Auditor’s report identifies two years of uncorrected concerns in Cambridge
Despite being notified of several areas of concern found during a 2014 audit of the city of Cambridge, officials in the small town of about 800 have failed to address them, according to a report released this week by the state auditor’s office.
In the report released Tuesday, areas of concern, such as the city not keeping proper records of financial transactions, business dealings with city government members creating possible conflicts of interest and local option sales tax dollars being spent without documentation showing how they were used, have not been corrected.
In 2013, the Iowa Legislature approved a law that allowed for periodic examinations of small towns in the state. Before that time, small cities in Iowa were rarely audited, according to Iowa deputy auditor Andy Nielsen.
When the law was passed, it forced smaller cities such as Cambridge to take part in examinations at least once every eight years.
“That’s what we did with Cambridge back in 2014, we did a periodic exam. One of the things that we noticed was there was a number of items that were there that we needed to follow up on to find out what the current status of them are,” Nielsen said.
Two years after the initial exam was done, the auditor’s office found that basically nothing had changed.
Among the concerns were two business deals that were considered possible conflicts of interest because they included members of the city government.
In 2008, the city entered into an agreement to sell a building to City Attorney Mike Lewis, of Lewis Law Firm, for $85,000, according to the report. In 2015, the city amended the terms of the agreement, which reduced the remaining balance owed on the building to $19,300, nearly $50,000 less than the remaining balance owed by the city attorney under the original agreement, according to the report.
The report states that it is unclear if the City Council was aware of the reduced selling price or how the city arrived at the $19,000 balance that was considered “mathematically incorrect” by the auditor’s office.
Then, in a separate business deal on Oct. 3, 2013, the city agreed to give a $50,000 loan to MRD Properties to fix outside walls of the Water Street Bar and Grill. Both businesses are owned by Cambridge Mayor Scott DeYoung, according to the report.
DeYoung said Wednesday that he felt as if the loan for his personal business was in the best interest of the city.
“The City Council made that decision,” DeYoung said. “If the building fell, it would take two or three buildings with it. So in the effort of preservation for our business district, that action was taken.”
DeYoung said he doesn’t agree with the auditor’s report, and he doesn’t see the business deals as a conflict of interest.
DeYoung also said the City Council was aware of the reduction in price for the law firm building and that it was the council’s decision to reduce the price, but he added, “There was no $50,000 reduction in price.”
Lewis said that he didn’t remember the exact price of the original agreement or the amount that it had been reduced, but that he remembered that the agreement had been altered because the building was in such poor condition that he nearly terminated the agreement altogether.
“There were significant construction flaws that had to be completely redone,” Lewis said. “I was ready to walk away from it. It was pretty bad.”
Lewis said that it was the city that approached him about buying the building and moving his office from Huxley to Cambridge. As a part of that deal, the city would upgrade the building for the purposes of Lewis’ business.
The concern that the auditor’s report brings up is not the reason why the building price was reduced, but why the city records show a mathematical error in how much is still owed on the building. Lewis said he would have to check his personal records before he knew the answer to that question, and DeYoung argued that the auditor’s report was wrong.
The auditor’s report also stated that the city’s annual finance report information does not match city records, which according to Nielsen, should never be able to happen.
“They’re preparing both of those, why don’t they agree? They should agree,” Nielsen said.
DeYoung stated that he couldn’t say why the annual finance report information didn’t match city records. DeYoung said he didn’t know and that he would look into it. According to Nielsen, these concerns are important ones that should be taken seriously by the city and its mayor. “I think the next step is for them to take some action on these items,” Nielsen said. When asked why he has not attempted to correct any of the issues outlined in the auditor’s report form 2014, DeYoung said “They’re recommendations.”
Other concerns identified in the report include the city not publishing minutes of council meetings within 15 days of the meeting as required by law, the failure to segregate city duties to avoid employees doing tasks that are incompatible and city employees not completing time sheets to substantiate hours worked.
DeYoung said he plans on taking actions called for in the report and that he hasn’t done so in the past because, “I’m a busy man. Mayor is a part-time job for me.”