Yesterday, on the front page of my local newspaper, I read that my county government recently found several million dollars that had been sitting in it’s bank account, unaccounted for, since 2007! Apparently, in November 2007, the school system transferred payroll funds that were unspent back to the county government, but the county government never recorded them as received. So when the country Treasurer, earlier this year, said the school had this money, the school system said they didn’t.
So the country hired an auditor to look at the books, and guess what? The money was sitting in the bank, unaccounted for.
Reading further, the article explained that after this audit, all parties agreed that this situation was no one’s fault; it was just a miscommunication.
Part of the explanation for the unaccounted funds was because the county government and the school system have the same bank account but separate accounting records. This practice of having one bank account is common in Virginia, since it helps to lower bank fees and earn higher interest rates, the article explained.
The miscommunication occurred when the school system recorded a $6.2M transfer back to the county on their books, but the county refused to record the income transaction on their side, because county government officials thought this was a payroll accounting error. So the $6.2M transfer was reflected as an expense in the school system’s books, but was never recorded as income in the county government’s books. Also, the article explained, in 2007 the county government and the school system had separate audits, so neither auditing firm was aware of the missing side of the transaction.
Just a miscommunication?
And in 2008, and now in 2009, there have been layoff’s and hiring freezes in our county schools.
Just a miscommunication?
And the county saved a few bucks in bank fees and earned a few dollars in extra interest earnings because there was only one bank account, but it also had three (expensive?) audits instead of one. And the net effect of those transactions… well, no one is saying.
And how is it that a county government cannot negotiate a better deal with the bank for lower bank fees and higher interest rates. If the funds are in one account or two, they would still be in a single bank. I bet if the county decided to send some of the funds to a different account at another bank, the bank would reconsider. But maybe no one has ever asked the bank to reconsider.
Just a miscommunication?
And the missing funds were not discovered until the summer of 2009, when the County Treasurer said the school had $5.6M in surplus funds “that were being carried on the county’s books because of a school system payroll accounting error.
So let’s think about this for a minute.
$6.2M was recorded by the school as an expense in 2007. The school gave that money back to the county. How did $6.2 get reduced to $5.6 in 2009? Doesn’t that mean that either the school system and/or the county government overspent their budget by $600K?
Does the county government reconcile it’s bank account? They only have one, after all. It shouldn’t be that difficult. But then again, how do you reconcile when you are only responsible for some of the bank activity.
Don’t the auditors for the school system and the county government get a list of transfers to and from each other’s books and reconcile those transfers? Was it a case where the auditors assumed such a large transaction could not have been recorded incorrectly?
Just a miscommunication?
Miscommunication. According to Dictionary.com, the definition of this word is to communicate mistakenly, unclearly, or inadequately.
I think our county government has redefined miscommunication to mean a politically correct way for all parties to avoid responsibility and accountability.
I bet there will be no miscommunication, though, if I forget to pay my personal property taxes in December.
The good, the bad, and the ugly
5 weeks ago
