The first of two reports linked to the City of Fennville finances and procedures showed no criminal actions but highlighted many irregularities that caused accounting confusion over five years.
“Our many analyses uncovered information which identified (with the exception of the noted issues) that these transactions, although unusual, were authorized and/or reasonable,” said the report delivered at the July 17 city commission meeting. “In addition, our analytics did not discover unknown problematic activity.”
The entire report will be posted on the city’s website.
The report was presented in closed session by Eric Conforti of Plante Moran then release to the public. The city hired Plante Moran in May 2022 after newly hired City Administrator Kathryn Beemer discovered procedural and financial problems in the budget and with grants.
Because of the investigation, the city has already made a multitude of changes in policies and procedures, such as hiring the new auditor and splitting the clerk-treasurer role into two positions. The city hired Munetrix to handle financial transparency and Positive Pay to monitor electronic withdrawals from city accounts.
The city has also dealt with more than $22,000 in fraudulent checks and terminated its contract with a technology services company over what Beemer described as “cybersecurity concerns.”
Retirement contributions for employees were not properly paid out for six months and had to be rectified last August. The city had to pay another $21,947 to fix contributions to employee benefits from previous fiscal years. A comprehensive audit of the city’s accounts uncovered the discrepancies in health insurance benefits, retirement contributions and paid time off.
The first report
The forensic investigation presented Monday night looked at 12 topics including payroll, internet and utility billing and disbursements for construction work from 2017 through 2022.
The investigation, for example, looked at two paychecks totaling $10,484.16 issued to former City Administrator Amanda Sleigh after her departure in March 2022. The report concluded the process used “an unusual approach” to input the hours into the payroll system, but that they matched what she was owed for vacation and paid time off hours plus her weekly salary.
The report tracked down a payment for $94,191.58 which had no documentation and was not approved by the commission. After investigation, it was found the money was a principal and interest payment to the Michigan Finance Authority State Revolving Fund for a purchase contract.
Another payment for $30,434.30 in 2021 had no information, but the report discovered it was payment for a new salt truck.
The cost
When the city hired Plante Moran in May 2022 to look into the finances, the cost was estimated to be $40,000. As of this month, the bill for the overall investigation is more than $190,000.
A second report by Plante Moran covering procedure and other information will be presented in a special meeting at 6 p.m. Tuesday, July 25, at city hall, 125 S. Maple St. The meeting is expected to be completely in open session.
The reports wrap up the city’s contract with Plante Moran, though the commission and staff have discussed retaining a firm to continue assisting in accounting procedures.
Closed session
Monday’s meeting on the first report was partially in closed session – about an hour. The entire meeting was about 2 hours.
City staff and attorney Dan Martin of Thrun Law Firm of Grand Rapids recommended the closed session under the attorney-client privilege exemption of the Open Meetings Act.
The motion to close the meeting passed the commission 5-1.
Commissioner Jim Hayden opposed the closed session.
The report was not made public before the meeting but was made available to all commissioners to read at city hall prior to Monday’s meeting.