautioning, Jacobsma is now reported the effects of unskilled personnel handling the financial transactions of the city are showing up in the annual examination. He noted “some” of his findings.
The findings ranged from simple internal control issues common in small governments to a more concerning imbalance of cash reconciliations between city and bank balances. The imbalance has been know to city officials for at least 2 years. Jacobsma believes that the imbalance is that some transactions were perhaps categorized incorrectly. He also stated that since the imbalance is showing he believes transactions were posted, perhaps to a wrong fund. The amount of the imbalance at the time of the examination is $32,485.00.
Other specific findings are total receipts and expenditures were not being published; No date on reconciliation preparations; no independent sign off of the reconciliations, although that is now changed with Treasurer Maureen Thompson now signing off on the reconciliations. Jacobsma recommendated specific steps and checks for the treasurer.
The outstanding checks list may have some duplication due to the possibility that some transactions were cleared EFT or other electronic performance. The schedule of investments, limited to CDs in the case of Paullina, are not in balance. Jacobsma suggested interest income transactions are not posted in the City’s books. He also pointed out principle and interest payments amounts are correct in their posting total, but the breakdown is not correct.
A TIF certification made to O’Brien County is not correct. A second certification should not have been made, however he noted that city officials are working with O’Brien County officials to decertify and balance the second, inappropriate certification. He explained that might be done by lesser reimbursements to the city will come to balance the account. This would be the manner in how the city repays the county for the inaccurate second certification. This error shows in the annual Urban Renewal report to the State of Iowa. The FY 2024 report was due December 1, 2024 but not submitted until January 10,m 2025. The report shows incorrect beginning and ending TIF Fund balances which cannot be corrected in the report to the state but can be in subsequent years.
A deficit balance in the Capital Projects fund is on the books. Jacobsma said that is not uncommon in cities that use accrual methods of accounting. Paullina uses cash. He recommended a lot of documentation and support to do a journal entry to correct the balance. Also in the Capital Project fund, the budgeted amount was exceeded by $430,000.
A final finding presented by Justin Jacobsma was there has been some improvement, but more is needed in supervisory oversight and sign off of staff hours for payroll purposes.
Council held a long discussion for selection of official newspaper. Two publishers submitted: Marcus News, Inc. and Northwest Iowa Review. The Northwest Iowa Review is the current publication of choice by council. A new council is reconsidered the position with two of the three remaining council members still opposed to supporting local business. Dennis Werkmeister, the mayor pro tem selected for this year, gave good arguments for using the Marcus News, Inc. while newcomers John Funkhouser and Roxy Pottebaum listened. Continuing council persons Jean Unrau and Nicole Fintel Jacobs voiced opposition. Unrau was a council person during Ebel Kruse’s tenure as mayor. Fintel Jacobs was an ally in other arenas and when she was voted onto the council. A resolution appointing the Northwest Iowa Review was read but an amendment offered by Werkmeister was eventually approved in a 3-2 vote to include Marcus News, Inc. as an option for legal publications. The amended resolution passed 4-1 with Fintel Jacobs opposing.
Committees appointments were made and a reminder of budget workshops on January 14 and 26, both at 5:30 was made.