Finance Director Addresses Extension On 2019 Financial Statements


At the Vermilion City Council Meeting on Monday, August 3, 2020, Finance Director Amy Hendricks addressed the monthly revisions to the appropriations.

“Those changes and allocations are of a routine nature,” stated Hendricks. “There is an additional transfer into Fund 703, which is the health insurance fund. This represents the final closeout from the self-funded insurance plan. The city was waiting for a disbursement of funds from a joint account that had been held with BAC.”

She asked Council to approve this appropriation ordinance by August 17, so it allows them to pick up changes that may come in over the course of the month.

Hendricks said to follow up on information she previously had presented about the extension on the 2019 Financial Statements, she learned on July 29 within hours of when these reports were to be filed that Lennon & Associates (Audit firm that prepares) would not be filing them by the deadline. She said it was too late to file an extension, and both she and a neighboring community who uses them received word at the same time and they both tried to file extension and they were denied. She hadn't received a good explanation for this, so in communication with the Auditor of State's office when the extension was not approved, she wanted to advise Council that fines have not been assessed in the past for entities that had missed the deadline, but it would be up to the city's individual auditors on whether we would receive a citation or not on the audit report.

She said her disappointment is that the city had all information submitted in record time during the first week of March. She has followed up with Lennon every couple of weeks through this time and they were aware that she didn't want to file for an extension because she felt they had things done very timely, but this still happened. She said it's unfortunate with all of the growth the city has made and if a list is published on the Auditor of State's website, it will show the City of Vermilion filed late and it really is not represented by the city's performance in this area, so they are working towards getting this filed now. She said the city had to move back their auditors who were coming next week to begin the audit review because the report was not ready. She said this situation has been very unsettling to her as she has never filed an extension before because she has always filed by the deadline. She was sorry it happened, but unfortunately it is not anything in the city's control. 

Council President Steve Herron confirmed that Lennon & Associates received everything they needed to file properly, and Hendricks concurred. Herron said Lennon & Associates did not give the city a reason why they did not file, so really the city does not have any answers. He asked if Lennon & Associates has a history of failing to file properly.

Hendricks believed from her observation they did not ultimately file by the deadline, but it seemed to always be very close to the deadline. She said they are great people, but this is something she is not going to take a risk of happening another year.

Mayor Forthofer said this consultant is a legacy before this administration; one of the few. He asked the finance director to investigate the relationship with this firm and determine if they need to review this relationship.

Herron asked Attorney Anderson if it was feasible for the city to go after Lennon & Associates if there is a fine associated with this late filing. Attorney Anderson said this is something she would not take off the table at this point. They need to get a better understanding from Lennon & Associates as to what happened and why it occurred, and certainly there would be no harm in asking for reimbursement if the city has to pay something as a result of their actions. She felt it would be fair game to ask them to reimburse the city, and if they refuse, depending on the facts and amounts, then the city could consider taking additional action. She was not sure if they had a written contract for services as they would have to look at this to see if there is a limitation of liability and that sort of thing.

Herron said the reason Lennon & Associate may have could lead to a positive auditor's decision to not impose a fine. 

Council Member Barb Brady asked if there was anything out of the ordinary as it relates to the transfers. Hendricks said the only new transfer relates to the insurance and the other ones are relatively routine – transfers into the police pension with additional retirements, so they beefed up the retirement severance fund. Others are mandated – like the safety boat and the recreation fund, but they are listed individually and brought to council.

Brady asked if the city's accounts are stable. Hendricks said so far so good; the ones they might look at that have a negative balance at this point are a couple of grants as they have expended the money and are waiting for reimbursement. There is one of the street funds that pays for the highway maintenance, as the state bills the city for services of our section of the state highway. The bill was higher than it had been in the past, but it's also one of those funds that has been hit by the fee collections from motor vehicle registrations, etc. The city may have a transfer into this fund before the end of the year.