Audit of small town finds nearly $100,000 in unauthorized or improper disbursements

A state audit has uncovered more than $92,000 in improperly handled financial transactions for the city of Cumberland, a west Iowa town with the population of 250.

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State Auditor Rob Sand said in a Tuesday news release that his office undertook the audit for the period January 2014 to June 2021 at the request of city officials concerned about transactions processed by the then-city clerk, Grace Thomsen.

He said a report of the audit has been provided to the Cass County Sheriff’s Office, the Iowa Division of Criminal Investigation, the Cass County Attorney’s Office and the Iowa Attorney General’s Office.

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Because city records were not sufficiently maintained it wasn't possible to determine if more money was involved, Sand said.

Sand said the investigation identified $58,532 in improper disbursements, including $18,827 in unauthorized payroll and reimbursements to Thomsen and $10,208 to other city employees. The audit also found $6,514 in undeposited, uncollected or unbilled utility charges for Thomsen and her spouse and $21,761 for other city residents.

Thomsen in an interview admitted she had either not billed or not paid her utilities until March 2021, Sand said in his report. In addition, he said the audit found several credit memos were processed on various residents' accounts to adjust balances for payments which had been posted but subsequently deleted.

Thomsen could not immediately be reached for comment Tuesday. The sheriff's office said the case was under investigation and that it had no further comment.

Thomsen began working at the city as the deputy city clerk in January 2013 and became the clerk that December, Sand's report said. In that position, she was responsible for receipts, disbursements, payroll, utility billing, inventory, bank accounts and financial reporting.

Members of Cumberland's fire department started asking questions about the city's finances in early 2021. Shortly after that, Thomsen submitted her resignation with three months' notice, Sand said.

The newly hired deputy city clerk, who she was training as her replacement, also began to raise questions and consulted with the city's accounting software vendor's representative, who confirmed irregularities in the accounting records, the report said.

Alerted to the problems, the City Council began questioning Thomsen, who in a conversation with the mayor admitted to taking $2,000 to "feed her family," the report said. She resigned immediately, effective June 9, 2021, according to the report.

The council then commissioned Sand's office to conduct the audit.

Sand said auditors interviewed Thomsen in December 2022 with a representative of the sheriff's office, and that she declined a request for a subsequent interview.

Sand recommends in the report that city officials implement procedures to ensure the city's financial controls are strengthened. This includes separating duties, performing utility reconciliations, reviewing timesheets and calendars for payroll and making sure all disbursements are properly supported and paid in a timely manner.

Noelle Alviz-Gransee is a breaking news reporter at the Des Moines Register. Follow her on Twitter @NoelleHannika or email her at NAlvizGransee@registermedia.com.

This article originally appeared on Des Moines Register: Audit of small Iowa town finds nearly $100,000 in improper transactions

Audit Prompts Amherst Central Schools to Disable Old Accounts

The audit discovered there were more than 1,000 user accounts accessing the district network that belonged to former students or staff, including one who retired more than 20 years ago.

While the audit warned that there was a significant risk that the district's network resources, financial data and student information could intentionally or unintentionally be changed or used inappropriately, it did not say there was any evidence of hacking.

"The district is committed to putting corrective actions into place for any findings listed in the final report," Panella said in his response.

The audit said as many as 1,570 accounts were unneeded, but had not been disabled.

There were 90 network accounts still active for people who had left the district, auditors said, writing that "former employee network accounts should be disabled on the day the employee leaves district employment."

"Because the district's network had unnecessary enabled network user accounts, it had a greater risk that these accounts could have been used as entry points for attackers to compromise IT resources," the audit said.

District officials told auditors that the accounts went unnoticed because the district did not have written policies and procedures to disable network accounts.

"Cybersecurity is an area our district continuously works to strengthen and we welcomed the in-depth look from the comptroller's office," the superintendent wrote in his response letter to the audit.

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Auditors reject Oshkosh protest of $9 billion JLTV contract loss

This story has been updated to include comment from the GAO.

WASHINGTON — The Government Accountability Office has denied Oshkosh Defense’s protest of the U.S. Army’s decision to award a nearly $9 billion contract to AM General to build Joint Light Tactical Vehicles, Defense News has learned.

Oshkosh took issue with the Army’s evaluation of its technical, price and cost proposals as well as with the Army’s evaluation of AM General’s submission, Edward Goldstein, a GAO attorney said in a June 12 statement.

“Oshkosh also argued that the Army unreasonably and unequally conducted discussions and should not have found AMG to be a ‘responsible’ contractor; that is, a contractor with the necessary financial, technical, and other business capabilities needed to perform the contract successfully. Finally, Oshkosh argued that the Army unreasonably made its best-value tradeoff determination.

“In denying the protest, GAO concluded that the Army reasonably evaluated proposals in accordance with the RFP’s evaluation criteria, and that any judgments made were consistent with and adequately supported by the content provided in written proposals or observed as part of site visits conducting during the course of the solicitation process,” Goldstein said.

The decision was issued under a protective order because it may contain proprietary information. A redacted version of the report is forthcoming.

“We are disappointed with the decision,” Oshkosh said in a statement sent to Defense News, “and we firmly believe our proposal was the lowest risk, best value solution for the young men and women serving our nation.”

Oshkosh said it would assess the GAO’s findings and evaluate next steps.

AM General upset JLTV-maker Oshkosh in the Army’s new competition to build more of the vehicles, winning a contract valued at $8.66 billion. Oshkosh won the original 2015 competition to build JLTV, beating out AM General and Lockheed Martin.

Oshkosh filed a protest with the GAO on March 6 following its post-award debriefing with the government. Tim Bleck, Oshkosh’s president, said at the time the company has “significant concerns regarding the evaluation of the proposals under the solicitation that support an independent review. We believe the government’s evaluation did not properly review the financial, technical, and manufacturing capabilities offered to select the best value and lowest risk solution to deliver the JLTV.”

Since 2020, private equity firm KPS Capital Partners has owned AM General. The subsidiary is now setting up infrastructure at its 96-acre Mishawaka Manufacturing Campus in Indiana.

Oshkosh has built nearly 19,000 JLTVs to date, supplying them to the U.S. Army, Marine Corps, Air Force and Navy as well as military forces in Montenegro, Brazil, Slovenia and Lithuania. The company is under contract to build more than 22,679 vehicles and expects additional orders through November.

According to a redacted copy of the protest obtained by Defense News, Oshkosh contends the Army took “glaring risks” by selecting AM General, noting the company has “zero experience manufacturing the JLTV” and “by its own admission, must build out its own facilities before it can start production.”

Oshkosh said in the protest the Army did not appropriately consider AM General’s financial capacity.

The company is preparing to close its JLTV production line by the end of 2024.

“As we move forward, we will continue to focus our mission to provide the highest quality vehicles and technologies that enable our warfighters to perform their mission and return home safely,” Oshkosh said in its June 12 statement.

AM General has to start building JLTVs by August 2024, and while the protest was still pending the Army went ahead and awarded a $4.7 billion contract to the company on May 24.

Byron Callan of Capital Alpha Partners said in recent analysis prior to the decision that he doubted the Army would have moved forward with a contract award to AM General if the service thought the award would be overturned.

Jen Judson is an award-winning journalist covering land warfare for Defense News. She has also worked for Politico and Inside Defense. She holds a Master of Science degree in journalism from Boston University and a Bachelor of Arts degree from Kenyon College.