Audit of Clinton County Commission and County Clerk identifies numerous concerns, gives rating of "poor"

An audit of the Clinton County Commission and County Clerk released today by State Auditor Nicole Galloway identified several concerns about the county's financial controls and procedures, including the County Clerk's late filings and remittances of payroll taxes to the Internal Revenue Service (IRS). The late filings and remittances have resulted in the county unnecessarily paying penalties and interest of $73,912, and still owing the IRS for at least $142,863 in past due amounts for tax years 2019, 2020 and 2021, including additional penalties and interest. The audit gave a rating of "poor," the lowest possible.  

"My audit found numerous deficiencies in several areas of county finances, especially in the operation of the County Clerk's office," Auditor Galloway said. "Significant steps are needed to address the problems found in the audit, and we've given recommendations to county officials for each of our findings. I urge those officials to move forward with the recommendations to be better stewards of taxpayer resources and to restore public confidence."

In September and October 2020, the State Auditor's Office whistleblower hotline received various concerns regarding the County Clerk's handling of county payroll and related employee benefits and late payments of county bills. After an initial review of the concerns determined further investigation was warranted, the Auditor's Office accepted a request from the Clinton County Commission to conduct an audit.

The audit found the county incurred significant penalties and interest because the County Clerk did not ensure payroll tax forms were filed and payroll taxes were remitted timely to the IRS. The audit also found that after the County Commission changed the county's payroll cycle for employees from biweekly to semimonthly, the County Clerk failed to properly account for the change, causing some employees to be underpaid ($2,357) and some to be overpaid ($20,258).

In addition, the County Clerk did not ensure retirement contributions withheld from employee paychecks were accurate and remitted timely to the respective retirement plans; the Clerk also did not enroll some employees timely in the Local Government Employees Retirement System and incorrectly reported the rehiring and hiring dates for some employees with the system.

The audit also found the County Clerk did not maintain accurate accounting records, which may have prevented other county officials from identifying the untimely payments and amounts owed. The County Commission also did not periodically review the accuracy of the records. Other findings included the failure of the County Clerk to remit child support garnishments timely to the appropriate state agency, and to ensure that accurate 2018 W-2 forms were filed with the Social Security Administration in January 2019.

In addition, the county's disbursement controls and procedures need improvement. Between June 2019 and March 2021, personnel in the County Clerk's office made several duplicate and erroneous payments to vendors. No one was aware of the payment errors until the vendors contacted the county or refunded the overpayments. In one instance, a vendor was paid $71,536 by the County Clerk's office when the vendor was owed only $5,435. In addition, the County Commission and County Clerk also did not ensure bills were paid timely, resulting in charges of more than $1,000 for late credit card payments and $500 for late lease and other bill payments.

The audit also noted the county needs to improve budgeting procedures, better ensure compliance with the Sunshine Law, and develop a records management and retention policy in compliance with state guidelines.

A copy of the complete audit can be found here. A follow-up review is planned to measure the county's implementation of the audit recommendations.