McHenry County Blog

Here is the text of the letter:

November 19, 2012

Grafton Township Supervisor Moore and Board of Trustees:

Effective upon receipt of this letter, Evans, Marshall and Pease, P.C. is resigning as the independent auditors for the year ended March 31, 2011.

This decision was reached after much consideration of the facts and circumstances that have arisen throughout our relationship and relative to the planned meeting with the Township on November 28, 2012.

Pursuant to a conversation with Supervisor Moore, it was agreed that Mr. Paul H. Thermen C.P.A. would attend a board meeting to discuss the March 31, 2011 audit and the accompanying management letter.

It was agreed that the Board would submit to our office, the questions and other items that they wished to address relative to these items only.

The decision to limit the meeting to these items was that the March 31, 2010 was completed, accepted and paid for by the Township.

It was only the March 31, 2011 audit and management letter that were not accepted by the Township, hence the meeting.

Since then Mr. Thermen has been contacted by Trustee LaPorta, first wanting to know if the information regarding the meeting that he received from the supervisor was correct.

Then, on November 13, 2012, Mr. LaPorta e-mailed Mr. Thermen and stated that he felt that it was unreasonable to limit the meeting as stated.

He goes on to say that we never met to discuss the final report of the previous audit.

In late August, 2011, CPA’s Jeffrey Rollefson and Paul Thermen presented their draft audit to the Grafton Township Board minus Trustee Gerry McMahon. The headline of my article quoted this statement: “Found nothing untoward in the audit.”

Mr. Thermen and Mr. Jeff Rollefson did in fact meet with the entire board relative to the audit report and it was subsequently revised to be in agreement with the Board’s request.

Mr. LaPorta asked for permission to expand the meeting to the prior year as well.

This request was not in accordance with the understanding reached with the Township Supervisor and therefore it was unacceptable.

On November 15, 2012, Mr. LaPorta e-mailed our office again, now stating that “Myself and/or our attorney’s will be contacting the AICPA and other professional organizations in your profession to determine if this is a normal reply. We will notify them of this refusal.”

He then states “We will also invite various media (2 newspapers and 2 on-line blog newspapers) to attend this meeting, of which we will highlight Paul’s refusal.”

This is not the first threat that has come from the Board via Mr. LaPorta.

At the beginning of our engagement, Evans, Marshall & Pease, P.C. was told that if the audit of the financial statements did not coincide with the allegations put forth by him, that legal action may ensue.

Our management letter set forth a number of items that we felt should be implemented, however nothing was found to impact the fairness of the financial statements for either audit period.

In light of this and the on-going tensions between the Board and the Township Supervisor, which is no place for the certified public accountants to be, we hereby tender our firm’s resignation.

As a result of our resignation, we feel that there is no purpose to the meeting scheduled for November 28, 2012 and Mr. Thermen will not be in attendance.

We suggest that the Township retain the services of another independent certified public accountant to perform the March 31, 2011 audit.

We have already submitted our invoice for the work performed on that audit and upon payment thereof we will fully co-operate with whomever the Township chooses.

Respectfully submitted,

Evans, Marshall & Pease, P.C.

Grafton Food Pantry recipient Ellen Drivakos is interviewed by Channel 7 for this evening's story at 5 o'clock.

Grafton Township Supervisor Linda Moore has never given up on the idea that Grafton Township government should run a food pantry.

The Daily Herald article.

The one run by former Supervisor John Rossi, reportedly organized as a not-for-profit organization in order to obtain food from the Northern Illinois Food Depository, moved lock, stock and barrel to a new location south of the McHenry-Kane County line in 2010.

Its independence was questioned by Grafton Township’s outside auditors Evans Marshall and Pease.  Nothing could be found in the Township minutes by the auditing fire to show it is not still a “component unit” of the Township, to put in auditor speak.

Today, the Daily Herald features the shortages at Township Hall’s Food Pantry in a front page article.

The Food Pantry shelves in the room that Grafton Township Road Commissioner Jack Freund is attempting to claim, were found to be empty, according to the story.

“…a mother-daughter team took up a collection among their Huntley neighbors and used the money to help fill the pantry with food. They had visited the pantry recently and were shocked at how bare it was,” according to Moore, as seen in Lenore Adkins’ story.

Sun City donor to the Grafton Township Food Pantry is interviewed by Leah Hope.

ABC TV reporter Leah Hope was out during the mid-day picking up on the Daily Herald’s story.  Channel 7 will have a story at 5 o’clock, she told Moore.

CPA’s Jeffrey Rollefson and Paul Thermen present their draft audit to the Grafton Township Board minus Trustee Gerry McMahon.

Because of the legal wrangling, the audit that should have been ready last summer has just been completed in draft form.

Still holding up finalization is the lack of a reply to a routine letter sent all law firms who represented Grafton Township.  Ancel, Glink’s reply is the only one missing.

Receipt of that reply, plus the signing of a “representation letter” by the proper township authority are the big things in the way of a final report.

Evans, Marshall & Pease, P.C., is the firm that took on the task of auditing Grafton Township.

Paul Thermen and Jeffery Rollefson were the pointmen who came to a special township board meeting Thursday night to present their draft findings and answer questions.

Just as they were getting started, Township Trustee Gerry McMahon walked out.  He stayed only twelve minutes.

My understanding is that Trustees get $100 a meeting.

CPA aul Theremen answers Trustee Robert LaPorta’s questions as Supervisor Linda Moore listens.

So, what did the auditors find?

“Nothing was missing,” Thermen explained in answer to a question from Trustee Rob LaPorta about the transfer of large amounts of money between township bank accounts.

Where there big problems?

“We really found nothing untoward in the audit,” Thermen said.

He complained about the “laborious” effort it took to read the minute and review the legal fees, but said the financial portions of the audit “went as smoothly as could be expected.”

LaPorta led the questioning on the Trustees’ behalf.  He wanted to know if the detailed questions raised by multiple township officials had been investigated.

Theremen wondered if some of the questions had not been handed in the courtroom.

“Procedures were a matter of differences of opinion.  Given the large legal expenditures, frankly, very bluntly, (the size) blew my mind, some of these concerns must have been handled by some of of these attorneys.”

“We must utilize ‘professional skepticism,’” he added.  He said the firm had solicited documents “relative to fraud.”

Grafton Township Trustee Robert LaPorta dominated the questioning of the outside auditors.

LaPorta interjected he agreed the township had had “astronomically large attorney fees” and observed that “some are still open,” but said the concerns brought up by various Grafton Township officials needed to be addressed in “the management letter, especially because of the extensive number of pages of concerns.”

“In all bluntness, I found some of it to be more politically oriented that accounting,” Thermen replied.  “In no way do we look at every single transaction…We didn’t see anything glaring.”

The CPA mentioned a complaint about allocation of a $5 expenditure to an unnamed official.   He used the word “minutia.”

LaPorta asked about “adjusting entries.”

“It did not affect the financial reporting,” Thermen replied.

“It is not uncommon to see adjusting entries.  (They are) not an indication of something done wrong.”

Indicating that the audit might end up in court, LaPorta pointed asked if the firm kept work papers.

They do for five years.

Paul Thermen, CPA

There was much conversation flowing from a draft note on “Contingencies.”

Its subject was the Grafton Township Food Pantry, moved out of township offices last year.

The basic question, raised by at least one attorney in the past, was whether the Township Board has taken official action to transfer the Grafton Township Food Pantry to a not-for-profit organization or is it still a “component unit” of the Township.  [Read Attorney Joe Gottermoller's September 2009 advice, including about the Food Pantry here.]

Theremen pointed out that a township employee had helped staff the Food Pantry in year’s past.

“The fact that it was housed here would lead the public to believe it was under the Township,” he added.

LaPorta agreed, “Mary was assigned to the Food Pantry.”

The auditor did not object to organization under a not-for-profit format so food could be purchased cheaper from the Northern Illinois Food Bank, he questioned whether the transferal from Township to non-Township governance had been done properly.  He stressed, however, that he was not giving a legal opinion.

He pointed out that board was made up the former Supervisor, former Clerk, present Clerk and one Trustee.

“Who appointed the (Food Pantry) Board?” he asked.

Trustee Betty Zirk explained the history of the Grafton Township Foor Pantry.

“I don’t recall,” Trustee Betty Zirk replied.

“How did any of you get on the Board?” was his follow-up question.

LaPorta said that former Supervisor John Rossi acted in his capacity as a private citizen, not as Township Supervisor, when he filed the Food Pantry’s legal papers.

Thermen wondered how that was possible, if the Food Pantry was being run by the Township.

“It kind of walks like a component unit and acts like one.  I think it is one.  That’s my non-legal opinion.

The auditors wanted everyone to know they were talking about the FY10 “DRAFT” audit. I hope this makes that clear.

“The Board has done nothing, zip, zero,” he observed concerning the Food Pantry’s transfer to a private entity.

LaPorta noted that its finances had been run out of Supervisor Millie Ruth’s personal checking account.  He added that after Rossi was elected Supervisor a separate account was set up to accept donations.

“Action needs to be taken by the Board to divest itself of the Food Pantry,” Thermen said.  “It could be done.  It hasn’t been done.  Hence, my note.”

Trustee Barb Murphy asked if a motion were made at the next Township meeting, “do we need to go back?”

CPA Paul Thermen answers question from Trustee Rob LaPorta.

Thermen again advised to get an attorney’s advice.

LaPorta stressed that they had followed an attorney’s advice at the time.

Thermen observed that the Township “had more attorneys than anyone I can think of.”

He noted that his firm’s predecessor as auditor had also commented on the Food Pantry situation in its management letter.

The draft audit for the immediate past year is almost completed and the firm intends to write a joint management letter to address both years.

There has been continuing contention over the audit of Grafton Township Supervisor Linda Moore’s books.

The separation of powers suit that Moore won delayed it.  (Not to be confused with the separation of powers suit that the Trustees won. which overruled Judge Michael Caldwell’s installation of Moore choice of attorney John Nelson.

As part of her statutory duties, Moore is the Treasurer of the Township and the Road District.

The Grafton Township Board: Trustees Gerry McMahon, Betty Zirk, Rob LaPorta and Barb Murphy with Supervisor Linda Moore sitting at a separate table.

Now, the audit for the first of the two years that Moore has kept the books is completed and being shared with the Township Trustees.

The audit was conducted by Evans, Marshall and Pease of Rolling Meadows.

Commenting on the audit, Moore said,

“The auditor has found no material weaknesses.

“Evans, Marshall and Pease has been the auditor of School District 158 for recent audits, so I’m quite comfortable with their ability and thoroughness.

“They had no concerns about the level of cooperation from management.

“The audit reveals that the township’s net worth has decreased due to the in expenses.”

A meeting to consider the audit will be held next Thursday night at 7:30.

Drawing of the Grafton Township Hall planned by the previous adminstration, but derailed by Judge Michael Caldwell when he ruled that there was inadequate notice given the public. Caldwell's decision was upheld by the 2nd Appellate Court. Voters defeated a referendum last fall to construct a new building. Electors voted to allow repayment of the loan over time, rather than in a lump sum.

The Grafton Township Board met Tuesday night and the Township Board approved the appointment of an auditor and the repayment of $400,000 of the money borrowed from the Road District to finance a new township hall.

Evans, Marshal and Pease out of Rolling Meadows will conduct the audit.

No lawyers were present at the meeting.

Yesterday, McHenry County Blog reflected on

Anyone who has ever watched CSI on the tube knows forensic auditors would actually look at a suspect’s personnel file for potential evidence. Jefferson Wells’ Mark Warner decided they could do a forensic payroll analysis without bothering to do that.

Maybe they have telepathic powers or Superman’s X ray vision?

Would District 158’s auditor have spilled the beans if school board member Larry Snow hadn’t already asked so many detailed questions?

If you were auditor Paul Thurman of the firm Evans, Marshall & Pease, P.C., and wasn’t planning on saying anything, you might be thinking,

“What if Larry Snow knows and I say everything was okay, this could be really embarrassing if Snow already knows the details?”

Obviously people in the fiscal department already knew because the auditor said so at the meeting.

You can have a policy that requires disclosure of financial irregularities, but if there are no adverse consequences for violating the policy, then the practice continues.

And why does such a “don’t tell unless someone asks” practice continue?

Because the individuals in power, the board majority and superintendent want it this way.

It’s their choice.

Voluntarily revealing such a screw up would hurt the image of Huntley School District 158, even though it would be good for accountability and transparency, not to mention for the soul.

Why put in the effort and work it takes for an actual good performance when you can hide and not disclose any mess ups anytime you want to?

Even to fellow board members…assuming Superintendent John Burkey told someone on the board.

You don’t even have to put in the time to fix a problem if the problem officially never happened?

Yesterday, McHenry County Blog reflected on

Anyone who has ever watched CSI on the tube knows forensic auditors would actually look at a suspect’s personnel file for potential evidence. Jefferson Wells’ Mark Warner decided they could do a forensic payroll analysis without bothering to do that.

Maybe they have telepathic powers or Superman’s X ray vision?

Would District 158’s auditor have spilled the beans if school board member Larry Snow hadn’t already asked so many detailed questions?

If you were auditor Paul Thurman of the firm Evans, Marshall & Pease, P.C., and wasn’t planning on saying anything, you might be thinking,

“What if Larry Snow knows and I say everything was okay, this could be really embarrassing if Snow already knows the details?”

Obviously people in the fiscal department already knew because the auditor said so at the meeting.

You can have a policy that requires disclosure of financial irregularities, but if there are no adverse consequences for violating the policy, then the practice continues.

And why does such a “don’t tell unless someone asks” practice continue?

Because the individuals in power, the board majority and superintendent want it this way.

It’s their choice.

Voluntarily revealing such a screw up would hurt the image of Huntley School District 158, even though it would be good for accountability and transparency, not to mention for the soul.

Why put in the effort and work it takes for an actual good performance when you can hide and not disclose any mess ups anytime you want to?

Even to fellow board members…assuming Superintendent John Burkey told someone on the board.

You don’t even have to put in the time to fix a problem if the problem officially never happened?

Compliance with Huntley School Board policies is apparently for students, not Huntley’s fiscal administrators.

School Board member Larry Snow along with board member Aileen Seedorf got a board policy (4:15) put on the books that says financial irregularities have to be reported to the board of education and to the superintendent.

It was obvious at last Thursday’s Board meeting that compliance with that mandate remains but a theoretical concept.

Not something actually practiced.

Mandatory disclosure missing even when written into board policy is obviously not being practiced four years after the scandalously referendum tax increase that the media labeled a deception.

Hardly progress if you ask me.

Superintendent John Burkey has been on the job three years. Obviously, the fiscal aspect of his supervision needs improvement.

And, not telling the board of a serious lapse in internal controls…how does one explain that.

Did the district’s outside auditor voluntarily disclose how he found a lapse in internal controls at the beginning of his presentation?

No.

In fact he made no presentation. Outside auditor Paul Thurman of the firm Evans, Marshall & Pease, P.C., simply said he didn’t have anything to say and immediately opened it up to questions.

The lapse in internal controls that had about $150,000 extra erroneously sent to the State (in July alone) wasn’t mentioned until Larry Snow started asking questions about internal controls in the fiscal office.

The written report the auditor gave the board made had no mention whatsoever about internal controls.

It was only after Snow had asked very precisely worded questions exposing errors in the audit report that Snow asked about what he found about “internal controls.”
At this point, the auditor said a future letter, as yet unwritten, would show a lapse in internal controls resulting in about a couple hundred thousand dollars being sent to the State as an overpayment error.

Whether the auditor would have routinely disclosed this to the board, as he said he was going to, is anyone’s guess.

It was apparent he didn’t disclose it before being questioned by the board Thursday night. It is certainly less likely that someone would ask a question, if nothing was volunteered about internal controls.

Four years after a deceptive referendum, you might think the board majority was actually going to start the practice of having the fiscal office and superintendent actually start telling the entire board of education about specific lapses in internal controls.

Guess not.

About $110,000 was spent under a guise of a forensic audit that was selectively unforensic.

Part 2 tomorrow.

Compliance with Huntley School Board policies is apparently for students, not Huntley’s fiscal administrators.

School Board member Larry Snow along with board member Aileen Seedorf got a board policy (4:15) put on the books that says financial irregularities have to be reported to the board of education and to the superintendent.

It was obvious at last Thursday’s Board meeting that compliance with that mandate remains but a theoretical concept.

Not something actually practiced.

Mandatory disclosure missing even when written into board policy is obviously not being practiced four years after the scandalously referendum tax increase that the media labeled a deception.

Hardly progress if you ask me.

Superintendent John Burkey has been on the job three years. Obviously, the fiscal aspect of his supervision needs improvement.

And, not telling the board of a serious lapse in internal controls…how does one explain that.

Did the district’s outside auditor voluntarily disclose how he found a lapse in internal controls at the beginning of his presentation?

No.

In fact he made no presentation. Outside auditor Paul Thurman of the firm Evans, Marshall & Pease, P.C., simply said he didn’t have anything to say and immediately opened it up to questions.

The lapse in internal controls that had about $150,000 extra erroneously sent to the State (in July alone) wasn’t mentioned until Larry Snow started asking questions about internal controls in the fiscal office.

The written report the auditor gave the board made had no mention whatsoever about internal controls.

It was only after Snow had asked very precisely worded questions exposing errors in the audit report that Snow asked about what he found about “internal controls.”
At this point, the auditor said a future letter, as yet unwritten, would show a lapse in internal controls resulting in about a couple hundred thousand dollars being sent to the State as an overpayment error.

Whether the auditor would have routinely disclosed this to the board, as he said he was going to, is anyone’s guess.

It was apparent he didn’t disclose it before being questioned by the board Thursday night. It is certainly less likely that someone would ask a question, if nothing was volunteered about internal controls.

Four years after a deceptive referendum, you might think the board majority was actually going to start the practice of having the fiscal office and superintendent actually start telling the entire board of education about specific lapses in internal controls.

Guess not.

About $110,000 was spent under a guise of a forensic audit that was selectively unforensic.

Part 2 tomorrow.

Where?

You won’t be surprised to find out this is about Huntley School District 158.

Those were the numbers that were talked about as errors as a result of the 2007 audit.

If you think an audit reassures residents that a school district financial numbers are officially correct, think again.

First, if you were a resident who actually went to the meeting, thinking you would get a copy of the auditor’s report so you could read along with the questions being asked by board members, largely by school board member Larry Snow, think again.

No copies of the report were available to the public.

Not online.

Not in person.

No where.

So much for transparency.

Expenses were incorrectly shown in the 2007 audit, admitted to as an error by Paul Thurman who represented the audit firm of Evans, Marshall & Pease, P.C. I assume he is a Certified Public Accountant.

Add to this property tax revenue of $600,246–inflated–and registration fees that didn’t belong in 2007, this added up to $1,531,406.

How much in registration fees didn’t belong in 2007?

Well, that would be $641,478.

That’s a lot of registration fees.

There were a couple of more “stunners,” starting with the first question asked by Snow.

It turns out the Auditor had over $10 million on the books as “Construction in Progress.”

Snow asked how this could be when the Marlowe school expansion has been done for well over a year?

This is the second school year the expansion is actually being used.

Huntley administrators said the school was done.

The auditor said he had documentation from someone saying it wasn’t, but didn’t have it with him.

Superintendent John Burkey looked rather perturbed.

Probably because no one on his staff reviewed the auditor’s report between Friday when they got it and the following Thursday, the night of the board meeting.

Snow asked the auditor about internal controls and what he found.

The auditor said he found the district overpaid the state more than $150,000 in July for the Teachers Retirement System.

This happened when the payroll supervisor miscalculated the amount to be paid, and apparently just sent it in. No one in the District knew there was an overpayment until the auditor caught it.

One person doing this with no approval process or anyone checking the work, I would say this qualifies as an internal controls’ violation.

Then the auditor said the same thing happened in June as well. That time it was apparently only $75,000 that was overpaid.

When Snow asked whether the auditor used the internal controls assessment done by former Comptroller Stacie Talbert, Thurman was very clear.

The outside auditor said he had never seen the report or been given a copy.

Talbert’s December 2007 report was a scathing evaluation. Obviously Huntley administrators didn’t want the audit firm to be looking too closely at what hadn’t been corrected.

Board member Aileen Seedorf asked if this is November and the overpayments were discovered in August, then why is this being brought to light only at a public meeting now?

Good question.

Is there a conspiracy of silence still going on in District 158?

You betcha and it was obvious how administrators were caught “knowing,” but not telling. Members of the board majority would not have deliberately withheld that information, would they?

Why would you inflate the financial results in a year you are negotiating a teachers’ contract?

I believe Snow expressed less than a thank you when he said the auditor made negotiating the contract more difficult not less difficult with fund balances inflated by $1.5 million

Part 2 tomorrow.

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At the top you can see teachers, including one shy one, picketing in front of Marlowe Elementary School.