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Parks and rec audit findings generate conflicting reports

April 5, 2013

A local auditing firm’s findings of internal finance control errors in the Starkville Parks and Recreation Commission has generated conflicting accounts of how at least one of those errors came to pass.
Watkins, Ward and Stafford revealed three deficiencies in the Starkville Parks and Recreation Commission’s internal finance controls at the commission’s specially called meeting Thursday at the Starkville Sportsplex. The conflicting accounts center around the a finding of a transfer of $35,000 to Couvillion Design and Build, LLC. not approved in the commission’s minutes for a splash pad at J.L. King Park replacing its pool. The audit report says this payment gave the appearance of the commission making an advance to the vendor. Commission Chair Dan Moreland said the payment was not an advance, a claim refuted by city records and by Couvillion Design and Build owner Joe Couvillion.
Moreland said the parks commission typically paid for such projects as the splash pad through the city’s 2-percent restaurant tax fund, which the commission must request from the city before transferring it to the contractor. He said the project had already been completed by Oct. 1, and after that, the parks commission sent the city “three or four” invoices requesting funds for the final few payments on Couvillion’s work. Moreland said these funds weren’t paid until Nov. 7.
“Taylor Adams had taken over as city clerk, and they didn’t release the money on Oct. 1,” Moreland said. “I’m sure part of it was Taylor was new and he was trying to get his feet wet in the position before he started writing checks. That didn’t take away the fact that it had to be paid.”
So, Moreland said, the commission paid a $35,000 check to Couvillion from its private donations fund on Oct. 17, and he said it was because the contractor said that amount was what he needed immediately to pay his workers.
“The job was complete,” Moreland said. “This was not an advance because the work had already been done and inspected.”
From there, Moreland said he asked City Clerk Taylor Adams’ office to deduct the $35,000 from its final payment to Couvillion, but it refused saying invoices had to be paid in full. Therefore, the city issued a check to the parks commission to pay the invoice in full on Nov. 7, essentially paying Couvillion the $35,000 a second time, and Couvillion agreed to reimburse the Parks Commission by certified check on Nov. 8.
“We weren’t going to give them the (final) check until he gave us the $35,000,” Moreland said. “We swapped checks at the parks office.”
Moreland said once he received the reimbursement from Couvillion he deposited it into the donations account, from which the original $35,000 check had been written.
Couvillion said much of Moreland’s story was “exactly false.” He said work on the splash pad was not completed by Oct. 1, but rather at the end of October. He said there were two relevant invoices requesting payment on his part: an invoice requesting $66,800 dated Oct. 10, and an invoice requesting $51,793.03 dated Oct. 31. Before Oct. 10, he said, there was no outstanding balance between him and the city.
Couvillion provided these invoices to Starkville Daily News, which detailed remaining work scheduled for Oct. 15-19 and Oct. 22-26. Remaining work detailed on the Oct. 10 invoice included completing of the parking area, landscaping, irrigation, debris removal and brick work.
Couvillion did confirm that he received a check for $35,000 from Starkville Parks and Recreation Director Herman Peters on Oct. 17, but he said he had never told him that specific amount was needed to pay his workers. In fact, he said, the commission never discussed paying him partially for his $66,800 payment request at all.
“We didn’t discuss a $35,000 payment,” Couvillion said. “They came up with it on their own. I didn’t tell Dan Moreland that we needed $35,000. We invoiced for $66,800. When we invoiced, that’s what we were saying we were wanting.”
An open records request filed for all materials pertaining these payments between Sept. 27 and Nov. 1 yielded only two invoices from the parks commission requesting funds from the city. The parks commission invoice requesting $66,800 was dated Oct. 18, and the commission invoice requesting $51,793.03 was dated Oct. 31, meaning the commission submitted both invoices after it issued Couvillion the $35,000 check.
Couvillion said he received payment from the city on Nov. 7 totaling $118,583.03, a sum of Couvillion’s two invoice requests that included the $35,000. He said it was true that by this time the city and the parks commission had effectively overpaid Couvillion by $35,000, so he reimbursed Starkville Parks and Recreation.
Starkville Mayor Parker Wiseman said no one in the city clerk’s office was aware of the parks department’s $35,000 payment until recently. Specifically, Adams said he found out about it for the first time about a month ago from Randy Scrivener, an auditor with Watkins, Ward and Stafford.
“(I found out when) Randy Scrivener asked me to join him and Herman Peters in a meeting to discuss park audit findings,” Adams said. “Coming out of that meeting, I asked Randy to brief the city budget and audit committee, which he did at our last meeting. To my knowledge, I was the first member of city staff to know of the infraction.”
Further, Wiseman said the parks commission submitted neither its own invoices nor Couvillon’s invoices to the city until Oct. 31. Wiseman said he was concerned about the timeliness of the commission’s invoice submission, along with several other facets of the audit report.
“An invoice (from Couvillon) was submitted to parks on Oct. 10, and three weeks passed before it was submitted to the city,” Wiseman said. “The city cannot make a payment on that invoice until it has been properly presented to our finance office, so that our finance office can put it in the city claims docket to be approved by the board of aldermen. The city didn’t sit on the invoice. Our staff followed all of the proper protocols.”
Wiseman said the board of aldermen approved the invoice Nov. 6, the earliest possible date, and payment was issued Nov. 7. He said he was also concerned about the $35,000 payment, even though it came from a private donation fund.
“Once a public agency receives funding from a private source for a public purpose, it then becomes subject to proper legal protocols,” Wiseman said. “It is troublesome that a check was issued without authorization. When a government official issues public funds without legal authority, it is a major concern. In this case, this is an organization that utilizes over $1 million a year in city funds, (so) this is particularly troublesome.”
Wiseman added he was concerned that the invoices the commission submitted Oct. 31 were no longer accurate, given the $35,000 payment the commission had made. Finally, Wiseman said he was concerned about the total effect of mismanagement of funds related to the splash pad project.
“This was a 2012 project, and over $118,000 of 2013 parks improvement funds were ultimately expended on this project. The parks improvement fund provides for $180,000 of funding for park improvements each year,” Wiseman said. “As a result of two-thirds of that revenue being expended in November, there is currently less than $5,000 remaining to fund all parks improvements for 2013, and we haven’t yet entered the summer months when heavy park improvement activity would normally be expected.
“The board of aldermen will hear from the auditor at its April 16 meeting,” Wiseman added. “I believe it is important that we as a city take decisive action to ensure that something like this never happens again.”
The audit report classified the issue with the parks commission’s $35,000 payment as a material weakness that could keep financial statement errors from being prevented, detected or corrected in a timely manner. There was a second material finding in the report that the commission had inadequate policies and procedures for monitoring internal budgets for capital projects. This finding says the splash pad exceeded its budget, but the overages were not reflected in the budget.
A third finding in the report was classified as a significant weakness, less severe than a material weakness but still requiring attention from the commission. This finding said the commission exceeded the budget on several line items. The commission had sufficient funds to cover the overages, the report says, but the pertinent amendments were not recorded in the minutes.
Moreland said he agreed that the minutes needed to reflect the entire meeting, and to that end, the commission bought a recording device Thursday. He said it was also worth noting that the parks and recreation director normally took meeting minutes, and the issues found in the minutes took place during a transition from former director Matthew Rye to current director Herman Peters.
“But it’s no reflection on any of their part,” Moreland said. “We started on the splash pad with Matthew, but before we got into the construction part of it, Matthew had resigned and Herman had taken over. We bought a recorder (Thursday so that) when (Peters) is going back and doing the minutes, he can come up with what exactly was said by whom.”

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