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State reaudit completed on Waverly Utilities, with changes to finance policies recommended

WAVERLY – More clarity will surround Waverly Utilities’ finances going forward as a result of a state re-audit for the Jan. 1, 2015, through Dec. 31, 2018, period.

The Office of the Iowa State Auditor Rob Sand completed its re-audit report earlier this month, and revealed one of its findings to be Waverly Utilities not adequately documenting the public purpose of certain expenses and payments during that financial period.

“The utilities company does not have policies addressing public purpose criteria or permitting the expense of public funds for employee recognition, retirement parties, employee awards, staff meals or other celebrations,” the report said.

The public utility company is now taking steps to establish, revise or better enforce internal policies and procedures, and among many things, “ensure all expenses are reasonable, necessary for utility operations, and meets the test of public purpose.”

“Waverly Utilities (WU) would like to acknowledge and thank the state auditor’s staff for conducting a very thorough re-audit of WU’s financials over the past four years,” said CEO Darrel Wenzel in a statement to The Courier. “While no significant or material findings were made, there are documentation deficiencies that have been or will be addressed and corrected by the WU management staff as overseen by the Board of Trustees.”

Unnamed city officials made a request to the state office to conduct a re-audit for calendar year 2016, after raising concerns about past business practices and fiscal activity regarding questionable expenses, excessive travel, credit card usage, marketing and advertising expenses and donations.

But “based on the nature of the concerns presented,” the re-audit covered items applicable to the four-year period, beginning Jan. 1, 2015.

None of the more egregious allegations, such as the utility company making donations to Wartburg College in support of its fitness center, the “W,” for several years, were found to be truth by the auditor’s office.

“I was confident Waverly Utilities was properly abiding by the rules, and didn’t have too much concern,” said Wenzel. “We can probably do a better job of answering questions and educating the public though.”

He led the company as CEO for the four-year financial period in question.

In addition, the state auditor’s office found Waverly Utilities paid more than $30,000, from 2015 to 2017, for advertising on the radio station of Aelvin “Ael” Suhr, the board of trustees chair at the time, without a bidding process, which was labeled as a potential conflict of interest violation.

That was before the public utility company had policies and procedures regarding business transactions and conflict of interest.

Suhr’s six-year term ended Dec. 31, 2017.

Wenzel said if he had remained on the board, the company would have developed a bidding process for the advertising on a local radio station, which is required for an expense north of $6,000 per year.

Waverly's 'Green Bridge' to be remembered with bronze plaque, signage and art display

He noted Suhr never approved payments to his company Ael Suhr Enterprises — $13,381, $10,861 and $13,605 in 2015, 2016 and 2017, respectively — which were made monthly and not via a contract.

The advertising on Suhr’s radio station began before his term on the board and continued after his departure.

Waverly Utilities followed through on the recommendation that it ensure all utility trustees and employees follow the new conflict of interest policy, which was approved March 12, 2019.

Wenzel couldn’t provide the names of the city officials who requested the re-audit. When reached by telephone, Auditor Rob Sand would not disclose the names because of whistleblower protection and wanting to encourage others to come forward with important information without fear of retribution.

Sand was not aware of any past issues involving Waverly Utilities’ finances. If fines or punishments were to be levied related to the findings, that doesn’t fall under his responsibilities.

“Our job is be taxation watchdogs and report on what we find,” he said.

Some of the other findings, which received recommendations from the auditor and were adequately addressed, included the utility initially paying for the personal costs of individual cell phone plans, and travel costs being paid for with the company credit card.

“The goal of a report like this is to ensure public funds are spent in accordance with the Code of Iowa and in the best interests of taxpayers,” said state auditor spokesperson Sonya Heitshusen.

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