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Forensic auditors: Manteno’s cash controls weak after $25 million concentrated at one bank
Summary
Forensic auditors told Manteno trustees the village lacked adequate cash controls and documentation, noting $25 million from a utility sale was held largely at one local bank and that reconciliations and written procedures were incomplete.
Forensic auditors told the Village of Manteno Board of Trustees on May 20 that the village’s cash-management controls and documentation were inadequate and left large sums at risk after the 2019 sale of the local water system. Lead auditor Jim Edmondstone said the team reconstructed bank activity and found material gaps in records, missing statements and a high concentration of funds at a single local bank.
Edmondstone, introducing the examination, said auditors focused on cash and internal controls and were asked to perform a forensic-style review. "We're brought in to do forensic audits," he told trustees as he described consolidated exhibits that list checks and monthly activity for five years. He said the audit team accounted for bank statements that cover roughly $12.5 million as of April 30, 2025, while earlier years showed higher balances and gaps that merit follow-up.
The auditors flagged the placement of about $25 million of sale proceeds (described in the report as proceeds of the utility sale) into short-term certificates and brokered arrangements at a small local bank that later merged with a larger institution. Edmondstone said the village’s minutes and procurement documents did not show a clear, documented process for shopping rates or explaining why that bank received the bulk of the deposit, which left a large overnight balance uninsured on at least two occasions.
Auditors also described weaknesses in internal controls: the treasurer both moved funds and reconciled the same accounts, a concentration-of-duty that the report called a significant internal-control deficiency. The report noted the village’s employee-insurance policy is not the same as the bonding required by village ordinance and recommended trustees review bonding levels and split cash-management responsibilities.
Trustees pressed auditors about whether money was missing; Edmondstone replied that some transfers were not labeled on bank statements and that auditors were able to trace many transfers in the general ledger but did not find full, contemporaneous documentation for large telephone transfers and wires. Village staff said some apparent discrepancies resulted from bank labels or the bank using alternative identifiers, not missing funds, and that supporting documentation would be provided for many transfers.
The auditors concluded with recommendations to update written investment procedures, reconcile all bank accounts to the general ledger, require sworn financial statements from depository banks per state law before investing, and reassess bonding and collateral practices.
The trustees heard the presentation, asked questions, and agreed the next steps should include producing additional documentation and considering the auditors’ recommended controls. The meeting closed after a public comment period in which residents urged procedural reforms and transparency.
