YMCA receives harsh report from independent auditor for 2016
Team Radio Marketing Group - August 17, 2017 4:58 pm
By Beverly Bryant/News Director
The Board of Directors of the Ponca City YMCA on Thursday received an independent auditor’s report on the YMCA’s financial statements through December 2016.
The report was prepared by Certfied Public Accountant Mark A. Kremeier.
The audit, among other things, shows total net assets on Jan. 1, 2016, of $1,986,176.31. On Dec. 31, 2016, total net assets were $1,689,967.40, a decrease of $296,208.91 over the course of 2016.
In presenting the audit to the board, Kremeier said the most significant issues in the YMCA’s financial picture were a lack of internal controls; a lack of accountability in the last quarter of 2016 and early 2017, and the meaningfulness of 2016 reports to the Board of Directors.
In his remarks, Kremeier addressed three specific items:
- The Garden Grant checking account and bookkeeping.
The YMCA received a $35,000 grant from Phillips 66 in December 2015 for the purposes of creating a children’s garden. The funds were placed in a separate bank account and initial spending of the funds started in the first quarter of 2016, with funds being properly documented and spent for the garden purposes.
However, after the first quarter, most garden grant funds were dealt with inappropriately in several ways. More and more funds were used for other purposes, including summer child care, after-school child care and the concesson stand. Kremeier reported fewer and fewer debit card purchases were documented with receipts, and few receipts showed any supervisory approval of any kind.
There also was no report to Phillips 66 of expenditures, as was requested in the original grant documents.
There was no evidence that any of 2016’s expenditures of $33,607.07 was ever formally reported to the Business Manager, the Executive Director or the Board of Directors.
In October 2016, an additional grant of $20,000 was deposited into the General Operating account instead of the dedicated Garden Grant checking account. There is evidence of only $3,216.85 of the $20,000 being spent on the garden. Kremeier said that was only through the allocation of gross pay and payroll taxes for two employees working on the project.
The report said the auditor was required to make 231 correcting entries to properly reflect the checking account activity in the 2016 audited financial statements.
- Chase Ink Credit Card
Kremeier’s audit found that a credit card used by the staff of the YMCA historically had a low balance that was paid off nearly every month. However, beginning in early 2016 the balance owed began to grow as charges exceeded payments, with only minimum payments made in the last half of 2016.
The balance owed on the card on Dec. 31, 2016, was $15,873.88, the audit showed. This amount was not recorded in the accounting records, Kremeier said.
Kremeier said the cash flow difficulties of the YMCA General Fund led to the failure to pay off the credit card balance in full each month, but he was unable to identify why the unpaid-for transactions were not entered into the accounting system.
There was no evidence the credit card activity was reported to the Board of Directors, he said, especially in the second half of 2016.
The auditor was required to make 67 correcting entries to properly reflect the credit card activity in the 2016 audited financial statements.
At the close of the audit, the credit card balance was paid in full and the account closed. Staff now uses a debit card which is under the control of the interim CEO, Casy Doty. Procedures require the card to be returned immediately purchases, with a receipt attached.
- Ponca City Utility Authority bills
Several erroneous entries resulted in a $23,409.63 understatement of Ponca City Utility Authority bills in the accounting system. However, Kremeier said, the Board of Directors was aware, at least in general terms, of the magnitude of the utility bill liability throughout 2016. He said it appears the business manager was unaware of how to correctly record partial utility payments into the accounting system.
Utility expenses were reported in incorrect amounts in some monthly financial reports to the Board of Directors. The auditor was required to make 11 correcting entries to properly reflect the billing and checking account activities in the 2016 audited financial statements.
At the conclusion of the audit, the outstanding balance with Ponca City Utility Authority has been paid.
- Cybex Payment of $6,368.53
An unresolved transaction remains at the close of the audit, Kremeier said. A check from the YMCA’s capital checking account was written to Cybex for $6,368.53. It was coded in the accounting system to “Building Maintenance and Repair.” The memo in the accounting system identifies it as “Equipment Repair.”
No documentation for the transaction has been found in the YMCA’s records, Kremeier’s audit states. Several attempts to obtain documentation from Cybex have been unsuccessful. The check cleared the bank on March 22, 2016, but was dated for June 14, 2016. The check date appears to have been altered from “2015” to “2016.”
Kremeier’s recommendation is to obtain documenation from Cybex to determine the business purpose of the expenditure.
- Closing comments
In his closing comments, Kreimeier said that data input into the capital checking account ceased in May 2016. Reconciliations for the May-December 2016 period were completed on May 22, 2017.
Reconciliations of the operating account also ceased in May 2016. They likewise were completed for the May-December 2016 period on May 22, 2017.
There was a slow decline in operating account bookkeeping accuracyand an increase in errors beginning in August/September 2016.
The decline increased in the fourth quarter of 2016 with an increase in the number and dollar value of errors.
Beginning in February 2017, data entry into the accounting system went into sharp decline. Ultimately, Kremeier reports, there was almost no data entry into the accounting system for April 2017 and none whatsoever for May 2017.