The results of an analysis of the records, finances, and operations of the city of Woolstock, which were tested as required by state law, were recently released by the independent accounting firm T.P. Anderson & Co., FC of Humboldt. The report covers the one year period between July 1, 2022 through June 30, 2023.
While these tests do not constitute a formal audit, they employ a similar methodology, and are performed “in accordance with attestation standards established by the American Institute of Certified Public Accountants and the standards for attestation engagements contained in Government Auditing Standards, issued by the Comptroller General of the United States,” according to the report.
The examination zeroed in on several serious deficiencies in ethical and competent management and violations of the law, including:
– A lack of segregation of duties.
– A July 12, 2022 meeting of the City Council which went into closed session without including in the minutes the justification for the closed session.
– Unreconciled bank and book balances.
– The lack of any formal policy regarding use of the city credit card.
– The lack of any written investment policy as required by Iowa law.
– Financial reports lacking any budget comparisons.
– Well over half a million dollars in fund deficits.
– Disbursements which exceeded the budgeted amounts in violation of Iowa law.
– Debt service payments falsely reported as Public Safety expenditures in the City’s Annual Financial Report (AFR).
– A false declaration of the city’s indebtedness, which was recorded in the AFR as $0, despite an outstanding general obligation loan the city still holds.
– A $60,975 transfer of funds from the General fund to the Debt Service fund without completing a resolution as required by Iowa law.
– Utility billings that were not reconciled, and went untested for accuracy, as well as electrical rates being used in the city’s billing software which did not match the rates approved by the City Council.
– Transactions for labor, snow and rock hauling between the city and City Councilman Troy Kastler, totalling more than twice the legal limit of $6,000, above which transactions may (but do not necessarily) constitute a conflict of interest.
– A lack of documentation of City Council resolutions authorizing pay rates for any of the city’s employees.
– No specification in the city’s Code of Ordinances providing attendance requirements for the Council or the Mayor, or the meeting types for the Mayor.
– Findings that some City Council members had been paid for meetings which they did not attend, and that Mayor Bruce Rholl was paid for meetings of organizations to which the city had not appointed him.
– The lack of a formal employee manual for city workers.
For each of these points, the full report offers greater detail and generally common sense solutions.
As a broad overview, the report’s findings raise serious questions about the city of Woolstock’s accounting practices, whether funds may have been either deliberately or unintentionally misappropriated, whether there are conflicts of interest occurring, and whether the residents of the city are being improperly charged – either overcharged or undercharged – for city services.
A press release issued by the accounting firm indicated that “The specified tests performed and the findings related to those tests are on file with the City of Woolstock, the State Auditor’s office, and on the Auditor of State’s website st https://auditor.iowa.gov/audit-reports.”
