Elgin council hears audit findings, consultants urge hiring finance director; consultants do not recommend immediate forensic audit

Elgin City Council members on April 2025 heard presentations from outside consultant Gradient Solutions and city staff about years of bookkeeping inconsistencies and ongoing bank-reconciliation work, and were urged to prioritize hiring a finance director and a senior accountant to prepare for an annual audit and budget process.

Council members and several residents also asked whether the city should order a forensic audit; consultants and the city manager said they had not found evidence of criminal malfeasance and recommended first focusing on staffing, controls and preparing for the audit that begins in June.

The discussion began after public commenters raised transparency concerns. Stephanie Lipke told the council that earlier recruitment work had appeared to stall and that key finance roles had not been publicly posted. Tiffany St. Peter and another resident said the city's annual consultant audit and a second consultant, Gradient Solutions, had identified troubling account and fund-use issues and urged a forensic audit. Their comments framed the council's follow-up questions to staff and the consultants.

Cal Webb, a presenter from Gradient Solutions, said the consulting team was helping staff with audit preparation and budget forecasting and that the immediate priorities should be the audit and the budget. "There are a lot of challenges with our finances. It is enormous as you will hear, but we've gotta figure out how to get a handle on it," Webb said. He described the consultants' role as supporting staff to complete bank reconciliations, fix general ledger coding, and prepare reliable figures for the budget process.

Pam Sanders, identified in the meeting as the city's HR director, described recent steps to improve internal capacity: she said staff have received training on the city's ERP system from Tyler Technologies and that the city had completed a budget calendar and a budget manual that will standardize submissions from departments. "We are still gonna extend that training," Sanders said, adding that the city intends to continue on-the-job training so staff can use the system effectively.

Council members pressed staff and consultants about whether the problems they were finding required a forensic audit. One council member asked directly, "Do you feel that a forensic audit is warranted?" A staff member identified in the meeting as Turner answered that forensic audits are generally aimed at detecting criminal malfeasance and can be costly; Turner said, "I have not found anything to warn that anything that was done criminally or any malfeasance." He said he wanted to make prudent use of taxpayer money and recommended prioritizing remediation and staffing first.

Gradient's Webb, who identified himself as a fraud examiner and longtime government auditor, said outside investigators often help management trace specific transactions but warned that a forensic audit can slow hiring and cleanup work if timed poorly. "If it was me, my main focus would be doing everything I could to get the right staff in, to recruit and to repair everything as quickly as possible," Webb said. He added that opportunity for fraud often stems from weak controls and limited staff, and that some control gaps exist, but he did not point to a specific transaction that proved criminal intent.

Pam Sanders and Gradient staff described examples of bookkeeping errors that required corrections and tracing. Sanders said she had been tracing individual transactions that had been entered and reversed multiple times without corresponding bank movement; she described those as errors rather than evidence of intentional concealment. "At the moment, no, sir," Sanders said in response to whether she had seen transactions that demanded a forensic audit, "but I can't say that I have moved to every transaction."

City leadership told the council the practical steps the city intends to take: complete bank reconciliations, prepare for the annual audit (single audit) beginning in June, finish the budget manual and calendar, extend ERP training, and recruit a finance director and a senior accountant. Staff said the finance team is currently understaffed by two positions and recommended upgrading one budgeted clerk/accountant slot to a senior accountant role so the department will have two certified accountants.

Turner and other staff outlined trade-offs: a forensic audit typically focuses on identifying wrongdoing and does not itself fix records, and it can require extensive supporting documentation that may be difficult to assemble if records are incomplete. One staff estimate cited in discussion put a forensic audit cost in the low six figures ("a hundred, a hundred and $50,000"), though no formal procurement or contract for such an audit was proposed at the meeting.

Council members asked how confident staff are that they can produce a budget with the current records. Turner answered that staff would deliver a budget they could reasonably rely on, but that it would be a difficult process given the volume of clean-up needed and ongoing staff turnover. Sanders and Gradient emphasized the same two near-term pillars: complete audit preparation and improve budget forecasting; other internal controls and process improvements will follow once those pillars are stable.

No formal vote or ordinance related to a forensic audit, new hires, or contract awards was taken at the April meeting. Council members and staff agreed to continue recruitment work for a finance director (a recruitment process previously started with SGR) and to include a compensation study in the coming budget to help retain qualified finance staff.

The council's next steps as discussed in the meeting: finish ERP training, complete reconciliations and the budget calendar/manual, continue tracing questionable entries as staff have time, recruit a finance director and a senior accountant, and update the council on audit readiness before the audit work begins in June.