City audit response studied


OBSERVER City Editor

Dunkirk’s Common Council is trying to make sure it doesn’t happen again – a bad report on city financial operations. The state audit of the city’s use of Community Development Block Grant funds and the city’s response was again the focus of the Finance Committee Monday.

“What my plan was for today is to review the minutes for the December meeting and just kind of tighten up a little bit what we talked about so we can put it on paper,” committee chairman Michael Michalski said, adding he would send it to council members for their input. “If there’s major changes that need to be made we’ll meet again in two weeks.”

The committee then began a review of the nine-item proposed response.

Establishing formal procedures to monitor the performance and administration of the CDBG program, including a review of periodic status reports on grant activity was first. Second was written agreements with the DLDC should clearly establish the responsibilities of both parties including the work to be performed, a schedule for completion, and a budget. Also included were requirements for documents allowing for sufficient monitoring and reports to council.

Council should authorize all transfers of CDBG funds to the DLDC only after ensuring they comply with council approved plans along with making sure no funds were distributed above council-approved limits. It was pointed out that council has already authorized CDBG plans.

The fourth recommendation states council should ensure the DLDC has effective control procedures in place to adequately safeguard grant monies.

Charging the director of development with inspecting the DLDC’s loan files to ensure adequate documentation is on file prior to providing CDBG grant funds for this purpose was number five.

Requiring proper documentation to support all claims against the city’s CDBG funds to demonstrate how the funds are being used to meet the program’s objectives was next on the list. Development Director Steve Neratko said the department is making progress on missing and incomplete reports.

How to handle some $26,000 in allegedly unauthorized payments to the former DLDC chairman and DLDC treasurer was number seven. City Attorney Ron Szot said the issue is still being looked into.

Having the council and mayor establish formal procedures for selecting grant recipients through an open, competitive process was the focus of number eight. The city did hold numerous public meetings in 2012 on CDBG 2013 and the five-year plans. The final item addressed the facade program, which Neratko said the city is not doing this year on the recommendation of HUD.

During the review of the proposed response, recommendations on the various items were made and discussed. After the meeting Michalski was asked for his thoughts on the meeting and wrapping up the process.

“Our goal was to really tighten up some of our responses that were given to us, the recommendations from the auditors, and I think we did that tonight,” he replied. “The only thing pending now before we give our final responses is to meet with (outside consultant) Harry Sicherman and to review some of the forms that are being put together by the Department of Development. Once we get those two things done, I think we can put together our final response and submit it to the state.”

Although the CDBG funds amount to about 2 percent of the city’s operating budget, Michalski said the effort to comply is necessary.

“We have basically a trustee or fiduciary responsibility to make sure those funds are correctly spent and handled in a correct manner,” he stated. “I don’t see this as being a waste of time, regardless of how much money we’re getting. If it’s one dollar or a half million dollars, we still have an obligation to taxpayers to make sure it’s done correctly.”

Michalski was asked if the CDBG funding was worth the city’s efforts.

“Obviously the amounts have gone down every year for the past three years and you do have to question, is it really worth all this time and effort to put into this program? Right now I don’t think we have a choice. Right now we have to address it,” he replied. “Whether we want to continue with the HUD programs or not, that’s for another discussion. Right now we’re trying to make up for mistakes that were made in the past and that’s my focus. … We’re in this now, regardless.”

It was decided a session with consultant Harry Sicherman will be held Jan. 16 with another meeting of the Finance Committee on Jan. 22 at 4:30 p.m. Michalski said he would put the response letter together for the committee’s review.

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