A lengthy audit of Portage’s finances under its previous administration drew some sharp rebukes from the State Board of Accounts. The audit found funds overdrawn, internal controls not followed and employees not having to pay a cent for their health insurance, among other criticisms. Some of the criticism was reported in five prior audits, the SBOA said. “While this current Administration continues its ‘learning curve,’ the SBOA audit findings and comments present a roadmap for areas that require significant improvement,” the city said in its response to the audit. “Rest assured that this Administration takes these findings and recommendations very seriously and our goal is to eliminate all of such findings in the City’s next SBOA audit.” The city’s written response to the agency by Mayor Austin Bonta and Clerk-Treasurer Liz Modesto promised immediate action on almost all accounts. The sole exception was not charging employees for a share of their health insurance premiums. State law requires municipalities to do so. Union contracts require the city to pay 100% of the premiums, so that will have to be negotiated with the unions, the city said. The city is using consultants to help with its finances, including monthly bank reconciliations, but those consultants are training deputies in the clerk-treasurer’s office to take over that task. Among the problems the audit cited was a lack of internal controls regarding cash and investments, receipts, disbursements, journal entries and reporting to ensure accurate and timely recordkeeping. “A segregation of duties for each of these areas had not been designed or implemented to prevent, or detect and correct, errors,” the report said. A review and verification process is needed to ensure the accuracy of payments to vendors and employees, the report said. Time records weren’t always approved by the police chief as required, and records of hours worked weren’t verified, the report said. The city also failed to complete a physical inventory of capital assets every two years as required. A new report was started, but it primarily consists of assets acquired between 2021 and 2024. Only three items predated 2021. The listing included the old police station, which was demolished, but not the current police and fire stations. Sewer lines and the wastewater treatment plant weren’t listed, either, although the utility historically reported over $59 million in assets. The city’s response said it is deciding whether to hire a consultant to recreate the capital asset records “that seem to have fallen off the radar between 2017 and 2021.” Bonta and Modesto hope city employees can accomplish the bulk of that task. Temporary transfers between accounts are common but Portage got written up for not following the correct procedure. In 2002, then Clerk-treasurer Nina Rivas made temporary transfers of funds totaling $2.15 million but the City Council resolution authorizing the transactions wasn’t adopted until 117 days after the transfers were made and recorded, the audit said. A $350,000 temporary loan from the motor vehicle excise tax fund to the wheel tax fund was made on June 26, 2020, and authorized on Jan. 5, 2021. The loan was extended to June 30, 2021, but the temporary transfer was still outstanding as of Dec 31, 2023, the end of the audit period, the report said. The Redevelopment Commission was criticized for spending $84,431 for removing an underground storage tank system outside a tax increment financing district and failing to document that the commission’s $40,000 contribution to the Portage Economic Development Corp. was for work within a TIF district. A $12,594 park department floor scrubber was an operating expense and shouldn’t have been paid from TIF funds, the audit said. Nina Rivas, who was clerk-treasurer during the audit period, was given a copy of the SBOA audit, the report said. “We appreciate having a clean cut-off between the previous and current administration and needed the current audit report for the city’s upcoming SRF (State Revolving Fund) bond issue in 2025,” the city’s response said. Improving internal controls required hiring two new employees for the clerk-treasurer’s office, bringing the number of employees back up to 10, Modesto said in a phone interview. A payroll clerk with extensive experience was hired in March. The newest employee, hired this month, comes from the State Board of Accounts. “We are hoping to get our office up to compliance by the next audit,” Modesto said. “My motto is to hire people who are qualified, educated and experienced,” she said. “I can’t say enough about the staff who’s here.” Doug Ross is a freelance reporter for the Post-Tribune.