Keystone Praised by Auditors

Staff Writer - Lebanon Daily News

A Camp Hill auditing firm is giving high marks to Keystone Collections Group, which was hired 18 months ago to take over tax-collection duties from the Lebanon County Earned Income Tax Bureau.

An audit of bureau operations from June 30, 2008, to June 30, 2009, was conducted by Camp Hill accounting firm Boyer and Ritter. Results of the audit were reported to the bureau's executive committee Wednesday.

Lisa Myers and Kira Santana spent three days at Keystone's office in Irwin, Westmoreland County. Myers said the two worked 13 to 14 hours each day.

"The Keystone people were very cooperative," Myers said, noting that a thorough check of Keystone's computer system was conducted. "We did make some suggestions to Keystone (to improve efficiency)."

"Financial statement disclosures are clean and concise," Santana said. "There were no material adjustments, no uncorrected misstatements. No major issues were discussed with management. We did not encounter any difficulties."

In terms of individual tax records, "there's no guesswork," Myers said. "It's all geo-coded (payments tied to a specific address). There should be, in theory, no adjustments. The issue is when an employee does not tell an employer, 'I've moved.'"

Or, as Elco School District municipal representative Dean Moyer noted, when an employer fails to keep employee data "up to snuff."

"That's every employer's responsibility," Myers said.

"How does that get corrected?" Moyer asked.

"That's not getting corrected until you file your individual tax return," Myers said. "That could be 16 months. ... You've got to get the employers getting it right."

"Employer education has been a big issue," bureau solicitor Howard Kelin said.

"Are we going to have an over-under (problem) again?" Moyer asked, referring to inaccurate payments made by the bureau to county school districts and municipalities between 2004 and 2007, when some were overpaid and others were underpaid.

"That was intentional," said Kurt Phillips, the Cornwall-Lebanon School District business manager, who represents county school district business managers on the committee. "That was fraud (committed by former EIT Bureau executive director Donald Foltz). Hopefully most employers are doing it correctly."

"Intentional misallocation of funds should not happen again," said Gordon Waldhausen, the committee's president.

Another problem, Myers said, was that some out-of-county tax collectors send checks to Keystone without detail. Reconciling a $50,000 check, in other words determining to which school districts or municipalities the money should be sent, can take months, Myers said.

"Keystone is much further advanced than any other system in the commonwealth," Myers said.

Waldhausen said he is "very comfortable with what's been done. The bureau has come a long way. We've rebuilt integrity."

He is hoping that a final report on the over/under payments will be presented at the committee's Feb. 17 meeting. A proposal by North Lebanon Township manager Cheri Grumbine offered in May for overpaid entities to pay back money is still being debated by solicitors, municipal officials and school boards.

"If it becomes adversarial, everybody's going to be suing everybody, including themselves," Waldhausen said.

An agreement will have to be unanimous, Kelin said. The bureau represents all six county school districts and 26 municipalities.

A third public meeting will be planned to, once again, educate officials about the methodology used by McKonly & Asbury, a certified public accounting firm, to determine over/under numbers and to explain Grumbine's plan.

"The concern is that some elected officials may not have an understanding," Kelin said, noting that new board members have been elected since the process started. "We're looking at the latter half of February for a meeting.";717-272-5611,ext.152

Reprinted with permission from the Lebanon Daily News.