As he does every year, Auditor Braidy Powers presented a schedule of meetings, notifications and deadlines for planning of the 2015 county budget. After adopting the budget calendar and approving the budget preparation guidelines for county department heads at the Tuesday, June 24, 2014 meeting commissioners continued discussing a question that was unresolved during last year’s budget cycle. What sort of audit should be the prerequisite to distributing grant funds to nonmandated entities?
In October 2013, the county board approved the requirement for audits for the non-mandated entities to which it provides funding such as the Violence Prevention Center, WTIP Radio, Grand Marais Public Library, the Volunteer Attorney Program, Cook County Higher Education, Legal Aid, Birch Grove Foundation, Cook County Historical Society, North Shore Music Association, and the Cook County Council on Aging. The board agreed to require an audit for organizations receiving over $50,000 from the county.
However, Auditor Powers said just what sort of audit is required needs to be clarified as the board begins meeting with those non-mandated organizations. Powers provided information on different audit options, along with cost estimates. He said an independent audit for a small organization could cost $3,000 – $7,000. “So you definitely have to shop,” he said.
Another option, an independent review would be less costly, costing $1,500 to $6,000. However it does not include the testing and review of internal controls that an independent audit would.
Powers said there was a third option, a program audit, which would be based on only the money given to the entity by the county. Powers said that would cost about $2,000.
Senior Center seeks clarification
In the audience to hear the discussion were Cook County Senior Center Director Bev Green and Cook County Council on Aging Treasurer Warren Anderson. The Council on Aging had sent the county board a letter, expressing dismay that their organization was “cherry picked” to have an audit completed before funding would be granted to them last year.
In the letter, Director Green, speaking for the Council on Aging, noted that the County Board’s question of whether or not the Senior Center must have an audit completed was reported in the Cook County News- Herald on three occasions, creating “negative publicity” for the Senior Center. Because of that negative publicity, Green wrote, a Senior Center application for funding from another source had been denied.
Green wrote, “Over the years we have worked hard to add and improve our programs and services, to bring our aging building up to date with energy saving projects and to become less dependent on county funding. We have been able to lower funding from the county over the past six years that I have been there as the director by actively seeking out other donation sources.
“Unfortunately, due to the Cook County commissioner’s hasty decision last September to ‘cherry pick’ us, requiring that we have an audit done, we are unable to obtain these donations,” she wrote.
“To add insult to injury, we are once again at that time of year when our Board of Directors is proceeding to complete our 2015 budget and the Cook County Commissioners after nine months have not come up with the audit policy they were going to complete for organizations requesting over $50,000,” wrote Green.
The Senior Center received $81,000 from the county in 2013. It was granted the same amount in 2014 and has received $40,500 to date. The center will receive the remainder in August.
Commissioners set audit criteria
Commissioner Garry Gamble said he understood paying for an audit is hard for nonprofit organizations and said he feels empathy for the organizations for which this will be a requirement. However, he added, “We have an opportunity as leadership to come alongside these organizations and encourage best practices.”
Commissioner Bruce Martinson said he was comfortable with requiring audits for entities receiving over $50,000 in county funding, but added that having an audit every two years would be sufficient.
“The internal audit option—that is not a quick and easy thing,” said Commissioner Sue Hakes. And, she asked, if the county requires an internal audit, what do they do with it? How would the county determine if the organization had met the county’s criteria?
Auditor Powers said the county could establish an audit committee.
Commissioner Jan Hall asked, “How far do you want to take this, as a small county, for these block grants?”
Commissioner Heidi Doo-Kirk said she was not comfortable with requiring an independent review. “The first paragraph of the review states ‘This has not been confirmed.’”
Commissioner Gamble said it is important to have some sort of criteria. “We have to have more than a cover letter and some financial information we may or may not understand.”
Commissioner Hakes acquiesced that an independent audit is “the way to go,” but added that it might be difficult for organizations that have not been having audits completed to have one done before budget planning was complete.
Senior Center Director Green spoke up, “We’re not opposed to conducting an audit. We just need to know what kind of an audit needs to be done.”
“For budgeting reasons, we need to know whether it is annual or two years,” said Council on Aging Treasurer Anderson.
Commissioner Hakes made a motion to require an independent audit every other year for non-mandated entities receiving more than $50,000 from the county. When the requirement should go into effect was discussed and it was agreed to give organizations some time to allow for the additional work and expense of conducting an audit. Commissioner Martinson said no funds would be disbursed in 2015 until an audit is received.
The motion carried, with Commissioner Gamble voting no, because he said all of the organizations that receive funding from Cook County, whether they receive less than $50,000 or not, should have to provide some sort of financial review.
Commissioner Martinson agreed, but said, “One step at a time.”
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