Spink County Commissioners issued the following the statement at the close of an executive session regarding the State of South Dakota Audit of Spink County on Tuesday, February 28th.
“Following the recent State of South Dakota Audit of Spink County, the Spink County Commission has reviewed the fiduciary responsibilities of the Spink County Treasurer’s Office and provided notice through the Spink County States Attorney that implementation of department controls are required within the Treasurer’s Office to prevent any further Audit concerns regarding cash transactions. The Treasurer’s Office has been reprimanded for the audit’s finding of a significant deficiency regarding employee use of county funds.”
The statement comes on the heels of an investigation conducted by Spink County States Attorney Vic Fischbach after an audit by the State of South Dakota Department of Legislative Audit resulted in finding number 2010-01 dated December 13, 2011 which states that during the period of October 2010 through November 2011 the Spink County Treasurer’s Daily Balance Record reflected various amounts owed the County from a Deputy County Treasurer. The amounts owed to the County during the period ranged from $155 to $2,690. The balance owed the County as of November 29, 2011 was $2,690. Of this amount the County Treasurer authorized and was aware the Deputy County Treasurer owed the County $720, however she was unaware the Deputy County Treasurer owed the County the additional $1,970.
Further analysis of the audit show that the Treasurer’s Daily Balance Record indicated that on October 13, 2010 Deputy Treasurer Amy Michlitsch began to use County funds for personal use by issuing a personal check, removing the cash and then not depositing the check with the daily deposit but rather holding it back to deposit at a later date. In the time period of October 13, 2010 to November 29, 2011 Michlitsch used $7,864 of County Funds in this matter. Beginning May 24, 2011 the Treasurer’s Daily Balance Record indicated Michlitsch owed funds under the name of Mick or Mick May.
Spink County Treasurer Kathy Ludwig stated in the audit findings she was unaware, and did not authorize Michlitsch to use the funds owed to the County under this name. However she was aware that Michlitsch owed $720 of the $2,690 balance owed the County on November 29, 2011.
According to the report, Ludwig stated that she did not perform a detailed review or reconciliation of all cash items noted in the Treasurer’s Daily Balance Record. It was the opinion of the Audit that if such a review had been performed, the additional borrowing may have been detected.
When questioned by Commissioners about the matter Ludwig stated that she was disappointed that her own auditor had not caught the problem since it was such a significant amount but stated that she didn’t believe it was a significant problem since her office will not be cashing personal checks for county employees any longer. Commissioner Brian Johnson questioned Ludwig inquiring if it bothered her that this “temporary borrowing” led to an employee using another name to obtain funds? Her reply was, “I have trusted Amy since the day she walked in to the office. She is meticulous in her work and has been able to help streamline the effectiveness of the Treasurer’s Office.”
As to questions regarding whether a detailed review and reconciliation of all cash items in the Treasurer’s Daily Balance Record had taken place and the problem detected, Ludwig stated, “I try but over the last 2 years I have been really busy trying to train those in the office. We have had several new personnel.”
Michlitsch when questioned by the Commissioners about her actions stated, “I’m not going to fill you with a bunch of excuses, I did it and I cashed the checks. Since that time I have made several changes and this will not happen again.”
According to Spink County State’s Attorney Vic Fischbach, who investigated the matter when the Audit Report was presented in December, “Obviously this was a serious matter that we looked into quite thoroughly. We did not find any attempt to defraud or any criminal activity. Michlitsch was very open about what she had done and had left detailed accounts of the amount owed. As a result, the findings of our investigation were turned over to the Spink County Commissioners and measurers implemented that include a double system check of the Treasurer’s Daily Balance Record and when verifying cash and cash items in the hands of the County Treasurer in accordance with SDCL 7-10-3. In addition, they will be identifying the purpose of all items in the Treasurer's Daily Balance Record and reporting any improprieties to the Board of County Commissioners.”
The Commissioners adjourned to a 40 minute executive session to further discuss the matter after which they came back to open session and set a policy regarding the cashing of personal checks and responded to audit recommendations. According to Commissioners Brian Johnson and Craig Johnson, “This action was a compromise as there was a variety of solutions discussed by the Commission.”
When questioned, it was reported that all the money ($2,690) in question at the time of the audit has been put back into the County funds.
Spink County Treasurer Kathy Ludwig has filed for re-election in the upcoming General Election November 6, 2012.