SANBORN—Details are scarce at the moment, but it can be verified that the Iowa Auditor of State’s Office is looking into the city of Sanborn’s financial records and the community’s longtime mayor and city clerk have resigned.
Duane Van Veldhuizen, 68, who had been mayor of the O’Brien County city of about 1,400 resigned on Friday, Jan. 11, as did city clerk Peggy Japenga, 48, who is Van Veldhuizen’s daughter.
The resignations were confirmed by the Sanborn city office. Sanborn city administrator Jim Zeutenhorst made limited comments on the matter.
A message was left at Van Veldhuizen’s home number and Japenga was unable to be reached.
In his resignation letter, obtained by nwestiowa.com, Van Veldhuizen threw the Sanborn City Council under the bus seemingly in defense of his daughter.
"I can't work with a council that doesn't stand behind there employees and are just ready to throw them to the curb," he wrote. "In the justice system, you are innocent until proven guilty, in the Sanborn City Council you are guilty and don't get the chance to prove you are innocent. It gives me great pain that this happened but for this reason, I am resigning."
Japenga's resignation letter, also obtained by nwestiowa.com, mentioned how much she loved her job and working for her hometown. She also noted she hoped the skills she learned there would help her in future career opportunities.
The timing of the resignations coincides with the state auditor’s inquiries into Sanborn’s financial records.
According to Jim Cunningham, a manager at the state auditor’s office, his department was contacted by TP Anderson & Co., a Humboldt-based firm that has prepared the city of Sanborn’s annual audits since 2009.
“At this time, we are not doing any procedures with the city of Sanborn; however, some concern has been brought to our attention in consultations with their actual CPA firm that does their audit,” he said. “The CPA firm will be addressing these concerns as part of the audit.”
Tim McCarton, a partner at TP Anderson & Co., confirmed that the audit is still ongoing.
“At this point, all I can really say is that we have been engaged to do the audit in Sanborn and we are looking into a few situations and when the work is completed we will issue a report that will be made public,” he said.
McCarton’s rough estimate for the completion of the audit is a month.
“It kind of depends on when we can gather up all information; we don’t have all information at this point,” he said. “I would say probably within the next month we would have something to issue, but at this point, we are not quite complete yet.”
Sanborn’s most recent audit on file with the state auditor’s office covers fiscal year 2016-17, which ended on June 30, 2017.
For the most part, TP Anderson did not note many irregularities in the report’s schedule of findings, but it did find a few issues.
Under internal control deficiencies, Sanborn has knocked for segregation of duties:
“One important aspect of internal control is the segregation of duties among employees to prevent an individual employee from handling duties which are incompatible. We noted that bank deposits and postings of cash receipts are, on occasion, handled by the same person. A small staff makes it difficult to establish an ideal system of internal checks on accounting record accuracy and reliability.”
The firm recommended that “the city should review its control procedures to obtain the maximum internal control possible under the circumstances utilizing currently available staff, including elected officials.”
In its response, Sanborn said it thought it was close to the maximum degree of separation with the limited number of office employees, but that it would investigate additional procedures to “cost effectively improve internal control.”
The response was accepted.
Van Veldhuizen had been Sanborn’s mayor since 2014 after defeating Michael Benner, and former mayor Thomas Ginger in the fall 2013 municipal election.
Before becoming mayor, Van Veldhuizen was a longtime member of the city council.
Japenga started as city clerk in 2011.
TP Anderson’s other finding of note in the report were that the city of Sanborn had not implemented the Uniform Chart of Accounts, which provides better financial information and control, and a deficit in its budget.
In fiscal year 2016-17, the city’s solid waste collection fund had a deficit of $23,781. The firm recommended the city find alternatives to eliminate the deficit, which it promised to eliminate.
This story has been modified to include information from the resignation letters of Duane Van Veldhuizen and Peggy Japenga.