Davis County controller says tax system cannot reconcile; urges formal year-end close and process overhaul

Davis County Controller Curtis Koch told the county's quarterly Audit Committee that the county's tax collection system cannot produce a reliable point-in-time balance or perform year-end closings, leaving the county to rely on so-called "plug" figures and ad hoc distributions.

Koch spoke during the committee's quarterly meeting, presenting a January 22 memo and a series of year-end bank reconciliations. "The system does not have the ability to give a point in time balance, does not have the ability to perform year end closing, and it has a limited ability to prevent, detect, and correct errors," Koch said. He told committee members the system had never been fully reconciled since launch.

The issue matters because tax distributions to taxing districts and other recipients depend on accurate, reconciled balances. Koch said Utah law requires a settlement process when a treasurer leaves office and noted the practical consequences of not reconciling: "A year's never been closed. So if that plug was false or fictitious for some reason and you go and correct an error because you never closed the year, you could have years and years and years of errors that ... were part of a plug number 10 years ago." Commissioner Lorraine Camilo, chairing the meeting, added that the memo is intended to "put a stake in the ground. Nobody can say they didn't know anymore."

Koch described the system as developed over roughly six years, capitalized at about $2.2 million, and launched about a year and a half ago. He said staff are discovering conversion errors and legacy data that have not been cleansed. Because the database has been treated as a rolling store of transactions rather than closed annual ledgers, Koch said errors from earlier conversions may still exist and cannot be validated without a formal year-end close and a tested reconciliation process.

Committee members discussed next steps and timelines. Koch and Information Systems staff said they are facilitating process-mapping meetings among the controller's office, the treasurer's office and the assessor to define consistent rules for assessment, collection and distribution. Koch said a technical fix will follow agreed business processes: "Once these processes have been vetted and agreed upon and documented, then I will go to work in making a system that supports these processes." He said tax year 2026 is the likely target for a fully reconciled operating model and any rebuilt or replaced system, with 2025 functioning as a transition year.

Koch and staff walked through year-end bank reconciliations the committee will use to measure progress. He reported a nearly clean inmate trust reconciliation with about $187,000 held for inmate accounts. The county's consolidated bank and book balances across funds totaled roughly $293 million; the controller's team showed an adjusted book-vs.-bank discrepancy of $483 on that total, which Koch said would be cleared with a journal entry as part of closing the year and then tracked monthly.

The committee also reviewed the county collector account reconciliation and flagged recurring reconciling items that must be captured in the tax system (for example, credit-card processor fees). Koch noted that credit-card processing fees (referred to in the meeting by the vendor name Forte) must be recognized in the county's collector records so they do not create untracked differences in distributions.

Staffing and controls were a frequent theme. The treasurer's office has funded two positions intended to support reconciliation work; Koch said those roles are necessary but that the system itself does not currently support needed reconciliation tests. The controller suggested simplifying processes where possible, separating banking/escrow functions from tax collection activities, and documenting mitigation controls where system capabilities require workarounds.

Committee members raised recent spikes of taxpayer complaints tied to mailed payments that apparently were not processed in the November window after a system launch. The treasurer's process for handling those cases is a county 13-47 application (a statutory administrative process referenced in the meeting) that allows commissioners to consider fee adjustments. The county is collecting those applications and expects commissioners to review them; staff and commissioners said they will also investigate whether the problem represents mail/lockbox processing in transit (the county's lockbox provider operates its large facility in Seattle) or a workload shift that concentrated cases on a small number of staff.

The committee briefly reviewed the county's annual fraud-and-ethics hotline activity. Audit staff reported the hotline receives roughly four to five reports per year, often out of scope for county investigation; when matters fall within county responsibility, staff investigate.

No technical or policy decisions were taken at the meeting. The committee asked staff to continue process mapping, to report back to the committee at a subsequent meeting with a status update, and to present documentation of mitigating controls for 2024 and planned controls for 2025.

Ending: The controller said he will continue to facilitate process meetings among the treasurer, assessor and IS staff, then build system changes to support the documented processes. Committee members asked that a progress report be added to a future audit committee agenda so elected officials and public members can track changes and any system- or policy-level decisions.