Inter-fund loan question clouds county audit

Print Article

SANDPOINT — Bonner County officials are working to refine declarations in the county’s external financial audit amid a haze of uncertainty over whether a pair of million-dollar loans were illegal.

Commissioners transferred $1.6 million in 2011 and $1.5 million in 2012 from the county’s solid waste fund to help pay for a new juvenile detention facility and the overhaul of the courthouse.

There was no question about their permissibility when the inter-fund transfers were effected. Such transfers are common throughout the state and their legality was vetted through various legal counsels.

“These were made in good faith. We had attorneys — more than one — give us opinions at the time that the loans were appropriate,” Commission Chairman Cary Kelly said.

Since then, however, the county’s bond counsel on the courthouse remodel financing concluded that such transfers were contrary to state law. The county sought a 1st District Court judge’s confirmation about the legality of such loans, but the court appeared to sidestep the question.

Although Commissioner Mike Nielsen signed off on the inter-fund loans when they were made, he’s adopted the bond counsel’s opinion that the loans are patently illegal under Idaho Code.

Nielsen’s line in the sand on the issue extends to the external audit, a certification that the county’s finances and financial practices are sound. But the uncertainty regarding the legality of inter-fund transfers raised concerns that the county’s external auditor,  DeCoria Maichel & Teague, might be compelled to issue a qualified opinion on the audit.

A qualified opinion on an audit could scare off future lenders or drive up interest rates on future loans.

“It was my understanding that you would have to issue a qualified audit for 15 years because these loans are for 15 years and I really would like to avoid that,” Nielsen said during a teleconference with DM-T officials on Tuesday.

Mike DeCoria said he didn’t recall framing things in such stark terms, but admitted that the uncertainty could lead to a qualified opinion.

DeCoria suggested the county could avoid a qualified opinion by inserting a lengthy footnote in the audit exhaustively outlining the entire saga and potential ramifications of the loans. An “emphasis of matter” paragraph could also be included, which further underscores the uncertainty issue.

Commissioner Joyce Broadsword questioned DM-T officials whether there was any real difference between the county borrowing the money from itself and paying it back versus a traditional bank loan.

“A loan’s a loan. It doesn’t matter where you borrowed it from as long as you know you have to pay it back and you have that obligation outlined in your financials.

DeCoria disagreed, pointing out that one method is legal and the other is potentially illegal.

But there is still deep disagreement whether the loans are in fact illegal because a court has yet to expressly say so.

Treasurer Cheryl Piehl and Clerk Marie Scott are unconvinced the loans are illegal and emphasized that they were done in the open with the taxpayers’ best interest in mind. The two loans’ interest rates are 0.20 and 0.30 percent.

“They were doing it with the best legal advice they had at that moment in time,” said Scott.

Print Article

Read More News

IFG acquires Merritt Brothers mill

April 20, 2018 at 5:00 am | Bonner County Daily Bee Idaho Forest Group, a lumber producer in the Inland Northwest, has acquired Merritt Brothers’ finger joint mill located in Athol. “This acquisition gives us the opportunity to learn the value-add...

Comments

Read More

Waste sites closed May 2

April 20, 2018 at 5:00 am | Bonner County Daily Bee SANDPOINT — All Bonner County solid waste collection sites will be closed on Wednesday, May 2 due to employee training. Normal operations will resume at 7 a.m. on Wednesday, May 3. ...

Comments

Read More

Crikey! Famous pair go exploring

April 20, 2018 at 5:00 am | Coeur d'Alene Press COEUR d’ALENE — Mudgy and Millie are on the move again. Ten years after Coeur d’Alene’s favorite children’s book characters began a game of hide-and-seek in the heart of the Lake City, the pair wi...

Comments

Read More

Arts panel revises Silver Box Project

April 20, 2018 at 5:00 am | Bonner County Daily Bee SANDPOINT — City Council rejected seven art submissions on Wednesday as the Sandpoint Arts Commission's Silver Box Project is being restructured. The project is a city-wide, on-loan art competition ...

Comments

Read More

Contact Us

(208) 263-9534
PO Box 159
Sandpoint, ID 83864

©2018 Bonner County Daily Bee Terms of Use Privacy Policy
X