Better system of audits should be considered

Money is tight for local units of government, but having a scrupulous system of checks and balances over how tax dollars are spent remains vital.

Normal annual audits conducted by private certified public accountants may not always catch irregularities.

The village of Lyndon found that out last year.

Village officials suspected irregularities with payroll records kept by the village clerk. A certified public accountant from nearby Prophetstown was hired in September to conduct a special review of 5 years’ worth of records.

A few weeks later, the village president, with the village board’s backing, fired the village clerk. The clerk initially refused to give up her computer passwords, but relented.

The special audit found several irregularities in the clerk’s records because of the lack of standard procedures. However, no evidence of gross negligence or fraud was found.

What if illegalities had been found?

The accountant would have been ethically and morally obligated to tell someone. But, according to a state Department of Financial and Professional Regulation official, no absolute requirement exists that fraud, negligence or other criminal activity must be reported to law enforcement.

That is disquieting news.

More disquieting is the fact that public bodies, such as village boards, also are not obligated to tell someone.

In fact, it appears there are no standard procedures about this subject, period.

When asked, Whiteside County State’s Attorney Gary Spencer said the village should report any suspected financial crimes to the Illinois State Police for investigation. “Should,” of course, is different from “must.”

Illinois’ neighbor to the east handles those situations differently.

Indiana has a State Board of Accounts that employs an army of auditors. They regularly review finances of townships, cities, counties, schools and colleges.

If irregularities are found, the agency, by law, must refer all cases to the Indiana attorney general, who takes civil or criminal action, as warranted.

We think such a reporting requirement in Illinois would create more accountability in the budget process, and such a Board of Accounts would provide a more formal protocol to deal with possible illegalities and the recovery of money.

Lyndon’s experience shows that the current process has the potential for abuse. An alert village president and board members sniffed out the irregularities, which were confirmed by a special audit – but only after the irregularities had been going on for a while.