ARCHIVE

  • Last modified 10 days ago (May 8, 2024)

MORE

Debt misstated by $2.6 million

Staff writer

Marion’s three most recent official quarterly reports have misstated the city’s debt by almost $2.6 million, according to a Record investigation.

Up until the second quarter of last year, the city had listed debt for its recent water line replacement project at $2,868,826.

Starting with the third quarter of last year, that amount shrank by nearly $2.6 million to just $274,311.78.

The same amount was repeated in reports for the fourth quarter of 2023 and the first quarter of 2024.

The error, initially noticed by a Record reader who asked to remain anonymous, may have been caused by a misplaced decimal point.

According to an audit of the city’s finances by the Loyd Group of Galva, the city’s actual debt on the project was $2,743,112 at the end of 2023.

That represents the earlier debt of $2,868,826 less $125,714 in principal paid in 2023.

If you move the decimal point one digit to the left, the amount the city has been reporting as its debt for the project is within a few cents of what the Loyd Group reported.

The apparently incorrect numbers were in official reports the city published in the Record Nov. 1, Jan. 31, and last week.

They also appeared in documents sent to city council members at those times.

City clerk Janet Robinson, who created the three most recent quarterly financial reports, said the error probably was a typographical mistake.

State law, however, requires the city treasurer Becky Makovec, not Robinson, to create city financial reports.

Whether the city will be required to re-publish corrected versions of its reports was not known Tuesday. Neither was whether the error should have been noticed on city balance sheets.

This is not the first error uncovered in recent publications prepared by the city.

Ordinance 1509, approved by the council April 1 and scheduled for publication April 10, contained language repealing itself instead of two earlier ordinances on floodplain management.

The error was noticed by the Record before publication, and the newspaper quietly notified the city. The ordinance was corrected, the council accepted the changes, and the corrected ordinance was passed April 15 and published April 24.

Suspicious anomalies also have appeared in other recent reports, including an apparent increase in the amount due for a voltage upgrade.

The Loyd Group’s annual audit of the city’s finances also includes a section in which the city must disclose to its auditor whether it faces any pending legal actions that might impact city finances.

Although four lawsuits seeking in the millions of dollars have been filed regarding a police raid Aug. 11 on the Record newsroom and its owners, the Loyd Group report states:

“During the ordinary course of its operations, the City is a party to various claims, legal actions and complaints. It is the opinion of the City’s management and legal counsel that these matters are not anticipated to have a material financial impact on the city.”

Accountant Scot Loyd said whether information on pending lawsuits must be included in a city’s audit report depends on “materiality.”

“Materiality” is the auditor’s judgment on whether the city is likely to have to pay a judgment out of city funding, as opposed to insurance funding, and whether a lawyer representing the city considers a judgment will be awarded to the plaintiff.

Asked to comment Monday, Robinson said the city did not need to disclose suits filed against it unless specific dollar amounts were stated in the suits.

Only one of the four suits was filed before Dec. 31, the end of the year that the Loyd Group report covers. That suit did list an amount of “at least” the legal threshold for filing a federal lawsuit.

Other suits, all of which were anticipated in December but filed after the first of this year, list amounts that in some cases reach into the millions of dollars.

Reporter Phyllis Zorn contributed to this story.

Last modified May 8, 2024

 

X

BACK TO TOP