Audit Raises Red Flags on CEIDC Financials

By Will Johnson

Messenger Reporter

CROCKETT – During a presentation of the annual, outside audit of the city of Crockett, red flags were raised when it came to the financial matters of the Crockett Economic and Industrial Development Corporation (CEIDC).

CPA Molly Abele, a partner in the accounting firm of Axley & Rode, LLP was present during the regularly scheduled meeting of the Crocket City Council held on Monday evening, April 19 to present her firm’s audit findings to the council and to answer any questions the council members may have.

As she began, the CPA informed the council, “We are issuing an unmodified opinion, which is the highest we can give, which states that everything is presented fairly in all material respects.”

Continuing, Abele pointed to a section in the report and explained, “This is your general fund budget, which is how you operate the city, basically. You can see what was expected to come in (revenue-wise) versus what actually came in and what you expected to expense and what you actually expensed. You were under budget on your revenues – just slightly – but you were under on your expenses, about $186,000 for the year. You did a very good job of staying within your budget for the year.”

She added the city expectations of a net loss of $75,000 actually became a net gain for Crockett of $76,000.

Not everything was quite as rosy, however. Abele said there was a letter contained in the audit which detailed significant deficiencies.

Saying this might be the first time any of the council members had seen the letter, Abele asked if there were any questions.

Councilman Butch Calvert spoke up and said, “I am concerned about the last two items on that list about signed, blank checks being found at the CEIDC and the unauthorized payments. I would like to see a lot more information from the CEIDC board about why this occurred. That is a red flag which could potentially prevent the city from getting state and federal grants. I would like to hear some explanation from Economic Development about those two items.”

The two items Calvert referenced were found in the letter and stated:

• Blank Check Stock – Economic Development Corporation: It was determined that signed blank checks are received in advance of check processing. There is a risk (that) disbursements are not properly authorized and the board is not fulfilling its fiduciary responsibility. We recommend checks be prepared prior to signature for proper approval and implementing multiple check signers to ensure availability of signers.
• Unauthorized Payment – Economic Development Corporation: There was no written authorization for the Executive Director’s incentive pay. In addition, this payment did not go through normal payroll process. As a result, no retirement or payroll taxes were paid on the incentive, nor was a 1099 prepared by the Corporation. We recommend proper authorization for rate increases and incentives be formally documented and all pay be processed through payroll.

Councilman Darrell Jones asked Abele if she had an opportunity to speak with CEIDC Board President Chris von Doenhoff about the matter. She replied she had made contact with the CEIDC treasurer who had given confirmation.

Crockett Mayor Dr. Ianthia Fisher suggested accepting the audit as presented and following up with the CEIDC about the specifics mentioned in the audit letter.

“My concern is, I don’t want the paper to report something that they haven’t been given the opportunity to say something about. Then, they put out there that money is missing, which we know its not. Since they’re (CEIDC Board President Chris von Doenhoff and CEIDC Executive Director James Gentry) here and can address it, please let them say something about it,” Jones said.

“Before we do that,” Calvert asked, “can we go ahead and make a motion to accept the audit?”

The council agreed with Calvert’s suggestion and the Precinct One Councilman made a motion to accept the audit as presented and to request a meeting with the CEIDC Board of Directors as soon as possible. The motion was unanimously approved.   

A meeting with the CEIDC has been scheduled for Friday, April 23 at 11 am.    

Prior to the audit discussion, Crockett Mayor Dr. Ianthia Fisher reminded those in attendance early voting for the May 1 election was underway.

“We would encourage all of our citizens to be sure to come out and participate in the voting process. We do know that early voting is the most convenient way. It started today and will go through next Tuesday,” the mayor said. 

In other matters brought before the council:

• Minutes from the April 5 meeting was approved.
• Crockett Police Chief Clayton Smith reported the police department received 406 calls for service during the month of March which resulted in 36 arrests. There were 222 traffic warnings and citations issued while 80 police reports were filed.
• Crockett Fire Chief Jason Frizzell reported the fire department responded to 45 total calls during the month of March. Of the 45 calls, Frizzell reported 28 were in the city of Crockett while 17 were in the county. He added there was one structure fire in the city and three in the county.
• A resolution denying the distribution cost recovery factor rate request of ONCOR Electric was unanimously approved by the council. 

Will Johnson may be contacted via e-mail at [email protected].