Marion Council receives gift, hears of audit problems

A $75,000 gift was bequeathed to the Marion Municipal Airport for a new office building, and city officials learned more about the details during their meeting Tuesday, June 1.

Ty Zeiner, airport board chairman, said the donation was from the Pearl Baxter Estate.

Before her death, he said, Baxter?s primary idea was to build a new office building.

?Pearl had a few conditions, and we talked about them before she died,? Zeiner said.

She wanted the new building named in honor of her husband, George.

In addition, she wanted the building arranged so that it had two restrooms, one for men and one for women, both handicap accessible, a lounge/office area, lockers, and heating and air conditioning.

?She also wanted the city to provide some things,? he said.

Among those items the city would be providing included removal of the old structure, concrete pad for the new structure, providing electrical, water and plumbing and a built-in display case to house her husband?s aviation artifacts.

?That is quite a project,? said Mayor Mary Olson. ?Would that ($75,000) cover it??

Zeiner said he had checked around and the building and other costs would be less than the donation amount.

?I also checked with the Kansas Department of Transportation, and we could put the new building where the existing one is now,? he said.

Councilor Bill Holdeman asked if the gift is going to the airport board or the city.

City Attorney Dan Baldwin said he hadn?t seen the actual trust document, but Baxter was specific as to where the money would go, which was to the airport board.

?Realistically, where (the money) should or shouldn?t have gone doesn?t matter as long as we are all working together,? he said.

City Administrator David Mayfield said he cannot foresee any problems with razing the old building or labor costs on concrete pad, water, electrical and plumbing.

The concern would be that no money was budgeted for the project this year.

Baldwin said he would suggest the airport board present the council with a plan, and the city and board could consider what the rules would be.

Councilor Steve Smith asked about lengthening the runway as part of the overall improvements.

Zeiner said one of the problems with lengthening the runway is that neither of two landowners will sell their property on either end.

?We knew what we wanted, but couldn?t get the property,? Baldwin said.

The selling prices were ?out of this world,? he said.

Zeiner said he could get a proposal together in 30 days and would bring it back at that time.

As for bidding the project, because the donation would be part of the city?s funds, three bids would be required by statute.

However for purposes of the initial proposal, one bid would suffice.

Audit report

Bill Glanzer with Adams, Beran, Brown and Ball, the city?s auditing firm, provided its findings for the year ending Dec. 31, 2009, with a significant deficiency.

In its report, Glanzer noted the city does not maintain a formal accounts payable/encumbrances tracking system.

?On the last day of the month, the city creates a worksheet of invoices on hand that are unpaid,? the report stated.

?However, the city does not add subsequent invoices received for the prior period or track encumbrances approved by the city council after the cutoff date.?

For the current audit year, this caused a material misstatement in the financial statements of $100,802.

?We recommend the city create and maintain a formal accounts payable/encumbrances listing and post this information to its financial statements at year end.

Glanzer said while this is less severe than a material weakness, it was important enough to merit attention.

?We consider the following deficiency in the city of Marion?s internal control to be a significant deficiency,? he reported.

Another area of the audit that requires attention in the future dealt with ending balances and the need for some accounts to be zeroed out. For example, in the bond and interest fund, a deficit of $134 was on the books at year end, along with a $3,116 deficit in the utility fund.

While the audit revealed no money misappropriated, Glanzer did suggest the city make sure to have enough money in its accounts so that no deficit occurs at year end.

This could require republishing the budget and moving money from one fund to another so that all accounts balance.

Other audit findings

In addition to financial controls, auditors also look at other controls within a city.

Glanzer pointed out some areas found that could improve the city?s internal controls.

Among those highlighted were city council minutes, which are not signed off regularly by appropriate personnel.

Outstanding checks over one year or more were not being voided or turned over to unclaimed property.

?Payroll checks in excess of one year that should have been deemed unclaimed according to statute were voided by the city when not cleared in the city accounts,? he noted.

During interviews with the city?s department heads and employees, Glanzer noted that many did not understand what entity/activity controls are within the city nor were they aware of how to identify these controls.

?For example,? he wrote, ?the department heads do not have a consistent understanding of the controls (purchasing limits, approval limitations) within the purchasing policy.?

Glanzer said the auditing firm recommends the department heads and employees be educated on the importance, implementation and monitoring of controls and how this helps the city?s operations.

The auditors also reported about the city?s library minutes and how raises were approved, but for some library employees, the amount of those raises were not included in the minutes.

?We recommend the library include all relevant information in the minutes (which includes wage rates, dollar amounts),? the report noted.

The library was also cited for not keeping cash funds received by the library in a secure, locked location and for not retaining bank reconciliations after reconciling cash.

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