VERNON COUNTY, Wis. – The Vernon County Board of Supervisors received its official 2025 financial audit report during its Sept. 17 meeting, sparking an extensive discussion on unreconciled bank balances, legacy bookkeeping flaws, past budget calculation mistakes, and administrative steps underway to restore long-term fiscal stability.
Greg Pitel with the independent accounting firm KerberRose, presented the 2025 audit findings to the board. Pitel reported that the county financial statements received a clean, unmodified audit opinion, which represents the highest standard attainable.
Despite the clean opinion, Pitel outlined several repeat internal control deficiencies detailed in the management communications letter. These included financial reporting, material account adjustments, preparation of state and federal award schedules, lack of segregation of duties, and untimely cash reconciliations. Pitel identified the cash reconciliation backlog as the single most critical finding in the audit, explaining that delayed and inaccurate reconciliations significantly stalled the issuance of the entire county audit report.
“The cash reconciliations were not done on a timely basis or accurately, which really delayed the issuance of the audit,” said Pitel. “By statute, the treasurer is responsible for the cash reconciliation, but in most counties that I work with, the treasurer and the finance department collaborate to ensure that you have an accurate and timely cash reconciliation.”
Pitel warned supervisors that failing to reconcile cash balances on a monthly basis directly undermines the accuracy of monthly financial reports used by county board committees to make operational decisions.
“At these monthly meetings, when you are looking at budget to actual financial performance, if cash is not reconciled, you are not really sure that you are getting the best information on those budget to actuals,” said Pitel. “Because there could be expenses or revenues that are not being recorded or captured.”
Pitel strongly recommended that county leadership establish a formal policy requiring cash reconciliations to be completed, reviewed, and mutually agreed upon within 10 to 15 days following the end of each month.
Pitel detailed the key factors that contributed to the county accounting obstacles, pointing to midyear turnover within the county finance team during 2025 and the ongoing technical challenge of transitioning away from a legacy computer system. In response to a question from Supervisor Martha Olson regarding whether cash reconciliation problems had occurred in prior years, Pitel noted that previous administrations had relied on external consultants to complete year end books.
“It has been typically last previous couple of years you hired out some help in I would say early January to help with the year end closing process, which included the cash reconciliation,” said Pitel.
Pitel emphasized that the county current migration to a new enterprise resource planning system, Tyler Munis, offers an ideal opportunity to evaluate and permanently fix the cash reconciliation workflow.
“I think it is a good time to evaluate that process because you are migrating to a new ERP system,” said Pitel. “And Tyler Munis is a pretty effective and good accounting system, from what I have seen across our client base.”
Pitel also highlighted areas where the county performed well, particularly noting that Vernon Manor successfully repaid $1.6 million to the general fund, fully settling a cash advance that had weighed on county books across prior budget cycles. Pitel added that the county strategically recognized remaining American Rescue Plan Act grant funds in 2024, protecting the county from potential timing issues ahead of federal obligation and expenditure deadlines.
Examining the general fund numbers Pitel walked supervisors through the budget to actual performance. He noted that while the general fund experienced an actual $555,000 negative change in fund balance for 2025, the original 2025 budget passed by the board had projected a much larger $2.429 million deficit.
Administrative Coordinator Nate Torres later noted that the actual $555,000 drawdown represented a $961,000 positive variance compared to original budget expectations, though both officials emphasized that running operational deficits remains unsustainable.
Following Pitel presentation, Finance Director Annie Lockyer and Torres addressed the board to explain how past calculation mistakes and one time reserve transfers created a structural deficit heading into the 2027 budget season. Lockyer told supervisors that a deep examination of historical financial records revealed a recurring structural gap that had been masked for years by clerical errors, one time reserve transfers, and overly optimistic revenue projections.
“As Nate and I have been looking at and correcting budget errors from the past, we have identified basically that we have a structural gap that has been obscured by these errors and some favorable year end variances year over year,” said Lockyer. “The planned use of fund balance, one time or unusually strong revenue, and transfers and other financing sources.”
Lockyer added that the finance department is actively rebuilding operating baselines to ensure future monthly and quarterly performance reports accurately reflect county health.
“It is not that suddenly $1.2 million disappeared,” said Lockyer. “It is that we need to make sure that our budget is completely nailed down and balanced, so that when we are giving you monthly or quarterly budget to actual information, it is valid and understandable.”
Later in the meeting, Torres presented a line by line analysis of the 2026 budget, laying out the specific clerical and mathematical errors inherited from prior administrations. The findings expanded on disclosures Torres made earlier in the week to the county Finance Committee.
Torres explained that the most substantial single omission in the 2026 budget involved the construction of the new emergency management storage building. While $360,000 in debt proceeds revenue for the facility was recorded on the master tax levy worksheet, the corresponding $360,000 capital expense was omitted from the budget roll up. A similar $40,000 capital vehicle expense for Human Services was also omitted from expense totals despite being approved.
Additionally, Torres uncovered $240,000 in revenue double counting and mathematical errors across operating departments. In the County Clerk budget, $103,000 in county farm rental revenue was counted twice on master summary sheets. The District Attorney budget double counted $35,000 in revenue, the Treasurer budget included $26,000 in revenue without a matching expense, and the Health Department double counted $6,500 in revenue.
Torres also highlighted a long standing benefit omission involving $95,000 in annual stipends paid to the Neighborhood Family Clinic to lower employee health insurance claims. The clinic expense had never been given a dedicated line item in past budget spreadsheets, forcing the 2027 draft budget to absorb an additional $95,000 to reflect actual costs.
Torres emphatically reassured supervisors and the public that the discrepancies were strictly technical calculation mistakes rather than intentional wrongdoing or missing funds.
“It is not fraudulent,” said Torres. “It is just budgeting calculation mistakes, where it is like you do your household budget for the month and forgot to put your mortgage in.”
Torres outlined several key factors that contributed to the systemic budget errors, citing years of executive turnover, decentralized department budgeting, and a heavy reliance on a legacy 1980s DOS based computer system called New Vision. Over the past year, county staff have been working continuously to transition all financial and payroll operations to a modern, centralized platform through Tyler Technologies.
Supervisor Alycann Taylor questioned how the emergency management building expense was dropped during the previous budget cycle, asking whether confusion over funding sources played a role.
“Was the emergency management building and possibly the $40,000, were those Ho Chunk requests, and is somehow that not aligning,” said Taylor. “There was a thread there.”
Torres clarified that the project was funded through $360,000 in debt proceeds and $40,000 from the hazmat fund, but the final spreadsheet math failed to include the expense column when calculating the tax levy.
Supervisor Jerry Pedretti noted that previous budget processes often saw capital projects shifted between various funding mechanisms, creating confusion during final roll ups.
“That is where the confusion comes in on that, because it was approved and not approved and kind of slid along,” said Pedretti. “And we were going to use Ho Chunk, and then we did not, and then we did, and then we went to capital (budget).”
Pedretti added that department heads were unaware that their individual numbers were being altered or double counted on master sheets created by former administrators.”
Supervisor Wayde Lawler asked about other capital line items on the summary worksheet, pointing to highway equipment figures.
“Nate, you mentioned the Human Services and the Emergency Management discrepancies,” said Lawler. “Could you talk about the highway equipment discrepancy, which looks to be to the good.”
Torres noted that while highway equipment figures had slight variations due to standard debt issuance rounding, the core capital misses in Emergency Management and Human Services directly created a $400,000 baseline deficit. When added to the $240,000 in departmental revenue double counting, Vernon County entered the current fiscal year with an unbudgeted $583,000 baseline deficit. Combined with $805,000 in requested departmental budget increases for 2027, the preliminary draft budget sits $1.262 million over state property tax levy limits.
The recent revelations follow a series of financial challenges for Vernon County in recent years. In late 2023, a clerical mistake led to a $2.2 million tax levy error that forced the county to draw from reserve funds. In August 2026, the Finance Committee reported that the 2025 financial audit was delayed due to severe cash reconciliation obstacles inherited from prior personnel, prompting warnings of potential state penalties from the Department of Revenue. To prevent future errors, the committee voted in August to spend up to $20,000 for specialized forensic accounting services from Johnson and Block to verify fund balances during the Tyler software transition.
Supervisor David Strudthoff asked Torres whether the county would face similar budget surprises every year or if the current effort would permanently stabilize county accounting.
“Nate, do you see this as an annual issue, or is this just something that you are going through right now to kind of get back on everybody back on their feet and even keel?” asked Strudthoff. “The reason I ask that question is because if this is going to be an annual thing, your department supervisors will start padding their budgets because knowing that every year you are going to come to them and tell them we want to cut this, this, and that.”
Torres expressed strong optimism that the intense review and software modernization would permanently resolve the recurring budget issues.
“Number one, in terms of making adjustments in year for 2026, I would hope that this is very much a one year situation where it is like, hey, mistakes were made,” said Torres. “We need to correct those mistakes.”
Torres emphasized that fresh leadership, modernized software, and collaborative oversight will allow the county to rebuild trust and maintain clean accounting moving forward.
“The budget, that is also something where Annie and I are like, we know how to fix this,” said Torres. “We know how to make sure that the budget is accurate, we know how to pull funds apart, we know how to separate capital from operating expenditures so that everything is much more clear, visible, easy to understand, and therefore you can connect the dots between all the budget numbers.”
Torres added that multiple layers of review across administration, finance, and board committees will ensure long-term accountability.
“Yes, I am very confident that with time we can get this sorted out and corrected, and that is part of what the new budget will be,” said Torres. “Is you will be able to see all the math, and the math will make sense, and then have multiple pairs of eyes on it.”
Board Chair Lorn Goede commended Torres and the finance team for their exhaustive efforts in identifying and addressing the legacy errors.
“Nate is on it all the time,” said Goede. “That has been a big undertaking, and we really appreciate it.”
Torres outlined the next steps for resolving the $1.262 million gap for the 2027 budget, explaining that administration will conduct a second round of department head meetings focused on priority based budgeting. This approach distinguishes mandatory statutory services from discretionary programs before considering broader, across the board reductions.
The Vernon County Board of Supervisors will review an updated, balanced draft budget in October before holding a formal public hearing and adopting the final 2027 budget in November.
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