Auditor’s recommendation sparks board debate

Miguel’s motion for oversight dies after second withdrawn.

By MIKE ANTHONY

An auditor’s recommendation that the city of Crestwood exercise some oversight of the financial statements of the historic Sappington House recently sparked a lively aldermanic debate.

Michele Graham of Botz, Deal & Co., presented her firm’s audit of the city’s fiscal 2010 finances to the Board of Aldermen on June 28. In the audit, Botz, Deal & Co. recommended the city exercise some oversight of the Sappington House’s financial statements.

“… Sappington House is an entity that works pretty autonomous. The accounting that goes on there, and I know the city doesn’t really want to take that over necessarily, but it doesn’t — it’s not subject to all the internal controls that happen with the city’s assets,” Graham told aldermen. “They do it on their own and then we get the information at the end of the year and combine it with everything that’s with the city.

“I’m not saying you should necessarily take over that accounting, but I think there should be some oversight on that — getting the bank statements, getting reconciliation statements on a regular basis rather than just at the end of the year and including them with your financial statements.

“There’s about $500,000 worth of assets there that are really in the city’s name and probably should have some of the same oversight that the city’s assets do …,” she added.

Ward 3 Alderman Jerry Miguel later asked acting City Administrator and Director of Public Services Jim Eckrich how the board should proceed in acting on the auditor’s recommendation.

“… Is there anything that we as a board need to do in that regard or does the administration have sufficient documentation to move forward or does it need a motion or anything from the board in order to move on that particular issue — on that recommendation?” Miguel asked.

Eckrich said, “… The administration would need direction from the board if you were to change the way the Sappington House is handled.”

Miguel said, “So you would like direction from the board to affirm what we just heard this evening?”

Eckrich replied, “Yes. If you want us to go to the members of the Sappington House Library Trust and obtain anything from them — yes, I’d like that direction from the board.”

Miguel said, “I agree with the recommendation that was just made and can we handle that with a motion at this point? And I guess my question there would be to (City Attorney) Mr. (Rob) Golterman that the board affirms the recommendation received from the audit …”

Golterman said, “You can do that by motion. It may take further action to implement whatever needs to be done, but you can direct staff and myself by motion to begin that process and we’ll have to report back …”

Miguel later said, “… I move that the city work with Sappington House to receive copies of bank statements directly from the bank and review reconciliations of these accounts on a monthly basis.”

After Ward 1 Alderman Darryl Wallach seconded the motion, Ward 1 Alderman Mimi Duncan said, “… I think we need to move forward on something, but I would be less comfortable with what Alderman Miguel said — but I would like to just make a more generic motion to say let the finance officer along with the acting city administrator and … the mayor and our city attorney to move forward with that process.

“I don’t feel I have the expertise to act on it. So that’s what I would like to see and then as Mr. Golterman said bring it back to us and we can make a specific vote on their recommendations …”

Ward 4 Alderman John Foote said, “Well, historically the Sappington House has been an entity unto itself. A lot of the funding that brought that $500,000 in were funds from people who are deceased and it was part of an endowment. And the people keeping the Sappington House currently are volunteer people and people in progression through the chain of shall we say relatives?

“And historically the city and Sappington House have worked with one another and on occasion we actually have had the ability to borrow money from them to do repairs on a portion of their property. It’s been a very easy street back and forth. It’s tidy from an accounting standpoint, but from a trust and from a long-existing relationship … I’d be a little hesitant to go along with this.”

Wallach said, “… We’ve got a third-party consultant that’s provided us their opinion. I think we need to think highly of that recommendation that’s she’s made and have the city move forward with that recommendation …”

City Finance Officer Greg Kremer told the board, “I will tell you that city staff has already contacted the Sappington House, the trustees, and asked at least minimum to receive monthly the bank statements as well as quarterly. Some statements come quarterly. Some are monthly. So city staff has already reached out to them to request that information. I guess if there’s further investigation that the board wants us to do, we can do that, but at least we have already started … we’ve already taken into account the recommendation by (the auditor) to go ahead and make that initial step.”

Ward 4 Alderman Deborah Beezley said, “With that step in place, I think it would probably be a good idea for us to see how that progresses and if it’s positive, then I think probably no further action would be indicated. So let’s — I go along with John Foote, or Alderman Foote, that I think we’ve have such an excellent relationship in the past, I would not like to disrupt that and if you’ve already started the process, I think that’s a good first step.”

Duncan asked Kremer, “… What was the reaction when you asked that question?”

Kremer responded, “I think they’re very receptive … They basically at the end of the year have to supply us that information. So rather than them keeping all the records and then really at the end of the year they give us their records and we keep them for a month, two months sometimes, and I think they’re really reluctant to turn over those records. So I think allowing us to just obtain a copy from the bank, I think they were going to reach out to their banks and just have a copy sent to us. So it’s actually going to kind of alleviate their responsibility somewhat …”

Duncan asked about activity on those accounts and Kremer said, “There’s not a lot of activity that goes through those accounts on a monthly basis or even on an annual basis. It’s very minor activity.”

Eckrich explained that the roughly $500,000 is divided among three groups — the Sappington House Foundation, the Sappington House Gift Shop and the Sappington House Library Trust — with the Library Trust having the greatest share, about $450,000.

“… That trust is governed by a document that has three trustees and the city has made some attempts to have some oversight of that money in the past and it has not worked, partially because there’s been no board action behind it …,” he said, adding that’s why he asked for direction from the board. “The Sappington House Foundation and the Gift Shop have been very accommodating with the city in working with us and making improvements …”

Wallach later asked Kremer, “… Did you receive the information from the Library Trust?”

Kremer said, “We have not received anything for 2011 as of yet. The request was just made about a week ago.”

Wallach said, “But the responses you received were receptive that they would be willing to.”

Kremer said, “Yes.”

Wallach said, “… Having said that, it looks like city staff has already taken that step of the oversight. I’m going to go ahead (and) rescind, withdraw my second since they’re already doing that …”

Mayor Jeff Schlink then declared Miguel’s motion dead for lack of a second.