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Audit finds material weaknesses, Brainerd makes corrections

Brainerd’s 2011 audit report found two material weaknesses, including dollars not properly computed for construction receivables.

Thomas Koop, of CliftonLarsonAllen, said government accounting is a little unusual in general and he wasn’t reporting incompetence but a change in process was needed and staff was making those changes.

Council member Bob Olson said if not for questioning, the nearly half a million dollars that didn’t come up as receivables related to the College Drive construction project would not have been caught by the finance department as the money wasn’t property shown in the report.

Olson said what he had to say wouldn’t sit well with a lot of the council, but $491,366 wasn’t listed as money the city was owed in 2011 and previous years for that accounts receivable were also incorrect in 2008, 2009 and 2010.

“I think there has to be concerns about the accuracy of other financial information provided by the financial department,” Olson said.

The audit report stated the city has limited personnel with financial experience but Olson thinks the city administrator’s office is over staffed. As a financial consultant, Olson said he thought Koop would want to recommend the city look at hiring experienced staff.

“I think you were sugar coating it when we have an under-reporting of an accounts receivable by almost $500,000,” Olson said, adding the finance department has to be held accountable. Olson said he’s been accused of a witch hunt by council members and of using taxpayer dollars and taking staff time in asking for information. Olson said he was told the city’s finance director becomes uptight and nervous whenever he asks questions.

Council President Mary Koep suggested Olson ask a question about the audit to which Olson said she was cutting him off after letting other discussion go on, which was unfair. The council would be better off if his questions were answered, he said.

“I think we have to be honest with each other. I don’t know why you don’t want to answer these questions,” Olson said.

“The construction receivables were missing,” Koop said. “We have not disagreed with that.”

Koop said he met with Olson on three occasions and provided answers to many questions. Koop said he was glad Olson was interested but he couldn’t provide limitless time without charging as topics under question cover prior years. Koop said he knew Olson was frustrated they haven’t answered all the questions, which grew from a half page to seven pages. Many answers were given verbally but to put everything in writing would take hours to accomplish. Somewhere there needs to be a balance, Koop said.

Olson said he met with Koop at Koop’s request to talk about his questions. Koop reported those meetings were not the ones he was counting and Olson came up with questions on the grant receivables but when it goes up beyond those basic questions, it starts adding up to hours and hours to answer.

When Koep asked if Olson had other questions, he said Koop wouldn’t answer them anymore anyway. “It’s ridiculous,” Olson said. “A lot of my colleagues don’t want the honest and accurate answers,” Olson said. “That’s the bottom line.”

Council member Bonnie Cumberland summarized the issue and asked Koop if she was correct that the city’s accuracy and reporting of its financial status was fairly represented and the city’s finances were healthy. Koop agreed. Cumberland said the two material weaknesses found regarded an in-house report and in the grant reporting for receivables without any intent to show fraud. Koop said that also was true.

Cumberland said she spent hours looking through the information and met with Olson and wasn’t there to hear character assassinations of city staff or the auditing firm.

Koep said as the city proceeds to prepare budgets and factually inform the public it’s important to have accurate figures and that wasn’t possible when it wasn’t known that nearly $500,000 in accounts receivable was coming in, which could affect decisions on the levy.

Koep said without that information, it was like budgeting in the dark.

Koop said the focus was narrow for the accounts receivable for the construction project, staff responded and is changing its accounting practice.

CliftonLarsonAllen provided the city with an unqualified clean opinion on the audit with the two material weaknesses — one related to internal reporting and the other regarding the handling of grants for the accounts receivable.

RENEE RICHARDSON, senior reporter, may be reached at 855-5852 or Follow on Twitter at

Renee Richardson
Richardson is a Pacelli High School graduate from Austin, Minn., who earned an applied science degree from the University of Minnesota, Waseca, with an emphasis in horse management. She worked extensively in the resort industry. She received an associate’s degree from Central Lakes College, where she was editor of the Westbank Journal student newspaper, as well as a summer intern at the Dispatch. She graduated from St. Cloud State University summa cum laude with a bachelor’s degree in mass communications and interned at the St. Cloud Times covering business while attending SCSU. She's been with the Brainerd Dispatch since 1996.
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