Audits of Township Finances Cite Numerous Violations of Law and Negligence
Hayes Township filed the required 2022 audit two years late. Because the results were so bad, the State now requires annual audits starting in 2023, “until these deficiencies are rectified.” The violations were egregious. The State demanded answers and corrective action plans.
The two audits identify numerous violations and deficiencies, including:
- “the board did not approve all disbursements prior to payment as required by charter or statute” (*noted by Michigan Department of Treasury)
- “The Township may have obligated more funds than were available which is a violation of the Uniform Budgeting and Accounting Act.”
- “The expenditure of funds in excess of appropriations are contrary to the Uniform Budgeting and Accounting Act.”
- “Bank accounts are not being reconciled and independently review[ed] in a timely fashion.” “Cause: This condition is due to the Township’s negligence in fulfilling its responsibilities.”
- “The Township Board of Trustees was not aware of the true financial status of any of the Township’s funds and; therefore, could not make any sound financial decisions.”
- “actual 2023 expenditures exceeded the Township Board of Trustees’ approved budget allocations for several general fund activities.”
- “23% of invoices tested were missing administrative approval”
- “15% of disbursements tested were missing appropriate supporting documentation”
- “24% of disbursements tested were improperly classified in the general ledger”
- “All ACH [online] and credit card payments were lacking receipts or suitable supporting documentation for the activity, including ACH payments (unable to determine source of the costs)”
At the January 2024 board meeting, the audits were not on the agenda or revealed to the public. However, residents had seen them on the State’s webpage and came prepared to the meeting and raised many points. A Charlevoix Courier reporter also attended. Front page stories resulted: “State demands corrective action following Hayes Township audit.” The State said “Please provide descriptions of unauthorized disbursements as well as the amount . . .and. . . the most recent board minutes showing the approval of expenditures.” Yet, the Township response leaves out this information, and appears to be ghost-written by the auditor.
The Auditor’s letter published in the Hayes Voice said that Treasury “accepted” the Township’s corrective action plan, but that is not true. Treasury wrote a resident: “Thanks for reaching out. We will review their 2023 audit and go from there. At this point, since the review has not been completed, I won’t be able to tell whether the corrective action plan is acceptable or not. Thank you.”–Yongping McDonnell, CPA
Audit Reports are below.
2023 Audit, Auditor’s letter, Michigan Treasury Department’s Deficiency Letter:
2022 Audit, Auditor’s Letter, Michigan Treasury Department’s Deficiency Letter: