OKLAHOMA CITY – An independent audit of the Town of Apache’s financial records in Fiscal Year 2019 revealed numerous irregularities, including “pervasive fraud.”
“A lack of documentation combined with pervasive fraud were the main reasons for our adverse opinion,” the Lawton accounting firm of Furrh & Associates wrote on Feb. 14, 2022. Furrh’s audits for FY 2020 and FY 2021 have not been completed yet but are expected to be just as damning because the previous town administration was still in office, Town Clerk Gena Montgomery confirmed.
The prior administration “had a habit of doing things their way,” Ms. Montgomery said Monday. She has been the town clerk for one year as of this week.
Most of the previous practices at City Hall that were cited in the audit “have been corrected,” she said. “We’ve been very busy.” Besides Ms. Montgomery, three of the five trustees on the town board are new “and they’ve been very supportive of these changes,” she said.
Among the issues cited in the Furrh audit, the accountants noted that the Town of Apache “has not prepared an annual operating budget for its General Fund, or for any other fund,” for FY 2019, which started July 1, 2018, and concluded at the close of business on June 30, 2019.
The audit listed 25 other major issues, including:
Ÿ Because of a lack of oversight by the town trustees, an audit report for FY 2019 was not filed on time. As a consequence, Apache did not receive gas taxes for FY 2020 and FY 2021.
The current administration is “keeping financial transactions updated daily,” and financial data and documentation were to be submitted to State Auditor and Inspector Cindy Byrd.
Ÿ Unauthorized utility charges. Documentation on utility rates could not be located; consequently, customers may have overpaid for utility services since 2011. The town board adopted an ordinance last year that raised water and sewer rates effective Jan. 1, 2022.
Ÿ “Due to a lack of oversight,” several citizens were not charged for utility services. One particular account was not charged for sewer or garbage collection service for more than 12 years, the auditors discovered.
As a result, audits and monthly assessments are being performed on customer accounts that are “missing specific billing codes for water, sewer, and garbage,” town officials reported.
Apache is a community of approximately 1,300 residents, census records indicate. The town has about 670 utility customers who are billed monthly for water, sewer and solid waste disposal service. Trash collection is provided by Multiple Community Services Authority based in Fletcher.
Ÿ “Due to a lack of oversight,” multiple citizens and town officials were not charged late fees nor was their utility service disconnected for late and/or non-payment. A town ordinance mandates late fees and cut-off fees are to be charged to delinquent accounts.
New water cards have been ordered “and are being used to correctly state the due date of the 20th of each month,” and all customer account exemptions from fees and penalties have been removed, city officials responded.
Ÿ Because of the former town clerk’s lack of oversight, petty cash was used on multiple occasions to pay utility bills for citizens.
As a result, the use of petty cash has been “dramatically restricted” for use of car washes and miscellaneous items that cost less than $10.” Any item costing more than $10 will be paid with an appropriate fund debit card, a purchase order will be issued and a receipt obtained. In addition, no more than $200 will be kept at any time in the petty cash drawer.
Ÿ The former town clerk “paid herself extra payroll checks without approval” from the town trustees. She took her annual salary and divided by 24 pay periods instead of 26, then paid herself the 24 pay-period amount 26 times, the auditors explained.
Ÿ The former town clerk “did not maintain accurate payroll records, which resulted in late payments” to the Internal Revenue Service, the Oklahoma Tax Commission, and the Oklahoma Employment Security Commission.
All payroll liabilities are now paid the same day payroll is processed, town officials reported.
Ÿ The former town clerk paid Christmas bonuses that exceeded the amount approved by the town trustees. The clerk “wrote checks for unapproved amounts in order to get the net pay amounts to equal the amounts approved” by the board.
As a result, the new Board of Trustees “has been informed of the importance of stating in their motion when awarding bonuses to employees that the amount should be stated for gross wages.” This policy will be included in the new Employee Policy Handbook submitted to the board this month.
Ÿ Only four of the town’s 17 active firefighters received payments to their pension accounts. Consequently, the Town of Apache has an outstanding liability to the state Firefighter Pension and Retirement System.
Ms. Montgomery contacted the Firefighter Pension and Retirement System “to bring current firefighter records and pension payments up to date through 2021.” In addition, a yearly audit will be performed “to keep pension accounts current,” she said.
Ÿ Unauthorized payments were made to the Apache Ambulance Service Inc. (AASI); the 501c3 designation for the ambulance company was revoked on May 15, 2018. As a result, tax dollars were paid to a for-profit organization without proper documentation or council approval, Furrh accountants reported.
The state’s Public Competitive Bidding Act requires all municipalities to contract for services costing more than $50,000. Apache paid the ambulance service four times that much – more than $207,000 – in FY 2019.
In January this year, after notification of the lapse of designation of the 501c3 status, Ms. Montgomery withheld payment of allotted sales tax funds until AASI provided proof of reapplication and receipt by the IRS for the company’s non-profit status.
Ÿ Even though municipal ordinances require three bids for construction contracts costing more than $7,500, town officials did not obtain competitive bids for multiple projects in FY 2019; thus, the town may have spent “more money than necessary” for construction projects.
An engineer “who has extensive experience following the Oklahoma Purchasing Act” has since been hired.
Ÿ The former town clerk issued no tax Form 1099s, contrary to federal law.
The current town management has “prepared, submitted and mailed all required 1099s as required by the Internal Revenue Service.” In addition, “We now require the completion of a W-9 prior to the award of any contract for goods or services,” Ms. Montgomery reported.
Ÿ Apache’s bank accounts were not insured by the Federal Deposit Insurance Corp.
The town’s current management applied to the IRS for a Federal Employer ID Number for the Apache Public Works Authority. In the interim, Shamrock Bank agreed to purchase additional insurance to cover amounts over FDIC limits of $250,000, and Liberty Bank provides a Security Pledge Report annually to ensure that proper collateral is pledged for the town’s accounts.
Southwest Ledger contacted the office of Caddo County District Attorney Jason Hicks on Monday to ask whether he has asked the Oklahoma State Bureau of Investigation to delve into the irregularities listed in the Furrh audit and/or whether he intends to file any criminal charges. However, no response had been received by press time.