A state audit of New Albany’s 2011 financial records questioned the purchase of two fire trucks, payments for legal counsel and the reconciliation of bank accounts during Mayor Doug England’s last year in office.
The New Albany City Council and Redevelopment Commission approved, with the backing of the England administration, the purchase of the two fire trucks using tax-increment financing funds. The trucks were purchased for $410,000 each, and the council and commission elected to buy them with available TIF funds instead of financing the deal.
However in its audit released to the public last week, the State Board of Accounts questioned whether TIF funds could be used for purchasing public-safety equipment.
Property taxes garnered from TIF districts carry specific regulations on how they can be spent. The state legislature has made changes in recent years to TIF rules, but generally projects funded with tax-increment revenue must serve the district from which the levies were collected.
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The city’s record keeping also was questioned in the audit. According to the report, there were discrepancies between reconciliation notes and transaction and balance records for two of the city’s 20 bank accounts. There was $57,820 more in unidentified cash shown in financial records than held in the two bank accounts, according to the audit.
“Bank reconcilements presented for audit indicated that there is not proper management oversight or approval of the monthly bank reconcilements being performed,” the auditor stated in the report. “Additionally, monthly bank reconcilements are not being presented to the [city council] to allow them to properly monitor and assess the quality of the city’s system of internal control.”
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Auditors also took issue with the manner then-City Attorney Shane Gibson was paid for legal services. Gibson had a contract with the city to be paid $50,000 for 2011 plus an hourly rate of $150 for any work performed in excess of 10 hours per week.
According to the audit, Gibson was paid $238,593 for the year, and though the city has a separate budget for the city attorney, a bulk of the payments were billed to other departments or accounts.
For example, Gibson was paid about $36,000 from the stormwater and sewer departments. Auditors stated in the report that use of funds should be limited to expenses authorized by statute or ordinance.
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The State Board of Accounts audits government entities annually, and will provide a report likely this year on the financial operations of New Albany for 2012.
Audits can be viewed online through the State Board of Accounts’ website at www.in.gov/sboa.
