Atchison County audit flags late daily statements, unreconciled bank items and negative fund balances

April Swartz, an auditor with Varney & Associates, told the Atchison County Commission on July 8 that the county'9s 2024 financial statements received a clean opinion under the Kansas Municipal Audit/Regulatory basis but that multiple operational control issues need attention.

Swartz said special procedures were required because the county spent more than $750,000 in federal funds (COVID-era CSLFRF), and the sampled federal expenditures were allowable. "Because you spent more than 750,000 in federal money this year, you were required to have additional procedures...we didn't see anything that looked out of line," she said.

The auditor highlighted several areas of concern that she said reduce day-to-day transparency and increase risk: delayed daily cash statements, uncleared bank reconciliation items amounting to roughly $200,000 that could not be traced to individual funds, several funds finishing the year with negative unencumbered cash, missing quarterly treasurer publications, and incomplete tracking of depository coverage and certificate of deposit balances.

Why it matters: county daily statements and reconciliations are the primary operational controls that let department heads and commissioners know current cash-by-fund balances. The audit said the most recent daily statement in the clerk's office was dated July 1 while the meeting occurred July 8, and the auditor urged restoring daily routines so budget and cash-management decisions rely on timely data.

Key findings and details

- Special procedures and federal money: Because county federal spending exceeded $750,000, auditors performed targeted testing of CSLFRF (state and local fiscal recovery) expenditures and found the sampled items allowable.

- Opinion and accounting basis: Varney & Associates issued a clean opinion on the county'9s financial statements under the regulatory (KMAG) basis of accounting. The report noted that the regulatory basis differs from GAAP, which is why the first paragraphs describe GAAP and appear adverse before the regulatory-basis opinion is given.

- Negative cash by fund: The audit identified several funds with negative unencumbered cash at year end, including the joint communications fund, special motor vehicle fund, juvenile intake and the solid waste fund. The auditor said only limited exceptions exist (for example, interim federal-grant reimbursements) and recommended corrective transfers or other management steps.

- Bank reconciliations and outstanding items: Auditors reported many uncleared or unexplained reconciling items in the bank reconciliation that prevented proof of about $200,000 of cash by fund. Swartz said the county appeared to have approximately $200,000 more cash than the books showed, but auditors could not substantiate that by fund because of missing detail.

- Quarterly treasurer publications and depository coverage: The treasurer had not published required quarterly reports for at least two periods, the audit said, and the treasurer'9s office did not appear to be tracking daily depository coverage and certificates of deposit accurately. Auditors reported examples where closed accounts or redeemed CDs remained listed in daily summaries.

- Debt and budget compliance: The audit summarized existing debt and financing leases (including a 2016 tax revenue bond and recently added equipment lease) and found no material budget-law violations; overall the county was under budget for the year on the funds reviewed.

Commissioner and staff response

Finance Director Mark Zeltner and commissioners discussed follow-up steps. Zeltner told the board he and the treasurer planned to meet to clean up outstanding reconciling items. Commissioners asked for weekly status checks and for the depository-coverage spreadsheet used by auditors so the board can monitor whether coverage is sufficient.

Swartz said the county'9s finance director had been essential to completing the audit and that Varney & Associates will continue as auditor if the county addresses the reconciliation and daily-statement issues. "Let's give it a chance," she said, while noting she would reconsider if the bank-reconciliation risk remains unaddressed.

Clarifying details and figures mentioned in the audit presentation

- Beginning unencumbered cash (reported): $6,809,626; receipts for the year shown in the report: roughly $28,025,000; expenditures reported: roughly $28,000,006.71. - Reconciled book balance example cited: roughly $6,000,004.42. - Auditor-identified problem reconciling amount: about $200,000 of uncleared items. - Exception allowing temporary negative cash: federal grant reimbursement expected (auditor noted an exception exists only for that situation).

What the commission directed

Commissioners asked staff to present improved daily statement reporting and a depository-coverage summary and to address the outstanding reconciling items. The board agreed to track progress and to ask the auditor and finance director for suggested reporting formats and cadence (auditor advised weekly checks on outstanding reconciling items until cleaned up).

Ending

The auditor presented a governance letter summarizing required corrective items. Commissioners acknowledged the findings and agreed to follow up with Zeltner and the treasurer to bring reconciliations and daily reporting into compliance. Varney & Associates said it would continue to work with county staff and monitor corrections before confirming audit arrangements for subsequent years.