Ambulance district board approves audit engagement

Nevada Daily Mail

During a special meeting Tuesday night the Vernon County Ambulance District Board of Directors took steps to address several financial problems it is facing.

In light of the lien filed against the district by the IRS for unpaid taxes and the discovery that no annual financial audits have been performed for the last two years, the district voted unanimously Tuesday to hire the district's accounting firm, DSWA, to conduct a thorough audit of the district.

Board president Mark Humphrey said that prior to this time period annual audits were performed and the fiscal year 2013 audit was complete. The audits for 2014 and 2015 were not.

According to a press released issued before the Tuesday meeting the audit will be available to the public when it is completed.

Humphrey said that after talking to IRS representatives in Joplin and Lees Summit on Tuesday, it appears the district owes between $229,000 and $270,000 in unpaid employment taxes.

The required 941 reports were filed, but the payroll tax deposits were not made.

B.G. Wolfe, from DSWA, told the board that he estimated the district would owe $310,000 to $350,000.

Humphrey said that if the district can pay the entire amount due by Dec. 1, he thought the IRS would "most likely abate the penalty."

"We have to pay everything that's due," he said.

"But you must stay current on payroll taxes from November on. You can't get behind," Wolfe said.

Now the district must figure out a way to pay the past due taxes.

Kendall Vickers, Ambulance District attorney, said that the board needs to know now what the options are to settle the debt.

"We can reactivate the trust to borrow money against the building and then pay it back as rent," Humphreys said.

The ambulance district has a trust that was used to finance the construction of the building and the trust leased the building to the ambulance district until the building was paid off.

"You could do a lease back. The district has $500,000 in assets, a tax base and a monopoly on emergency services in Vernon County," Vickers said.

"But until you have some idea of the cash flow, there is nothing to go on to borrow money. A lender will ask if there is money to service the debt," he said.

To get an idea of the district's cash flow, the board decided to outsource that work to a third party company and voted 6-0 to direct the board president and treasurer to bring proposals to the next meeting for third party monthly accounting.

Before voting on this, the board talked to a firm in Texas by telephone Tuesday night that Kendall Vickers knew of to get an idea of what would be involved.

The company owner told the board that they do this kind of work and if they were to hire her, she would want to be in Nevada by the end of this week to get things started. In addition to handling the billing for the district, she told the board her company, K&P Specialty Billing Systems of Texas, would also handle the medical coding, which would save the district from needing to pay for someone to be trained to do the coding.

This company would want a two-year contract with an opt-out clause. The fee for service would be 8 percent of whatever is collected.

Chris Mason told the other board members that "We need to get this in place as soon as possible, but he did not want to rush."

"I feel this will reduce the stress on the staff in the front office," board member Nancy Jeffries said.

"I think whatever her fee, she'll collect more than that. That's my opinion," Wolfe told the board.

In addition to contracting with an outside firm to handle billing, the board is also looking to outsource its payroll monthly accounting.

"It's pretty standard with most governmental agencies that bills aren't paid until the board approves them," Wolfe said, adding this would give the board a measure of internal control.

"The board essentially approves every payment," he said.

Wolfe said this might mean the board needs to meet more often than monthly.

"We don't know what happened here, but a wheel fell off and that's what we are going to find out in the next couple of weeks," Wolfe said.

The board plans to meet again Monday or Tuesday.