McHenry County Blog

A press release from State Rep.

Rep. Wheeler Looks to Protect Consumers

Springfield, IL… With the 98th General Assembly about to swing into full gear, State Rep. Barbara Wheeler (R-Crystal Lake) is looking towards consumer protection with her first ever piece of legislation aimed at credit card user fees.

“There are certainly signs that the economy is moving again; however, families are still weary of fee increases,” Wheeler stated.

Ten states now prohibit surcharges on credit cards. Barb Wheeler would make Illinois number 11.

“Even small savings can go a long way, and now is not the time to begin burdening families with increased fees, regardless of their size.”

The measure, HB 977, seeks to make it unlawful for merchants to impose a surcharge on a consumer who elects to pay with a credit card.

In July, an antitrust settlement between the major credit companies, Visa and MasterCard, and merchants will now allow retailers to charge a higher price for consumers who choose the “credit” option as opposed to the “debit” option when making purchases beginning on January 27 of this year.

Prior to the settlement, merchants were only allowed to offer discounts to non-credit card purchases, not to charge a higher price to those paying with credit.

This bill marks the first piece of legislation introduced by Rep. Wheeler and is already receiving support from many of her constituents.

Area business owner Pete Kalantzis, owner of Marzano’s Wood Fired Italian Restaurant in McHenry, has already vowed not to charge customers.

“Me personally, I will not charge my customers,” Kalantzis stated.

“Credit cards are a part of our cost of doing business. We are providing a service and we shouldn’t be penalizing our customers for using credit cards.”

“This is exactly why Rep. Wheeler will be an asset to the people of McHenry County,” said Ed Donahue of the Law Office of Donahue and Walsh.

“This is a common sense approach to an issue that affects everyone. I am the owner of a small business and credit card surcharges have always been a cost of doing business.

“I am also a consumer and this is a bill that protects the consumer.”

Fox News had a wallet busting report on tonight about how merchants will be allowed to charge up to 4% more on credit card purchases starting this weekend in all but 10 states.

If merchants start charging 4% for credit card purchases, that makes the 1% cash back Discover offers pretty worthless.

Illinois is not one of those ten states.

The only restrictions seems to be that the merchant has to tell you that he is charging you more.

I’m wondering if this is an unintended byproduct of Senator Dick Durbin’s bill to prohibit merchants from charging more to those using debit cards.

Since it is prohibited in ten states, such as California and Florida, that means an opportunity exits for some Illinois legislator to introduce and try to pass legislation to prohibit charging more for those using credit cards.

Merchants wanting to reward those using cash could always give a rebate.

If little signs start popping up where I shop, I’ll be carrying around a lot more cash.

A press release from Grafton Township Supervisor Linda Moore:

Non-Payment of Township Expenses by Trustees Zirk, LaPorta, Murphy and McMahon Causes Accounts To Be Closed

Grafton Township Trustees have not approved payment the township credit card for the months of May, June, July and September leaving a balance due of $2,644.68.

Notification was sent by a representative of BMO Financial Group today that the all of the township credit and debit cards were closed due to the non-payment on the account.

These elected official positions have had credit cards since 2005.

A local attorney has offered to provide free mediation with the township board, however the trustees have not accepted it.

Grafton Township Supervisor responds to Township Trustee Rob LaPorta’s posting of credit card purchases in a comment under this article:

Moore Says Trustees are Lawsuit “Addicts” Having Spent $347,000 vs. Her $53,000, Motive Is Her Defeat of New Township Hall

Here’s Moore’s press release in reply:

Trustee LaPorta Questions Township Expenses He Already Approved

Linda Moore

Rob LaPorta

Trustee LaPorta has posted on the McHenry County Blog [see comments] questions that he has about the very bills that he himself has already approved as a township trustee.

I will attempt to help him out with this information.

The trustees are encouraged to come to the office and view all township financial documents, but they do not do this.

I have made myself available after regular hours.

The township assessor, supervisor, and highway commissioner started using credit cards in 2005, shortly after Trustees Zirk, LaPorta and Murphy took office. Since my election to office in 2009, at every township board meeting these trustees spend about an hour asking very specific questions about all of the bills, especially the town bills, before they approve them.

All of these bills that he is asking about have been approved by the board.

We have had a flurry of FOIA requests which have significantly increased the need for office staff hours and we have had to schedule employees for extra hours.

With the budget cuts that have been proposed by the trustees, I am concerned about a shortage of staff to operate the senior transportation program at the end of the fiscal year.

Because I do not have the specifics of what he is referring to I will attempt to address his concerns as best I can without having the details of the exact items that he is referring to.

• We mail postcards to invite residents to township events.
• The township Supervisor attends monthly training for the McHenry County Township Supervisor’s Association.
• Converge Home Health asked us to purchase food for the event they were sponsoring when they had a scheduling problem. They later reimbursed these expenses.
• We bought some cleaning supplies for the office. The computer printer ink was getting low and we like to keep some in stock in advance, a chair needed to be replaced to avoid potential workman’s comp claim, the binders are used for board members packets and document storage.
• The emergency lights are checked regularly by the fire department and must be kept fully operational.
• A hall light was replaced.
• The township offices subscribe to the Daily and Northwest Herald.
• An overnight hotel stay at a Township Officials of Illinois sponsored training program was incurred.
• A computer monitor malfunctioned, trustees’ and clerk’s computers were bought, we needed more chairs for AARP classes, and videotape equipment was needed for township purposes.
• We use the van when possible for senior transportation to save expenses.
• The township supplies the seniors with bingo cards and we have two yard signs to place out front when we are holding the event.
• A downtown Chicago parking garage fee was incurred for a meeting with State Officials.
• Bags are used to distribute information to residents about township service.
• Fuel was bought for a township vehicle.
• The township paid for a “For sale by Owner” listing of the township property on Haligus Road.
• We bought a used light fixture for the township bathroom.
• The township bought check supplies.

Maybe Master Card would be willing to pay for exposure on Crystal Lake's Tax Increment Finance District stone monuments.

What a perfect ad to place on Crystal Lake’s $16,000 credit-financed TIF monuments:  one for MasterCard.
= = = = =

Photoshopping by one Heck of a Guy blogster Allan Showalter.

Crystal Lake used to get a lot of money from sales taxes?

"35 Days Till Christmas" could read the advertising sign next year.

To keep the dollars flowing, the Crystal Lake City Council voted to hike the city’s rate by 75%.

Advertising shopping opportunities in the city might help repay the $16,000 apiece that the city paid to erect four monuments marking the eastern and western edges of the Virginia Street Corridor Tax Increment Financing District.

What do you think?

Is it worth a try?

= = = = =
Photoshopping by one Heck of a Guy blogster Allan Showalter.

Northrop Grumman Electronic Systems Business Development Director Matthew Smith-Meck has been indicted on a five-count indictment by the U.S. Attorney’s Office.

From 2006-8, the Crystal Lake man is accused of misusing his company American Express card.to the run of about $215,250.

The Federal indictment, issued July 21st, itemized the following misuses:

• purchasing fitness equipment
• paying for home remodeling and landscaping
• paying Federal taxes
• making automobile payments.

He also is accused of asking for reimbursement for airline and business expenses that

• had not been incurred
• were incurred by already reimbursed
• were incurred but overstated.

Expenses for trips to

• London,
• Greece,
• Taiwan,
• Germany and the United Arab Emirates

sent by Federal Express for reimbursement are noted in separate counts in the indictment.

Location of 40 acres in Wyoming which is identified for potential forfeiture.

In addition, Smith-Meck is cited for falsification of a Department of Defense “Electronic Questionnaires for Investigations” Form 86 that he had not been fired from a job in the previous seven years, when he knew he had been terminated by Northrop Grumman Oct. 22, 2008. The form also asked whether he had not had employer credit card problems

$215,250 in forfeiture is sought and a 40-acre property in Carbon County, Wyoming, is specifically cited.

Smith-Meck lives on Prairie Ridge Road, which is east of Route 31 between East Terra Cotta and East Crystal Lake Roads. It is in unincorporated Nunda Township.

The trial will be in Chicago.

The beginning of a four-minute story about State Rep. Jack Franks' bill.

State Rep. Jack Franks does work for at least one bank group.

The group is foreclosing on homes.

That, of course, injures credit ratings.

He is also sponsor of a bill just signed by Governor Pat Quinn which prohibits employers from checking credit ratings of applicants to lots of jobs.

On July 29th, there apparently were "ADDITION COVERAGE" available on the Fox News web site.

Now the "additional comments" are missing.

He got the story on Fox News in Chicago on July 29th.

The Chicago Tribune on Wednesday trashed the idea:

Chicago Tribune editorial criticizing Jack Franks' bill, but not mentioning his name.

“As if there weren’t enough reason for employers to avoid hiring in Illinois, Gov. Pat Quinn on Tuesday providing another…

“In practice, the new law will introduce a batch of red tape. It won’t create a single new job. It will simply curb the discretion of an employer who might prefer to hire someone who has paid his bills over someone who hasn’t…

“Illinois, with 10.4 percent unemployed, is sending one more signal that it doesn’t trust the people who put people to work.”

Thursday night the school board considered an “Internal Controls Report” prepared by Talbert.

Perhaps it should have been titled, “Lack of Internal Controls Report.”

The board packet for Thursday night meeting contains over 600 pages of information. If any of the board members reads it all, I’d award him or her a gold star.

But they ought to read this Talbert report. Start on page 10 of the Finance Report in the board packet for December 13th.

It starts out defining internal controls as a process designed to provide reasonable assurance regarding the achievement of objectives in the following three broad categories:

• Effectiveness and efficiency of operations
• Reliability of financial reporting
• Compliance with applicable laws and regulations

To reach those objectives the internal control framework requires these five components:

1. Control Environment – “Tone at the top” or “corporate culture” of the organization influencing the control consciousness of the employees.
2. Risk Assessment – Identification and assessment of the internal and external risks that present obstacles to achieving the organization’s objectives.
3. Control Activities – Policies and procedures in place to deter, detect, or mitigate various forms of risks identified by management.
4. Information and Communication – Accurate, timely, and appropriate communication is made available on a timely basis to those who need it. Clean and concise communication from the top down that control responsibilities must be taken serious.
5. Monitoring – Ongoing monitoring and evaluation of policies and processes.

So, we’ve both had our management lesson for the day.

What about where District 158 fits into this picture?

Talbert looked at business processes in the Fiscal department with emphasis on high cash areas, e.g., food service, school secretaries or those responsible for handling cash at schools, registration, etc.

Next comes the Executive Summary.

With regard to accounts receivable and cash, purchasing, purchase cards and credit cards, accounts payable and cash disbursements, payroll, accounting and budgeting, and general controls,

”There are significant deficiencies in business processes that cross all categories reviewed, poorly designed processes that are manual, lack of purchasing expertise, inadequate financial software system, lack of consistently followed reviews and processes, lack of technical and operational training, lack of standardized purchasing and accounts payable process.”

What are some specific problems?

Accounts Receivable and Cash Cycle:

For impact and transition fees [from developers]…there is no established billing cycle…no established system for monitoring receipts, [etc.]

Deposits received in the Fiscal office are not recounted and posted to SDS upon receipt…[nor] reconciled and deposited on a daily basis…

Funds waiting to be deposited are not secured in the safe but in a locking bank bag in the file cabinet in the Fiscal department.

Purchasing Cycle:

“Overall controls and business processes surrounding the purchasing process are inconsistent, weak, and lend it self to major deficiencies…below are some of the more significant deficiencies…:

There is no professional purchasing agent… All bids, requests for proposals and request for qualifications are handled by the individual departments and the process is not standardized.

There is no requirement for departments to utilize purchase orders…As a result there are very large dollar amounts request to be paid on a check request… [when] the goods and services have already been received… Develop a threshold for requiring all purchases over an established dollar amount be placed on a purchase order… [and be approved by the] B[oard] o[f] E[ducation]…

…no accounts payable processing should be tasks within the purchasing area.

There is no approved purchaser list with established purchasing limits…

Purchasing Card and Credit Cards:

Since implementation of the purchase card, there has not been an evaluation of the other credit cards held by the District…

…There is not formal process to determine credit limits for individual or department cards. There appears to be a lack of accountability and/or ownership for departmental purchase cards…

Accounts Payable and Cash Disbursement Cycle:

Overall, controls and business processes surrounding the accounts payable and cash disbursement process are inconsistent, weak, and lend it self to major deficiencies…

Purchase orders and invoices are not always compared resulting in invoices being vouchered in the system separate from the purchase order and not relieving the encumbrances…quarterly… all open purchase orders [should be reviewd] and close[d] when necessary.

Invoices are being vouchered and paid from copies. Additionally, instances have been noted where a check request has been received in Fiscal with no sufficient backup documentation…can result in duplicate payments…

Invoices are being sent from vendors to the ordering departments. As a result, invoices are not process in a timely manner…

…Invoices that are “problem” invoices are not followed up on in a timely manner due to lack of manpower…There is one accounts payable clerk who is the sole employee that completes the process from vouchering to disbursements. When this employee goes on vacation, accounts payable activity stops until she returns. This poses a separation of duties issue…

There is no requirements or guidelines for departments to utilize check requests…There needs to be established criteria for purchasing goods or services using a purchase card vs. purchase order vs. check request.

Payroll Cycle:

…an area of improvement needs to be deductions and reconciliations to the general ledger. Additionally, all EFT payments and reports needs to be reviewed and approved by the Comptroller prior to processing.

General Controls:

The current software system does not meet the needs of the District…does not support accrual based accounting…standard reporting used in the accounting industry is not available… [With] the current software system… there are no audit trails, the check printing process allows staff to print and reprint checks with no controls, and staff are often in the background of the database to do standard data uploads…[which] allows for corruption of data and data formatting…

…There needs to be a vocal embrace and awareness of internal controls from the top down….

There is no policy to address unreserved fund balance and emergency contingency…from 5-15% [of] revenue stream…

There is…too much access to Fiscal staff [to SDS] and no separation of duties…

Next there are pages and pages of objectives, potential risks and evaluations/conclusions. Here are some of the more shocking ones:

Accruals for accounts receivable had not been calculated or recorded in the G[eneral] L[edger] prior to September 2007.

There is no regular billing cycle for impact fees for …municipalities…

…in the school office…there is no separation of duties as in most cases the same person collects the monies and prepares the deposit.

Cash receipts are not entered (receipted) upon receiving the funds…

Fiscal deposits are secured in a locked bank bag in a locked file cabinet.

There is no formal and/or uniform purchasing process. Process is decentralized…

With regard to use of sole or single source vendors, “there is no formal and/or uniform purchasing process.”

There is no “approved vendor list.”

Large dollar purchases are made with no p[urchase] o[rder] in place.

For department credit cards, are more occurrences where the buildings don’t know who charge the items and there are no receipts remitted.

Employees are not being consistently required to sign out the department credit card.

…process payments from faxed copies of invoices…nothing…that prevents duplicate payments to vendors.

Thee have been instances of duplicate payments.

There is still an environment of coding expenses to the G[eneral] L[edger] account in which there is budget money instead of the correct GL account.

Backup received for reimbursements. Have noted that there have been credit card receipts submitted but the receipt do not detail what was purchased at a restaurant. Noted management submit reimbursements that do not have their supervisors approval.

Check stock and signature plates are secured in the Fiscal department but all fiscal staff have access to the information.

…no separation of duties [between check preparation, check signing and mailing].

Not certain all petty cash funds are accounted for in the ledger.

Deduction codes on employees are not always correct…not been done on a consistent basis.

Thursday night the school board considered an “Internal Controls Report” prepared by Talbert.

Perhaps it should have been titled, “Lack of Internal Controls Report.”

The board packet for Thursday night meeting contains over 600 pages of information. If any of the board members reads it all, I’d award him or her a gold star.

But they ought to read this Talbert report. Start on page 10 of the Finance Report in the board packet for December 13th.

It starts out defining internal controls as a process designed to provide reasonable assurance regarding the achievement of objectives in the following three broad categories:

• Effectiveness and efficiency of operations
• Reliability of financial reporting
• Compliance with applicable laws and regulations

To reach those objectives the internal control framework requires these five components:

1. Control Environment – “Tone at the top” or “corporate culture” of the organization influencing the control consciousness of the employees.
2. Risk Assessment – Identification and assessment of the internal and external risks that present obstacles to achieving the organization’s objectives.
3. Control Activities – Policies and procedures in place to deter, detect, or mitigate various forms of risks identified by management.
4. Information and Communication – Accurate, timely, and appropriate communication is made available on a timely basis to those who need it. Clean and concise communication from the top down that control responsibilities must be taken serious.
5. Monitoring – Ongoing monitoring and evaluation of policies and processes.

So, we’ve both had our management lesson for the day.

What about where District 158 fits into this picture?

Talbert looked at business processes in the Fiscal department with emphasis on high cash areas, e.g., food service, school secretaries or those responsible for handling cash at schools, registration, etc.

Next comes the Executive Summary.

With regard to accounts receivable and cash, purchasing, purchase cards and credit cards, accounts payable and cash disbursements, payroll, accounting and budgeting, and general controls,

”There are significant deficiencies in business processes that cross all categories reviewed, poorly designed processes that are manual, lack of purchasing expertise, inadequate financial software system, lack of consistently followed reviews and processes, lack of technical and operational training, lack of standardized purchasing and accounts payable process.”

What are some specific problems?

Accounts Receivable and Cash Cycle:

For impact and transition fees [from developers]…there is no established billing cycle…no established system for monitoring receipts, [etc.]

Deposits received in the Fiscal office are not recounted and posted to SDS upon receipt…[nor] reconciled and deposited on a daily basis…

Funds waiting to be deposited are not secured in the safe but in a locking bank bag in the file cabinet in the Fiscal department.

Purchasing Cycle:

“Overall controls and business processes surrounding the purchasing process are inconsistent, weak, and lend it self to major deficiencies…below are some of the more significant deficiencies…:

There is no professional purchasing agent… All bids, requests for proposals and request for qualifications are handled by the individual departments and the process is not standardized.

There is no requirement for departments to utilize purchase orders…As a result there are very large dollar amounts request to be paid on a check request… [when] the goods and services have already been received… Develop a threshold for requiring all purchases over an established dollar amount be placed on a purchase order… [and be approved by the] B[oard] o[f] E[ducation]…

…no accounts payable processing should be tasks within the purchasing area.

There is no approved purchaser list with established purchasing limits…

Purchasing Card and Credit Cards:

Since implementation of the purchase card, there has not been an evaluation of the other credit cards held by the District…

…There is not formal process to determine credit limits for individual or department cards. There appears to be a lack of accountability and/or ownership for departmental purchase cards…

Accounts Payable and Cash Disbursement Cycle:

Overall, controls and business processes surrounding the accounts payable and cash disbursement process are inconsistent, weak, and lend it self to major deficiencies…

Purchase orders and invoices are not always compared resulting in invoices being vouchered in the system separate from the purchase order and not relieving the encumbrances…quarterly… all open purchase orders [should be reviewd] and close[d] when necessary.

Invoices are being vouchered and paid from copies. Additionally, instances have been noted where a check request has been received in Fiscal with no sufficient backup documentation…can result in duplicate payments…

Invoices are being sent from vendors to the ordering departments. As a result, invoices are not process in a timely manner…

…Invoices that are “problem” invoices are not followed up on in a timely manner due to lack of manpower…There is one accounts payable clerk who is the sole employee that completes the process from vouchering to disbursements. When this employee goes on vacation, accounts payable activity stops until she returns. This poses a separation of duties issue…

There is no requirements or guidelines for departments to utilize check requests…There needs to be established criteria for purchasing goods or services using a purchase card vs. purchase order vs. check request.

Payroll Cycle:

…an area of improvement needs to be deductions and reconciliations to the general ledger. Additionally, all EFT payments and reports needs to be reviewed and approved by the Comptroller prior to processing.

General Controls:

The current software system does not meet the needs of the District…does not support accrual based accounting…standard reporting used in the accounting industry is not available… [With] the current software system… there are no audit trails, the check printing process allows staff to print and reprint checks with no controls, and staff are often in the background of the database to do standard data uploads…[which] allows for corruption of data and data formatting…

…There needs to be a vocal embrace and awareness of internal controls from the top down….

There is no policy to address unreserved fund balance and emergency contingency…from 5-15% [of] revenue stream…

There is…too much access to Fiscal staff [to SDS] and no separation of duties…

Next there are pages and pages of objectives, potential risks and evaluations/conclusions. Here are some of the more shocking ones:

Accruals for accounts receivable had not been calculated or recorded in the G[eneral] L[edger] prior to September 2007.

There is no regular billing cycle for impact fees for …municipalities…

…in the school office…there is no separation of duties as in most cases the same person collects the monies and prepares the deposit.

Cash receipts are not entered (receipted) upon receiving the funds…

Fiscal deposits are secured in a locked bank bag in a locked file cabinet.

There is no formal and/or uniform purchasing process. Process is decentralized…

With regard to use of sole or single source vendors, “there is no formal and/or uniform purchasing process.”

There is no “approved vendor list.”

Large dollar purchases are made with no p[urchase] o[rder] in place.

For department credit cards, are more occurrences where the buildings don’t know who charge the items and there are no receipts remitted.

Employees are not being consistently required to sign out the department credit card.

…process payments from faxed copies of invoices…nothing…that prevents duplicate payments to vendors.

Thee have been instances of duplicate payments.

There is still an environment of coding expenses to the G[eneral] L[edger] account in which there is budget money instead of the correct GL account.

Backup received for reimbursements. Have noted that there have been credit card receipts submitted but the receipt do not detail what was purchased at a restaurant. Noted management submit reimbursements that do not have their supervisors approval.

Check stock and signature plates are secured in the Fiscal department but all fiscal staff have access to the information.

…no separation of duties [between check preparation, check signing and mailing].

Not certain all petty cash funds are accounted for in the ledger.

Deduction codes on employees are not always correct…not been done on a consistent basis.