Regarding truth in accounting Report.
As a Chief Financial Officer and CPA, I read the Truth in Accounting report regarding Wood Dale's financial condition with great interest. There are several disturbing facts noted in the report which should cause taxpayer concern. Specifics are as follows:
1. According to the report there is a major disparity between the 2018 budget and the actual performance for 2018. The budget called for a surplus of $12,572, but the actual results for the 2018 fiscal year reflect a reported deficit of $1.8 million! This does not say much for the current administration's financial stewardship of taxpayer dollars. Rather it is indicative of a lack of fiscal discipline.
2. It took Wood Dale 218 days to complete its audit. The Government Finance Officers' Association suggests 180 days as a guideline for completion. Wood Dale failed to meet the 180 day guideline, but I would also point out that in the private sector publicly traded companies are not only required to complete their audit but also file Form 10K with the United States Securities and Exchange Commission within 90 days of the close of the fiscal year.
Moreover, private companies with bank debt are also generally required to comply with the 90 day rule by their lender. It is clear that Wood Dale's Finance Department could stand some improvement since after all; they are responsible for handling the public's money.
3. According to the report, in five of the last ten years, the City actually generated deficits, whereby spending exceeded revenues. This fact appears to have been conveniently buried from the public. Rather the administration touted "pipe dream" planned (budgeted) surpluses instead while ignoring the reality as noted in the audited financial statements. Four out of the five deficit years occurred under the current Pulice administration.
After reading the city of Wood Dale's independent auditor comments regarding internal control related matters for the year ended April 30, 2018, I became further concerned.
Under the section, "Corrected and Uncorrected Misstatements" the independent auditors (Sikich LLP, CPAs) reference 15 auditor generated journal entries required to correct financial misstatements. In addition, 9 of the 15 entries were considered material in terms of the effect on the City's financial statements.
In the private sector, I have seen CFOs and Controllers fired for having more than 5 auditor generated journal entries. In theory, with a competent Finance Department there should be zero auditor adjusting journal entries and especially no material adjustments. A large number of auditor generated journal entries required to correct financial misstatements is a poor reflection on management and also the competence of the Finance Department.
The auditors also noted a further deficiency in their report regarding the accounting for grant revenues and expenditures. The City failed to properly record 2 grants in compliance with generally accepted accounting principles. This is another indication of substandard accounting practices.
I have learned in this process that there is no evidence that Wood Dale's incumbent Finance Director is a CPA. If that credential were in place, perhaps some of these weaknesses would not exist. A link to the Truth in Accounting report is noted below.
Paul Wickland, CPA
Chief Financial Officer
Tempco Electric Heater Corporation