11/07/01 Nicosia/FRDO LiabilitiesNovember 7, 2001
Board of County Commissioners
Attn. Howard Gipe, Chairman
Flathead County Courthouse
800 South Main Street
Kalispell, MT 59901-5400
Dear Mr. Gipe:
I was recently appointed to represent the City of Columbia Falls on the Tri-City Planning Office
due to the vacancy created by our city manager's departure. At a recent meeting, I learned that
the County did not pay all of the Flathead Regional Development Office (FRDO) liabilities,
electing instead to pass them on to the Tri-City Planning Office. I am writing to request your
prompt attention to these debts and to request payment to the Tri-City Planning Office.
The previous County -wide Administrative Board (CAB) approved a contract with Denning,
Downey and Associates to perform an agreed -upon procedures engagement on May 1, 2001.
County Commissioner Williams made the motion with Chris Kukulksi, Kalispell City Manager,
seconding the motion. The motion passed unanimously. On June 12th, Commissioner Williams
voted to amend the contract requiring Denning, Downey and Associates to verify all outstanding
claims be reconciled by July 20, 2001. The firm completed the engagement on July 6, 2001 and
reported that all claims had been reconciled. A bill was submitted on July 1 lth by Denning,
Downey and Associates in the amount of $2,335. Despite the timing of the bill, pursuant to
generally accepted accounting principles, a liability existed as of June 30th and could have been
accrued by the county. The engagement was a direct liability of the Flathead Regional
Development Office and should have been paid from the cash balance held by Flathead County.
The timing of the bill did not change the original FRDO obligation nor the intent that this
contract be a direct obligation of FRDO.
Further, the agreed -upon procedures report failed to recognize the significant liability created by
employees earning compensatory time and vacation and sick leave earnings in compliance with
County policy and state law. Mr. Robert Denning of Denning, Downey and Associates verified
the liability amount as of June 30th through the county accounting department in July 2001. The
compensatory time liability as of June 30th was $3,897.95 and the vacation and sick leave
earnings (compensated absences payable) as of June 30th was $57,436.57, for a total liability of
$61,334.52. Flathead County did not compensate the Tri-City Planning Office for their portion
of this liability although FRDO employees departing or staying with the county were
compensated from FRDO funds.
I would appreciate the opportunity to discuss this matter with the Board of Commissioners.
Sincerely,
Susan M. Nicosia, CPA, MPA
City Council — City of Columbia Falls