Fire Safe Council audit released | TheUnion.com
YOUR AD HERE »

Fire Safe Council audit released

The Fire Safe Council of Nevada County addressed allegations of budgetary mismanagement leveled by its former accountant in a board of directors meeting held Thursday — an effort to allay concerns expressed by Nevada County officials about the organization’s financial practices.

On Thursday, the council released the preliminary findings of an audit of its 2020 finances conducted by a third-party accounting firm, with the audit addressing allegations regarding unethical budgetary practices, which were raised in a letter written in June on behalf of the council’s former accountant, Roby Pracht.

Pracht’s claims attracted the attention of Nevada County, which subsequently informed the nonprofit that the county would not award contracts for any new projects to the council until items of concern about the organization’s financial practices, including the issues brought up in Pracht’s letter, had been fully addressed.



Analysis of the council’s 2019 audit report “indicate a weakness in financial management and controls as well as deficient payroll practices and observance of tax laws…The county is unable to engage with the Fire Safe Council on new contracts until these items are addressed and resolved,” the county said in a letter addressed to the council on Monday.

SPECIAL AUDIT

In June, as a response to the county’s inquiry, the council had requested its third-party auditing firm, Richardson & Company, to conduct a special audit of the organization, which the council had said in previous meetings would respond to county’s concerns.




On Thursday, Ingrid Sheipline, accountant for Richardson and Company, presented the preliminary findings of the audit, addressing the major issues of concern identified by both the county and Pracht’s letter.

The audit indicated that many of the letter’s claims had merit, but stated that in most cases the council appeared to be taking steps to remedy the items of concern.

One such issue was Pracht’s claim that the council’s executive director, Jaime Jones, had written multiple checks from the council to herself, totaling $14,500, which were not properly documented in payroll, violating Internal Revenue Service guidelines concerning taxable income.

The audit concurred with Pracht that the checks made out to Jones, determined to be retroactive pay increases, lacked the applicable payroll tax withholdings and payments required by the IRS, and recommended that the council take steps to ensure that future such payments were properly processed through payroll.

Sheipline also found errors in how the council had handled its 2020 Paycheck Protection Program loan of $77,306, another item raised by both Pracht and the county. The council had mistakenly reported the loan as a credit in its end of the year financial statements for 2020. The loan should have been recorded as a liability, as it has not yet been forgiven through the credit institution that made out the loan, Sheipline said.

Sheipline did not comment on the claim raised in Pracht’s letter that the misreporting of the PPP loan had misrepresented the council’s bottom line in its public budget statements.

Regarding the audit’s findings on the payroll witholding errors and the mishandling of the PPP loan, Jones pledged in her comments during the meeting to adopt all of the audit’s recommendations on both items.

In comments made during the meeting, board chairman Don Thane acknowledged that the organization’s financial reporting had “fallen behind” in a number areas mentioned in the audit, while denying that any intentional mismanagement had taken place.

The audit made no accusation of wrongdoing.

IRA PLAN

In response to allegations about the council’s purported mismanagement of a Simple IRA plan set up for its employees in 2019, Sheipline found that the council’s retirement plan had fallen afoul of some IRS guidelines, adding that the council has subsequently taken steps to remedy these mistakes.

The audit found that the council initially lacked a plan document for its Simple IRA when the account was set up, and had failed to direct contributions for employees to an official employer retirement account, but has subsequently moved toward setting up a founding document for the plan and directing future contributions toward an appropriate Fire Safe Council account.

At the end of the meeting, the council board voted to adopt all recommendations made in Sheipline’s audit.

“I’ll vote ‘yes,’ but we really need to get this cleaned up,” Director Alan Doerr said.

Stephen Monaghan, the county’s chief information officer, attended the meeting and reaffirmed the county’s stance that it would not enter into any new projects with the council until the audit’s recommendations had been implemented and the concerns expressed by the county’s letter had been thoroughly remedied. However, he added that the county remains confident in the future financial viability of the nonprofit, and said that he was encouraged that the board appeared to be taking the issue seriously.

“It is not any one single item on its own for the county that is [of concern], but in general the larger issue of adequate fiscal and operational polices and controls that need to be either created or improved. (The council) seems to be on the right track for that,” Monaghan said.

Preliminary FSC Audit.pdf

August 23 County Letter.pdf

Analysis of FSC 2019 Audit Report.pdf

Stephen Wyer is a staff writer with The Union. He can be reached at swyer@theunion.com

 


Support Local Journalism


Support Local Journalism

Readers around Grass Valley and Nevada County make The Union’s work possible. Your financial contribution supports our efforts to deliver quality, locally relevant journalism.

Now more than ever, your support is critical to help us keep our community informed about the evolving coronavirus pandemic and the impact it is having locally. Every contribution, however large or small, will make a difference.

Your donation will help us continue to cover COVID-19 and our other vital local news.

 

Start a dialogue, stay on topic and be civil.
If you don't follow the rules, your comment may be deleted.

User Legend: iconModerator iconTrusted User