Ephraim asks auditor how to prevent embezzlement

 

By James Tilson

 

12-20-2018

 

EPHRAIM—The Ephraim City Council found out why external audits don’t always catch embezzlers at a meeting Dec. 5.

Jon Haderlie, senior audit manager for Larson and Company, Spanish Fork, reported on the company’s audit of Ephraim’s books for the 2017-18 fiscal year.

Councilman John Scott asked Larson, “How will [your audit report] identify embezzlers?” Haderlie explained a city’s or company’s internal controls make the main difference as to whether an embezzler will be caught, much more so than an
external audit.

Haderlie added that the size of a city makes a big difference in how much risk of fraud exists and the ability of a city to put controls in place. For example, in a city like Provo, the types of controls put in place have to do with sophisticated digital fraud.

Scott asked Haderlie, “My concern is, are we missing something? What kind of red flag should we be looking for?”

Haderlie said fraud is often very small and hard to notice. At the same time,

distrust of staff can cause friction and inefficiency.

Councilman Greg Boothe asked Larson, “How did Fayette find their fraud?”

“Their mayor discovered it,” Larson said. Larson cited this as an example of internal controls, although he pointed out the obvious flaw in Fayette’s system. “Fayette only had two full-time employees, the clerk and a water service person” so there was inadequate oversight of the clerk.

City manager Brant Hanson said Ephraim had a number of controls in place, which ideally head off the temptation for fraud in the first place. “You want to keep your honest people honest.” Ephraim has a large enough staff to implement effective controls over a number of levels, he said.

The council agreed to have Haderlie come back to give a special presentation solely on internal controls. Haderlie noted that Mt. Pleasant had already scheduled him to do the same for them.

The council was then told that Nancy Bean, founder of the Clothing Resource Bank, was hoping to move to Ephraim to an underused city building. The clothing banks current building, the Manti Improvement Business Association (MIBA) Building in Manti, is scheduled to be torn down to make way for a new courthouse.

She told the council the clothing bank’s long-term plans are to become a 503(c) non-profit organization and apply for grants to build or buy a new building. But in the meantime, she hopes to use the old ambulance shed on 100 West in Ephraim.

City Manager Hanson and Police Chief Aaron Broomhead confirmed the building had been used for storage recently, but could be emptied and turned into a suitable space for the clothing bank. Bean informed the council Utah Foster Care Foundation covers the organization’s insurance. Board member Kirk Williams said the clothing bank is now closed, but plans to open back up in February.

The council voiced its approval and authorized Hanson to move forward with preparations to the building.

Chief Broomhead had his own presentation for the council regarding a possible “Urban Deer Control P

lan.”

Deer have been habitating in Ephraim for several years and prompting citizen complaints. However, as Broomhead informed the council, the Utah Division of Wildlife Resources (DWR) has jurisdiction over the deer and has specific regulations on how a municipality may deal with deer.

Broomhead went over the steps Ephraim would need to follow in order to qualify for what the DWR calls an “Urban Deer Control Plan.” Ephraim would have to identify and specify the problem, decide how they want to deal with the deer, decide how much they want to spend on the program, and then decide how they want to handle any meat from deer taken in the city.

However, Broomhead said their options are somewhat limited. Because the DWR has identified Sanpete deer as carrying chronic wasting disease, any deer in the county are not able to be relocated anywhere else in the state. This limits Ephraim to either building higher fences around properties, planting deer-resistant plants to discourage deer from grazing or euthanization.

Realizing that any solution would take time to implement, the council decided to first notify the public of the issue and the factors facing the city. After that, the city would seek input from the public as to how to deal with the situation.