SHELBY — The accounting practices of Shelby Municipal Court are in hot water, both by the Ohio Auditor of State and now Shelby City Council.
Members of council strongly rebuked the court’s actions at their April 3 meeting, after finance director Brian Crum shared that two of the court’s accounts were not reconciled with the bank.
Crum stated the court’s civil account was off by $3,700 and the criminal account was off by $3,600. He noted these accounts have not been balanced for many years, throughout multiple personnel changes with the clerk of court.
“They don’t have high hopes of finding the remaining differences,” Crum said.
Audits performed by the state of Ohio are standard operating procedure. Every government entity is audited every year. Since 2018, every time Shelby Municipal Court has been audited, it has received a notice regarding the improperly reconciled bank accounts.
Last year, Crum said, the auditor gave a warning to the court that if the situation was not rectified, the auditor would give an adverse opinion, a big red flag that could negatively affect the city and the court.
At the March 20 meeting of council, Council members Nathan Martin, Garland Gates and Charlie Roub rejected the option of writing off the unreconciled balances at the court. Martin expressed frustration that no accountability for the mistakes had taken place.
On April 3, Martin threatened legislative action if the accounts were not reconciled.
“Soon, if something doesn’t drastically happen and the administration and (Municipal Court Judge Sheree Studer) continues to try this council member’s patience, then there’s going to be legislation brought to the floor of council that’s going to start forcing people’s hand to accountability,” Martin said.
“We are not an impotent council without the ability to force accountability. I’m at the end of my rope on this.”
HOW DID WE GET HERE?
In an interview with Richland Source, Crum explained the problem began in 2018, when the city received the state’s audit of the court from 2017. It was determined then the court was not properly reconciling its bank accounts.
In bookkeeping, a bank reconciliation is the process by which the bank account balance in an entity’s books of account is reconciled to the balance reported by the bank. Any difference between the two figures needs to be examined and, if appropriate, rectified.
“In layman’s terms, a bank reconciliation is when the balance in your accounting books should be the bank balance, minus any outstanding checks,” Crum said. “Thirty years ago everybody did that with their checkbooks, but as a whole, society seems to have forgotten how to do that.”
During that time period, Crum said, the court was going through a transition with its clerk when the longtime clerk of courts retired and a new person took over. The new person, according to Crum, “didn’t know what they were doing” and stopped reconciling the court’s accounts.
The current clerk of court, Shannon Small, started in 2018. Crum said Small also struggled with bank reconciliation, didn’t know how to fix the current accounts, and instead of asking for help to rectify the situation, simply let it go.
“The court system was not reconciling their bank accounts. I think Shannon was trying, but she was not ever able to bring them into balance,” Crum said. “This went on for years and years and the problem got much worse.”
Crum said since his election as finance director in 2020, he has tried to make progress with the accounts. Last year, a local accountant went through the books and made some progress, but ultimately did not solve the problem. The previously-retired clerk of courts also returned to help catch things up with Small.
“They’ve gotten through all the time Shannon has been there and figured out all the mistakes made, and now they can reconcile back to the same difference every month,” Crum said. “Before, the number was all over the place, so that tells me they figured out everything going back to when Shannon started in 2018.”
However, the balances still consistently show the civil account off by $3,700 and the criminal account off by $3,600.
“The problem they have now is, because of that bookkeeper before Shannon not having any records of things and the remaining differences, they’re struggling to find documentation of things,” Crum said. “It’s been years now and they’re working with old material that previous employees did and didn’t keep good records.”
WHAT HAPPENS NEXT?
Without the proper documentation, Crum said there is little chance of reconciling the accounts.
“I’ve spoken with the state auditor on this, they say let’s get through this state audit and see where we’re at,” Crum said.
In the grand scheme of things, the amount is small compared to the city’s $41 million budget, Crum said. The state auditor does not believe the money was stolen. It is possible the auditor will choose not to look into the matter further, he said.
“After that, it’s a management decision between the council and the court,” Crum said. “And I think it’s no secret that Garland and Nathan want something significant done.”
Gates noted on April 3 that a majority of council had made it clear in previous meetings that they expected the two accounts at the municipal court balanced to the penny.
“I don’t care how much time it takes, I don’t care that no one in that office now was there when this first started, they perpetuated it because audit after audit, we get the same citations of a significant deficiency,” Gates said. “The finance director and his deputy balance many funds every month to the penny.
“I’m not asking the court to do anything that I don’t expect from the finance department.”
Roub expressed frustration that action was not taken when a problem with the accounts was first discovered in 2018.
“It doesn’t matter who was in office and who was responsible for it before then, they found the error and just set it aside instead of doing what they should’ve done in the first place and find what the problem is,” Roub said. “It seems like the attitude is to overlook it and maybe it’ll go away.”
Both Roub and Martin agreed that legislative action may need to be taken if the issue is not addressed.
“This council member is not going to be worn down, and frankly, the judge and the administration are trying this council member’s patience on coming up with a plan of actual accountability and action,” Martin said.
“The amount is inconsequential, the bottom line is we are responsible for those funds. That is unacceptable.”
