The Jefferson County Soil and Water Conservation District board of directors received the results Monday night of an audit conducted by Crowley and Halloran CPAs, which identified several areas for improvement but included no indication of fraud or other potential criminal activity.
The district is an independent state-mandated agency created by the county that helps farmers comply with state Department of Environmental Conservation regulations.
It is funded by state grants and county money along with a small amount of earned income from tree sales, equipment rental and other services. Farmers who rely on the districts expertise and equipment have called it an integral part of Jefferson Countys agricultural community.
According to the audit, which presented the board with a snapshot of the districts finances as of Dec. 31, the district had expenses of $931,207 in 2012 and revenues of $938,325.
Those numbers are based on modified accrual accounting and are different from how the district typically organizes the annual financial reports it submits to the state. The district started 2012 with a deficit of $72,647 and ended the year with a deficit of $65,529 after a $7,118 increase in its net position.
According to the method the district uses to organize its finances, it has budgeted $386,236 in expenses for 2013. Roughly half of its revenue, $195,840, comes from the county.
The audit cited seven material weaknesses in the districts internal controls, including not keeping cash from grant funds in separate bank accounts, not enforcing the districts policy governing equipment use, not having a formal process in place to develop a budget and not segregating certain financial duties.
The audit also identified two significant deficiencies, which are less serious than material weaknesses but still worth noting, according to the report.
They included weaknesses in internal controls in the payroll process, including instances in which the former executive director signed his own payroll checks; irregularities in the signing and submission of employees time cards and weaknesses in internal controls governing the cash disbursement process.
The errors were attributed to lack of internal controls and oversight.
Despite the difficult situation, the report was presented with a degree of good humor, encouraged by the fact the Watertown accountants endorsed their report with an unqualified opinion, meaning the financial documents they reviewed presented a fair picture of the districts financial position.
You got a clean opinion. Thats great, said Michael W. Crowley.
Pamela J. Halloran said the management was really doing a good job of cleaning up.
The board called for the audit during a long, anxious meeting in February after the state froze all grant funds to the district following the revelation the districts former executive director, Brian J. Wohnsiedler, had been mingling grant funds and borrowing against future revenue sources to stretch a budget that had been worn thin by steadily increasing operating costs and poor economic conditions.
Mr. Wohnsiedler maintained he had done nothing wrong and using available resources has always been a practice at the district. But board members said they had lost faith in Mr. Wohnsiedler and he resigned.
The districts agronomist, Christine M. Watkins, became the interim executive director and the district began shedding employees and assets in an effort to survive while the state turned off all grant funds until the audits results were returned and the district could figure out how to get out of its predicament.
Gary D. Eddy, the districts full-time forester, was laid off in March, and an auction of a truck, boat and trailer netted the district $27,365.22, which went toward paying part of the $175,000 it owes to the state.
After the meeting Monday, Mrs. Watkins said the district would still need to find a strategy to help reinstate the rest of the grant money it was due to receive for the year and repay the rest of the $175,000. That strategy will have to be approved by the head of Land and Water Resources at the state Department of Agriculture and Markets.
The trials of the recent months have brought a bit of notoriety to an organization typically used to quietly helping the areas farmers.
This has been kind of an eye-opening thing for a lot of people, said Robert D. Brower, an associate environmental analyst in the state Department of Agriculture and Markets. Because of whats going on in this county, its changing how we do things across the state.