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Ogle County forensic audit: $10,754 from tow fund unaccounted for

Auditors say the fund's records were sloppy and it lacked internal controls

OREGON – The forensic audit of the Ogle County administrative tow fund found that more than $10,000 of expected tow fees are unaccounted for.

In addition, about $61,000 in fees that should have gone into the county's general fund didn't make it there, the audit found.

Findings from Naperville-based Sikich, which began the audit in July, were presented Tuesday afternoon at a special meeting of the county board's executive committee. The forensic audit will cost the county $15,000, and Sikich reported putting in more than 128 hours.

Click here to view the forensic report

As a result of the findings, the committee is recommended that the county approve all recommendations in the report; that the board explore the legalities of having people pay tow fees in an office other than the county sheriff, as the ordinance now requires; and that the county move the $38,000 still in the tow fund to the general fund and keep any future tow fees until the $61,000 mark is hit.

Three recommendations were presented Tuesday night to the board, which approved them.

First, the board accepted the Sikich report, agreed to implement its recommendations to tighten up tow fund procedures, and to pay Sikich's bill of $15,000.

It then approved requiring that $61,713 be transferred immediately from the tow fund to the county's general fund to repay money that should have gone there in the first place.

Finally, the board agreed to explore changing where tow fund payments must be made from the sheriff's office to another county department.

Based on records reviewed by the auditors, money deposited into the tow fund should have equalled $237,413.12, made up of $350 tow fees and other sources of revenue.

According to the results of the forensic audit, though, only $226,658.12 was deposited, leaving $10,754.67 unaccounted for.

"It should be noted that this figure was arrived at after piecing together bits of information from the Sheriff's Office and tow companies and verifying data as best as possible, given the sloppy record-keeping performed by the Sheriff's Office," the report said.

Sikich's James Sullivan, who led the forensic audit, said the amount of unaccounted for money could be higher or lower, depending on whether cash transactions were made other than those the audit found.

Sullivan said when he talked with Harn about the unaccounted for money, the sheriff was upset, but had no explanation.

He came across no transactions that led him to believe there was fraud or embezzlement, Sulilvan said.

"There is a complete breakdown of all internal controls ... we can't say where the money went."

Board Chairman Kim Gouker said the results of the audit didn't allow for a definitive answer on whether fraud was committed.

"You probably can't tell if there was," Gouker said. "You probably can't prove that there wasn't."

After the meeting, Gouker said the forensic audit found a serious breakdown of record-keeping, which reflects poorly on the department and the county.

"This has been a long, arduous process – many months – and I think the personnel from Sikich did an outstanding job," he said. "They dug as deep as they possibly could. They overturned every rock necessary. We now know a lot of what happened, except for the missing records."

With the changes to the fund that already have been implemented – limiting its revenue and expenses, and transferring control to the Ogle County Treasurer's Office – and the recommendations to the board, Gouker said he's satisfied with where the tow fund is and is confident the county will "clean up the rest of it."

When the tow fee was approved by the county board in 2011, it only approved the fee. It didn't set up a fund or limit what could be deposited into it. The ordinance also allowed for money in the fund to be used at the sheriff's discretion. All of those have been changed since the spring.

Forensic audit results

When the forensic audit began, the department wasn't able to give Sikich a total for tow fees it had collected.

Sullivan talked to six of the 21 tow companies and reviewed police reports. He was able to verify 502 tows, he said, but there are others that couldn't be verified.

"In essence, it was just a complete breakdown of internal controls," Sullivan said, when describing the fund and its documentation.

The first deposit into the tow fund included a check from the Illinois Office of Emergency Management for about $12,000, and six tow fees, he said

But only $10,000 of the check was deposited. The forensic audit found that $2,921.31 was received as "cash back."

The forensic audit also found a $2,340 "non-check" payment to Dan's Diesel, which was for work on Sheriff Michael Harn's truck, but Sullivan said there was no invoice written by the company.

"Sikich was informed by Dan's Diesel that it installed an emissions delete package on the sheriff's truck, and that it was a cash transaction," the audit said. "Dan's Diesel did not issue an invoice due to the nature of the work, not wanting to create a paper trail 'due to EPA laws.'"

According to the audit, Harn told Sikich the cash from the IEMA check not deposited into the fund might have paid for the work at Dan's Diesel.

There was about a 4-month lag from when the deposit was made and Dan's Diesel was paid, Sullivan said.

Sikich found that the record-keeping and procedures for the tow fund were not conducive to effective internal controls.

"The original problem and a problem throughout our review was that records were not maintained properly," Sullivan said.


Sikich made 12 recommendations for ways the Sheriff's Department can "reduce the risk of improperly handling administrative tow fees and to properly manage the tow fund."

The first was to establish written procedures for the entire tow fund process, detailing responsibilities for staff. There are no written procedures at this time, Sullivan said.

There was no procedure for tow companies to be added to the tow list and no procedure for them to be removed. Two companies were removed form the list.

The only department employee who handled the fees, paperwork and record-keeping was Executive Assistant Melissa Crippen, who happens to be Harn's sister-in-law.

Sullivan recommended adequate separation of duties be added.

Other recommendations:

• Funds should be secured in a safe until deposited.

• Deposits to the tow fund or transmittals to the county treasurer should be made daily when fees are collected.

• The sheriff's office, in conjunction with the treasurer, should periodically reconcile all administrative tow fund records with funds collected and deposited to ensure all expected revenue was received and deposited.

The executive committee meeting lasted 70 minutes. Members talked about implementing the recommendations and the possibility of freezing the fund until they were applied.

Ultimately, all the committee or county board can do is make recommendations or pass directives. It will be up to the elected official to implement them, Gouker said.

"We have no control over the elected official," he said. "We really don't."

About the tow fund

The tow fund was established by county ordinance in 2011 and was meant to supplement diminishing budgets and help the sheriff's department with vehicle repairs and purchases. In the original ordinance, the sheriff was given discretion to spend the funds, collected from a $350 tow fee, for any purpose.

In December, Sauk Valley Media reported that funds from the tow fund had been used by Sheriff Michael Harn to pay for a tent for the county fair, flowers for Secretary’s Day, and a $4,000 management fee for the department’s Facebook page, in addition to vehicle purchases and repairs.

In February, after the fund’s expenses and revenue from other sources were reported, the board restricted what the tow fund could be used for and what funds could be deposited into it.

A month later, the tow fund’s control was transferred to the Ogle County treasurer’s office, and Ogle County Chairman Kim Gouker called for a forensic audit of the fund. He had opposed one several months earlier.

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