It is either a miniscule thing or a somewhat bigger problem, depending on where you sit. But this much is true: Jefferson County’s accounting books are slightly off — by $904 at the end of the fiscal 2023 year.
And it’s driving Treasurer Terri Kunz nuts.
Each year, the financial statements of municipalities across the nation are examined by an independent auditor. In most cases, the audit yields a statement something like the one Strom & Associates, a Billings-based accounting firm, produced on July 15 for Jefferson County:
“In our opinion, the accompanying financial statements…present fairly, in all respects, the respective position of the governmental activities…of the County as of June 30, 2023, and the respective changes in financial position…in accordance with accounting principles generally accepted in the United States of America.”
Which means, things are generally fine. However, audits also identify problems, or potential problems — areas for improvement. The county’s 2022 audit, for example, called out incomplete minutes of the County Commission’s weekly meetings, as well as misstated grant revenue. Both of those shortcomings were fixed in the following year.
This year’s audit surfaced a new problem — a “serious deficiency,” in audit lingo, which means it merits the attention of the county’s leadership. The county’s monthly reconciliations “are not consistently reconciled to $0 error.”
“I knew they were going to call us on it,” Kunz says. This isn’t a new problem: At the end of fiscal 2022, the reconciliation was off by $4,298. “It makes me crazy.”
Basically, the county’s accounting totals aren’t matching its bank and investment account balances. It’s a lot like the challenge of balancing a checkbook. In this case, the county’s $904 error, on total funds of over $45 million, is equivalent to being off by two cents on an individual’s $1000 checking account: It’s not much, but it has to be figured out.
At least in part, the county’s challenge reflects the increasing complexity of municipal finance, even for a small county like Jefferson. The Treasurer’s Office is like a central bank, tracking revenues and expenses of all the county’s departments, and also of every school, the cities of Boulder and Whitehall, and numerous library, water, and fire districts.
The county has seven separate bank accounts and three investment funds, and Kunz says the county has several hundred bank deposits each week. Some taxes and fees are paid by check at the Treasurer’s Office teller windows; others, like solid waste charges or herbicide sales, come in through various departments. Some residents pay property taxes directly into a county bank account; state grant revenues arrive via electronic funds transfers. Right now, the Treasurer’s staff is working through 50 pages of property tax adjustments.
Every day, Kunz’ staff reviews entries in its bank accounts to identify any that need to be posted in its accounting system. At the end of each day, her tellers sum up their deposits, comparing the totals to what’s in the system. “Every evening,” she says, “they balance to the penny.” And all posts are reviewed by the finance department in the county’s Clerk and Recorder’s Office, providing another check.
“There are a lot of moving parts,” Kunz says, “and one of the parts is off.” Nobody knows which one.
In her response to the audit findings, Kunz committed to enforcing a five-day deadline after each month’s end for departments to post their revenues and expenses — or to move them into the following month. She also proposed internally auditing all electronic check entries to make sure they’re correct — and to “shut the door to my office for two days” to review all entries and postings.
(The audit identified a second, unrelated deficiency, this one related to the mis-timing of the accounting of certain transactions. In its response, the county said it would work with departments to identify outstanding revenue and expenditure accruals as the fiscal year winds down; and to ensure that the previous year’s accruals are reversed.)
If all else fails, Kunz says, she will hire an independent forensic accounting specialist to comb through the system and root out the problem. She hopes to avoid that, in part because such a contractor would cost around $2,000 — but also because she wants to solve it herself.
“We’ll figure it out,” she says.
