City Of Yukon Announces $1.3 Million In Money Troubles

Residents in Yukon said their growing city has always had a pretty good name.

Robbie Elswick and her family have lived there for 14 years.

“I love Yukon. It’s the best place and the best people,” she said.

But learning the city discovered several major financial issues was a shock to some.

In a press release, city officials said in October 2015, $1.3 million "was taken from bond funds that were meant for capital improvement to pay for general expenses without the Council's knowledge."

“Taking money from one fund and putting it in another without going through the proper channels is definitely not OK. And it does upset me,” resident Sue Saunders said.

City officials said a forensic accountant later found the city "has been using its reserves to pay expenses for a number of years and does not have enough money to pay its expenditures for the rest of this fiscal year."

3/21/2016 Related Story: City Of Yukon Facing Budget Crisis

Because of the reported discovery, city officials said they're faced with the possibility of layoffs, liquidating assets and borrowing money to make ends meet.

Also according to the city, past audits appear to be inaccurate and 2015's may need to be reissued.

However, the firm that performed the 2015 audit called the release sent by the city "misleading."

The firm FSW&B’s released the following statement statement:

"We were first made aware of the assertions provided to your organization approximately 1 p.m. today. Within the last couple of months, the city council made a decision to replace the City Manager and shortly thereafter, they replaced their municipal accounting consultant. We have not been contacted by the City of Yukon with regards to their press release which we believe is at best premature and more likely misleading.

"According to the press release it states 'In October 2015, approximately $1.3 million was taken from bond funds that were meant for capital improvement to pay for general expenses without the City Council’s knowledge.' That same press release future states that 'it appears that the 2015 audit will need to be reissued, …'

"The problem is that the last audit period ended June 30, 2015 and so if the alleged improper use of funds is even accurate, it is outside of the time period of the audit period which they state will need to be reissued. Additionally, the City provided our firm with signed representations that they were not aware of any potential items that could be material to the financial statement that existed subsequent to the end of the period being audited but prior to the issuance of that report and had they known that condition or suspected it, that should have been disclosed to us prior to completing the prior period audit so that appropriate adjustments to our audit plan, if any, could have been implemented.

"Our firm will continue to work with the new accounting consultant (and new auditor if they choose to hire a different firm for the audit period covered under their allegation) to resolve any differences of opinion and to assist them in continuing to improve their financial reporting function.

"Because we feel like the press release was premature and inappropriate with the information that they had at this time, our firm will not offer further comment on the matter and will instead continue to provide information as needed to the new accounting consultant and to discuss any potential differences or resolutions required."

The firm also claimed "due to a personal conflict between the former city manager and the mayor, it appears that the mayor or someone within the City Council is trying to use a scorched earth tactic rather than allowing time to make a transition between the old accounting consultant and the new consultant."

Former City Manager Grayson Bottom resigned in December 2015, a few months after the city said the funds were taken. News 9 tried contacting Bottom Monday but could not reach him.

The city did not comment on whether his resignation and the funding issues are related.