Town to require audits for non-profits

Jul. 16, 2013 @ 08:22 AM

All non-profit organizations receiving town funds will be required to present the Town of Forest City with an audit of their accounts before receiving future disbursements.

Council members unanimously approved — Council member Shawn White was not in attendance — the requirement during their regular meeting Monday night at the Cool Springs Administration Building.

Full audits will be required beginning with fiscal year 2014-15 disbursements.

The vote came on the heels of the arrest over the weekend of Marion Lee Mayes, president of the Forest City Little League after city officials discovered financial inaccuracies upon reviewing a financial compilation received so the organization could receive its 2013-14 funds.

Town Manager John Condrey said the discussion over requiring audits was scheduled before the arrest took place.

"All the information in this report, really has nothing to do with the incident," Condrey said.

The report issued by Finance Director Julie Scherer only indicated five disbursements for outside athletic programs.

Scherer told council members they had options of requiring an audit — the highest level of testing — a review or a simple compilation of financial documents.

She said the Forest City Heat reported a $600 cost to have a review done by an accountant as opposed to $2,000 for an audit.

"I would rather us spend our money doing an audit and make them more honest," said council member Dee Dee Bright. "If you require them to spend $2,000 of our dollars, there will be a lot less likelihood of things like embezzlement."

Town Attorney Beth Miller cautioned the council on having too much oversight to the financial records of non-profit organizations.

"The more liability you could be opening yourself up to," Miller said.

However, Condrey said there is a perception because a lot of the organizations have Forest City in their official name, they are part of the town.

"We are talking about taxpayer money and we owe it too them to have a check and balance in place to make sure the money goes where it is intended to go," said council member David Eaker.

Of the five outside athletic programs that receive town funds, the American Legion and Forest City Swim Team already provide an audit. The Forest City Heat and Forest City Youth Football give a review and the Forest City Little League give a compilation of its finances.

"When they don't get our money because they don't do an audit, maybe they will think twice," Bright said. "It does mean they will keep better records which the parents and those involved should expect."