GVMC offers to settle accounting argument

December 12, 2010
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]For perhaps the first time in its 20-year history, the Grand Valley Metro Council has delayed releasing an audit of a fiscal-year budget, even though Treasurer Cy Moore said a review of the 2010 spending plan is done.

The council’s auditing firm, Vredeveld & Heafner, has recommended that the audit’s release be withheld until a financial dispute with the Office of Transportation Commission Audit at the Michigan Department of Transportation is resolved.

“That’s the reason we don’t have the preliminary audit at this time,” said Moore.

OTCA audited the council’s budgets from 1996 to 2004 and said it found some reporting discrepancies. The agency has claimed that the Metro Council owes MDOT — and, essentially, the federal government — up to $1 million for alleged overpayments that were made to GVMC over those nine years.

The claim is based on a review of accounting procedures regarding such things as how the staff’s vacation hours and sick leaves were posted. OTCA said how those items were accounted for wasn’t in line with Circular No. 887, a reporting regulation for grants. Federal and state transportation grants for the region are cycled through the Metro Council.

“Was this a serious violation? No. Was this an attempt to defraud the government? Absolutely not,” said GVMC Executive Director Don Stypula.

Stypula said department heads have kept “meticulous” records throughout the years. He added that MDOT managers will present the council’s case to OTCA, along with its offer of $320,000 to settle the dispute. Stypula said the settlement would be paid over the course of years, possibly as many as 10.

“In essence, we will owe some amount. We just don’t know exactly what,” he said.

If OTCA accepts the council’s offer, GVMC will pay MDOT; then MDOT will send the payment to the federal government. Stypula said other planning agencies have fought OTCA over similar findings but have lost, and going to court could cost the council more money than settling the issue.

“It bothers me that the state decided to audit us after 12 years,” said Ottawa County Administrator Al Vanderberg. Other members wondered why the auditing firms the council hired in past years weren’t aware of the regulation. The council has had its annual budgets audited by an outside party every year; this is the first year Vredeveld & Heafner has done the audit. The council incorporated the regulation into its 2010 fiscal-year budget.

Stypula said he hopes to have the OTCA matter resolved this month. If so, he will release the latest annual audit next month.

In another matter, GVMC Chairman Jim Buck, also mayor of Grandville, named nine Metro Council members to a task force that will help to determine the council’s governance future. The group’s first meeting is this week; the panel’s recommendations are due by June 30.

Buck will be joined on the task force by Kent County Administrator and Controller Daryl Delabbio, East Grand Rapids City Manager Brian Donovan, Crystal Flash Energy President & CEO Tom Fehsenfeld, Cascade Township Trustee Cindy Fox, Grand Rapids Mayor George Heartwell, Jamestown Township Supervisor Jim Miedema, Greenville Mayor Kenneth Snow, Vanderberg, and Rockford City Manager Michael Young.

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