Lake County officials are still trying to get a grasp on what happened in the county’s accounting process that left the lingering question of just exactly where the entity’s cash balances stand and prompted Standard and Poors to stop issuing it a credit rating.
Commissioner Micheal Repay, D-Hammond, confirmed Thursday S&P is no longer providing a credit rating for the county because it does not have a 2022 audit. Investigators from the State Board of Accounts left the county’s annual audit in July unfinished because they said they could not gather the information they needed to get the job done.
“It wasn’t a great surprise to us that that occurred,” Repay said, of the S&P action.
The problems were blamed on reporting due to the transition to a new accounting platform, Oracle, from the existing Lawson Software accounting platform. Auditor John Petalas at the time said the data is in the system, just not in a way the state auditors can use it.
The county began a switch to Oracle accounting software in 2022. The process is ongoing and was met with pushback from some officials and department heads who preferred the existing accounting system. Petalas said then the vendor brought in by Oracle to input data for the county did not understand the difference between governmental and real-world accounting.
Repay said he believes most of the funds are 100% accurate despite the reporting problems with the software. He does not believe the errors affect the cash balance and, like Petalas, described the problem as a reporting issue.
The lack of an S&P credit rating has no immediate impact on the county because it currently does not have any short or mid-term borrowing needs and is in a strong financial position with a solid cash balance, Repay said.
“It’s not a situation where we are broke. We know that we have it,” Repay said.
It is not an uncommon thing to occur during a transition, he said, but it is something that should not have happened. Repay said officials are engaged in getting it squared away. He said he is unsure yet if the problems that existed within the Lawson software go back further than a year or two.
“I don’t think (the problem) was years in the making, but we don’t know,” Repay said.
During the council’s Thursday workshop, councilman Randy Niemeyer, R-Cedar Lake, said officials need to determine why and how the problem occurred. He said officials contracted with consultant HTC Global Services to oversee the transition to the Oracle software and has paid the firm more than $750,000.
After attending the latest data board hearing where he heard comments from a couple employees about their training experiences with HTC, Niemeyer said he was questioning whether the company upheld its end of the deal.
Niemeyer said he learned many employees did not take advantage of the training offered by HTC during the transition. Now that new training is underway, he said he wants to ensure all employees take advantage. He said he also learned the problems with the accounts not balancing predate the Oracle software and were present with Lawson.
Forensic accounting firm Baker Tilly is conducting an after-action report, which should be finished this month, Repay said.
“It is a report on where we could have done better,” Repay said. He expects the report to be released to the public. “I also expect there is probably a little bit of blame for everybody. Everybody could have done a little bit better.”
cnapoleon@chicagotribune.com
