The Mitchell City Council heard a report on a special review of the procedures followed regarding the operation of the Corn Palace. The report was requested by Mitchell Mayor Ken Tracy and was issued by South Dakota Auditor General Martin Guindon. The report is not considered an official audit of the Corn Palace operation.
It states that internal controls over the concession operations, such as cash collection, reconciliation, and accountability, were not adequately designed or functioning properly to detect errors, fraud, or abuse.
The report listed several areas where lack of proper internal controls were evident, including the fact that only one person, former Director Mark Schilling, handled the counting of cash in the registers and making the deposits. Registers were not balanced out with a required starting balance each time deposits were made, and journal tapes from cash registers were not retained with summary balance tapes, called ‘Z’ tapes.
The report specified only one period of time where there was an actual discrepancy of cash in a register at the North concession stand at the Corn Palace. Between December 9th and December 13th of 2013, a flash report conducted on the cash register showed sales of $4,320. However, the ‘Z’ tapes, or balance tapes, showed sales of only $3,142, which was discrepancy of approximately $1,177.00. Since the balance tapes were not retained, officials could not trace the source or sources of the discrepancy.
The report listed several recommendations for procedures which should be changed, including having two people count all cash and make deposits. It was also recommended that proper surveillance be installed in all areas where cash transactions occur, and that the Corn Palace consolidating cash collections to one location.
The report also found some missing documentation from the use of the City credit cards issued to former Director Mark Schilling. Several of those involved charging meals while on trips, which is against City policy. It was also reported that Schilling and staff member Jeri Mickelson received free tickets to the 2013 Academy of Country Music Show supplied by Romeo Entertainment, which is a vendor of the city. Receiving free tickets from a vendor is also against Municipal Policy.