Audit questions cemetery contributions in Winfield

WINFIELD — An annual financial review of the City of Winfield found continued issues with oversight and accounting procedures, including questions about the city's long-standing contributions to the Scott Township Cemetery.

The report, released June 30 by independent auditor Ted M. Wiegand, CPA, covered the period from July 1, 2023, through June 30, 2024. It identified nine findings related to the city’s handling of taxpayer funds, seven of which were repeat issues from the previous year.

One of the most significant findings focused on the city’s $9,000 contribution to the cemetery during the fiscal year. While the city later provided a 1978 agreement establishing a joint “Board of Control of Winfield-Scott Cemetery” under Chapter 28E of the Iowa Code, the report raised concerns about the legality of ongoing financial support without clear documentation of public benefit.

Wiegand noted that the existence of the 28E agreement alone may not be sufficient to justify the ongoing public funding.

“I am not aware of any statutory authority for the City to donate public funds to any entity or organization,” Wiegand stated. “If the donation is not providing a service to the City, the City should immediately cease making such donations.”

The report cited Article III, Section 31 of the Iowa Constitution, which prohibits public money from being used for private purposes without legislative approval. It also referenced multiple Iowa Attorney General opinions stating that local governments cannot give public funds to private entities — even those performing community services — unless there is clear public oversight and statutory authority.

The Iowa Constitution prohibits public funds from being used for private purposes, and multiple Iowa Attorney General opinions have emphasized that public money may not be given to private organizations, even for charitable or quasi-public activities, unless certain conditions are met.

“A governmental body may not donate public funds to a private entity, even if the entity is established for charitable or educational purposes and performs work which the government could perform directly,” the report stated.

The audit also highlighted persistent financial management problems, including a $115,299.70 deficit in the city’s water fund as of June 30.

Wiegand recommended that the city “investigate alternatives to eliminate the fund balance deficit to return the fund to a sound financial position.”

In addition to the water fund, the report found that some of the city’s bank reconciliations contained outdated information. More than $5,500 in old outstanding checks and deposits — some dating back over 13 years — were still listed in the city’s records.

According to Chapter 556.11 of the Iowa Code, cities are required to report and remit such long-outstanding obligations to the State Treasurer. The auditor noted that six checks more than two years old had not been turned over, which results in an overstatement of the city’s cash balances.

Wiegand advised the city to clean up the accounting system and make necessary adjustments to future financial reports.

“Outstanding obligations should be reviewed annually,” he wrote, “and amounts over two years old should be remitted to the Office of Treasurer of State annually, as required.”

Additional findings pointed to weak internal controls. The city lacks adequate segregation of duties, meaning that in many cases, one employee is responsible for multiple stages of a transaction — from approval to execution to record-keeping. This increases the risk of errors or misuse of funds going undetected, though Wiegand did acknowledge the added difficulties with a small staff.

The report also noted that utility billings, collections and delinquent accounts were not reconciled throughout the year, and that the city exceeded its budget for culture and recreation without formally amending its certified budget as required by Iowa law.

Public moneys may not be expended or encumbered except under an annual or continuing appropriation,” the report said, citing Chapter 384.20 of the Code of Iowa.

Wiegand recommended several corrective actions to address these issues and emphasized the importance of proper oversight by city officials.

“The City Council has a fiduciary responsibility to provide oversight of the City’s operations and financial transactions,” the report stated, defining oversight as “watchful and responsible care” that governing bodies must exercise in handling public resources.

The full report is available at auditor.iowa.gov/audit-reports.

Comments: AnnaMarie.Kruse@southeastiowaunion.com