 Riggs had always played a huge part in the budget process,
and in her absence it was left to the deputy city clerk, Susan Gehlbach, to work on the task with Les Plotner, the treasurer, and
Melody Anderson, finance chair.There was another problem. Riggs
had played so many things so close to the cuff that Plotner,
Anderson and Gehlbach all knew that if they were going to move
forward and keep the city running, they were going to have to have
some help.
That help came in the form of WTI and Laura Wernsing. WTI is the
company that provided the initial accounting software for the city.
Wernsing, who is located in Springfield, was the consultant for the
software and is also a certified public accountant.
At the city's Feb. 27 committee of the whole, Anderson and
Gehlbach said that Wernsing's help had been invaluable and that her
services would continue to be needed throughout the coming months.
Managing the city's money is not a simple task. Imagine one large
corporation with several subsidiaries. Each subsidiary -- such as
streets and alleys, police, fire, building and grounds, and
wastewater management -- has to have its own budget for the year.
They also have differing sources of revenue.
These accounts need to be kept separate so that revenues and
expenditures within the subsidiaries can be tracked accurately.
However, there are also times when the city treasurer needs to see
the "big picture," or the well-being of the city as a whole.
These actions can be accomplished through one software program,
generally referred to as "fund accounting software." However, when
Riggs left, the software was out of date and incomplete, making it
all the more difficult for those left behind. The city soon started
upgrading the accounting software, bringing current programs up to
date and adding programs that would make the system more secure.
No more handwritten checks; no blank payee
Among the first added was a cash disbursements component that
included check writing. There would be no more handwritten checks
with copies used to make journal entries. In addition no check could
ever be written with a blank payee.
The software would issue a check and simultaneously post the bill
as paid in the accounting system.
Computer-generated bank reports
Another program that was added to the system was for doing bank
reconciliations. With the push of a few keys on the computer, a
report would be generated that showed all the deposits made into
accounts and all the checks written. There was no more listing them
by hand, which meant less likelihood of error.
Reduction of checking accounts
All of the paper checkbooks were destroyed, and over time,
Martinek and her staff have worked to determine how many of the
25-plus accounts were actually needed.
It has been a long process, but the city now has less than 10
accounts. Martinek said that there are several accounts that must be
kept separate, but with the fund accounting, the best practice is to
combine everything that can be legally combined and let the software
do its job in keeping things separated.
Canceled check payee and endorsements monitored
In addition to this, the city has made better arrangements with
the banks and now receives copies of all the canceled checks, both
front and back, so they can identify not only the payee but also who
endorsed or cashed the check.
Cash tracked through multi-person transactions
Another component that has been added is a daily cash receipts
system. Martinek said that no one ever proved that cash was being
taken from the cash drawers at City Hall. However, the system that
was in place would have made it easy to do so and virtually
impossible to trace.
The staff is also now working with better checks and balances in
place so that no one person performs every step in a transaction.
For example, Gehlbach enters cash received into the computer and
then hands over a receipt report and the cash to Martinek, who in
turn makes the deposit and enters that into the computer.
At the end of the month a report is printed showing all the cash
received and another showing all the deposits for the month. The two
reports must agree, and if they don't, the staff sets to work
immediately to find out why.
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One might wonder why none of these important upgrades and components
had been added to the software system as they became available.
Martinek said that the answer came one day in a conversation with
Wernsing.
Wernsing recounted that WTI had contacted Riggs about upgrades
and the bank reconciliation component a few years ago. Shortly
thereafter the firm received a letter from Riggs that was very
explicit.
Riggs stated that the city of Lincoln had no need for the
upgrades, the new components or even accounting support. She
said that the only instances when she would need WTI were if
something went wrong with the hardware or physical computers.
Wernsing also told Martinek that there had been a similar
situation in another town, where the clerk was not interested in
keeping the computers up to date, and in that case also, it was
later discovered that money was being stolen from the city coffers.
Martinek said that there are still some things that need to be
done to make all the city's accounting and records management
systems more efficient and secure. But there has been a great deal
of money invested thus far this year, and some things may have to
wait.
In the meantime, though, there are other issues that need to be
addressed.
Martinek says that the staff needs a new written policy and
procedure manual that will outline the responsibilities of each
staff member. Writing the procedure will include adding standard
checks and balances that will assure that in the future no one
person has total control over transactions.
She also says that she is somewhat concerned about how checks are
signed, and it is a topic she hopes to address at some point in the
future.
The next big issue for the city clerk's staff and city council is
going to be the result of the audit for the 2008-09 fiscal year.
Martinek said that the audit should have been finished over a
month ago, but with all the deception that has been folded into the
city finances, the auditors have struggled to get everything sorted
out.
Estes, Bridgewater & Ogden of Springfield are the auditors of the
books for the first time this year. They have kept Martinek abreast
of their activities and have told her that everything should be
completed very soon.
Once they are finished, there will be numerous adjusting entries
to be made. There will be a management letter or a letter of
findings, which is no surprise to the city clerk.
Martinek also expects that the 2009-10 audit will be equally as
difficult to handle, but she is confident that by the time the audit
for 2010-11 comes around, all the city's financial records will be
in proper order.
Martinek says she does feel bad for the council. They have had to
deal with a lot in the past nine months, and there is still more to
come.
She said that while most of them have become very proactive in
the daily running of the city's finances, others would like to
pretend this never happened. But it did.
She adds that the taxpayers have the right to know that the city
council and city staff are holding themselves accountable for the
dollars entrusted to them.
Martinek knows that change is hard, and sometimes it's easier to
just maintain in the same old way, but in this case change is very
necessary. The best thing to do now is move on; learn from the
experience and work together to keep improving on what has been
started in the last few months.
To end the story on a slightly amusing and somewhat bizarre
note... Martinek said she took a phone call one day not long ago.
The person on the other end of the line was with the Internal
Revenue Service. It seems that now that Riggs has pleaded guilty to
the embezzlement of city funds, she is going to be held liable to
pay income tax on the money she stole.
[By NILA SMITH]
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