Note 13 by Blair and Associates for the 2011 Town of Paonia audit was a doozy. "In 2011, employee fraud was detected during the audit process.
Total employee fraud noted in the audit was $401,063," of which the Town of Paonia has a claim for reimbursement with CIRSA, its insurance carrier.
That $400,000-plus figure is the total found missing from town coffers for 2010 and 2011. "There could be fraud in prior years, but that is not in these numbers yet," Cindy Jones, current Paonia finance officer, said.
While the auditors have found alleged fraud totalling that amount, that may not match the amount used by the district attorney's office should charges be filed against the town's former finance officer, Kristin Chesnik. The amount missing versus what can be proven may be two different things, said Jones. Alleged fraudulent entries were found throughout the funds.
As for current accounting practices, Jones said, "Any electronic actions are being reviewed by the finance committee and actually by the whole council. I produce a report that shows all electronic debits including tax payments, and that goes to the whole council."
All cash is detailed on a report to all council members. The finance committee compares the receipts to the electronic transactions.
The finance officer prints out a report of the general journal entries. Those are reviewed monthly by the finance committee.
The capital assets list is in process. "I'm going to build a spread sheet from the fixed asset list . . . . Anything that is purchased will be added to that. In 2012, we haven't had any additions to capital assets," Jones said.
All bank accounts are reconciled monthly, receipts are matched and filed monthly. The finance committee signs off on those accounts, which are being reviewed "multiple times by multiple people," Jones said.
The inventory for both the capital assets and the inventory of supplies will be done by the end of the year.
A budget session was held on Tuesday, Oct. 23. For the first time since working on the 2013 budget, the council had fund balances taken from the audit. They had been working with zero balances.
"All the deficiencies should be plugged by now," Jones said. "It just takes awhile to build those inventories."
According to Sherry McKenzie, public information officer for the district attorney, charges could be filed in this case by next week.