After years of work since the embezzlement of city funds in 2016, the city of Cortez announced on Friday that the backlog of the city’s delinquent audits for the years 2016-2022 have been completed and successfully sent to the Colorado State Auditor’s Office.
Over the span of a few years beginning Jan. 1, 2016 to Dec. 31, 2018, former City Finance Director Katheryn Moss embezzled at least $63,642 from the City of Cortez.
The Colorado Bureau of Investigations was able to prove that she had embezzled at least that much, though there was know way to know how much she took, since she was able to destroy some of the evidence and “cover her tracks” before she was caught.
Moss, who was 70 at the time of her sentencing in October of 2022, pleaded guilty to a Class 5 felony charge and was sentenced to 30 days in jail, two years of probation and required to pay over $78,000 in restitution.
Since the embezzlement, the City has been working to get its financials on track and get audits caught up.
Because of the 2016 embezzlement, the city ran into issues with their financial reporting, and the 2016 audit wasn’t completed until 2020 through audit company Mayberry & Co.
It took four years of research and deep diving into the 2016 financials, embezzlement and software issues in the department to prepare the audits to be filed with the state.
According to the news release from Cortez Finance Director Kelly Koskie, it is required by Colorado law that “the governing body of each local government in the state submit an annual audit of its financial statements for each fiscal year.”
Koskie was hired by the city in 2021 to lead the finance department and take the responsibility of working on the delinquent audits.
When Koskie was brought on, a new audit firm, Atlas CPA’s and Advisors, was also hired to help Koskie and her team tackle the audits and get them up to date.
There were fears that there could be additional embezzlement in the years 2017 through 2019, leading the team to be extra cautious while tabulating the finances.
“They took their time and meticulously went through the financials of the city for each audit year knowing there were possibly additional embezzlement issues for fiscal years 2017-2019 which placed these years in a high risk category,” the news release said. “Thankfully, no additional issues were identified.”
After the completion of the 2016 audit, the 2017 audit was finished in eight months, and the 2018-2019 audits weren’t completed long after, totaling 14 months.
“This was a massive amount of work for the city’s finance department that was in addition to their day-to-day responsibilities,” the release said.
City Manager Drew Sanders praised Koskie and her “dedicated and competent teamwork of staff,” which included Sara Coffey and Lynette Reece, who help manage financial resources for the city of Cortez.
“We are very grateful for the hard work, diligence and dedication exhibited by our finance team that brought us out of a very dark chapter in the history of our city. Our city government is now stronger and better prepared for the future after having experienced this ordeal,” Sanders said.
Koskie also expressed her gratefulness and relief for the audits to be completed after the grueling process when speaking with The Journal on Wednesday.
“It just feels amazing to be back on a regular schedule. And I can tell you, there's no way that we could have ever done it without our audit firm Atlas CPA,” she said. “They are so professional and so knowledgeable. They really were the right fit for this particular circumstance. And we also have great leadership with our city manager Drew, and then also Sara Coffee and Lynette Reece, they are just are so hardworking, competent and dedicated. I can't imagine any other group being able to accomplish such a massive workload.”
Though the audits have been completed, the city did suffer consequences for not filing their audits on time.
One consequence the city experienced was having property taxes withheld during the years that the audits were not submitted.
At the request of the State Auditor’s Office, the Montezuma County Treasurer’s Office released the backlog of property taxes in the amount of $920,000 for the years 2017-2021, according to the news release.
Now that the 2022 audit has been completed and filed with the state auditor, the city should have the 2022 property taxes released soon.
Additionally, Colorado Conservation Trust Funds were also withheld during this time, when they are normally released quarterly on a per capita basis to be used for Parks and Recreation.
Now that the audit has been completed, those funds totaling $565,000 have been released to the city.
“This has been a long and arduous journey for the city, but all possible steps were taken to ensure these issues were corrected and internal controls put in place so the risk of this occurring again is greatly diminished. The city of Cortez is now in full compliance with state law, but more importantly, we are in a position to earn back the trust of our residents and taxpayers,” the news release finished.
On Saturday, Sanders was part of a League of Women’s Voters event that took place at the Cortez Public Library.
According to organizer Judy Schuenemeyer, the members of the League of Women’s Voters and attendees hoped to hear more about what goes into planning a city budget and hearing the status on the audits after the 2016 embezzlement.
“Obviously, people are interested in the financial health of the city after an employee embezzles a significant amount of money,” Schuenemeyer said. “As taxpayers, we all want to know that our money is spent wisely and that there aren’t opportunities for people to embezzle money.”
Sanders told The Journal that part of Saturday’s event was a celebration of the audits getting caught up.
“We had to rebuild the financial system, and we had to go back and we went above and beyond to make sure the trial balance is tied together from year to year,” Sanders said. “That is super-important because now we can look the community in the eye and say, ‘We have accounted for your money.’ It’s been a very long, arduous journey.”
One of the safeguards that Sanders mentioned as being strengthened was a “strict system of internal controls” to make sure not just one person is in charge of and in control of the city’s money.
Sanders also mentioned that the city is now enrolled with a program called Clear Gov that allows citizens to view the city’s budget, financials, where their tax dollars are going and more.
Koskie echoed Sanders, saying she hoped getting the audits back on track will help rebuild trust in the city.
“I know that it may take some time to rebuild trust as a community, but the people that are in the finance department now are the ones that put in the hard work to correct the mistakes of the past, and I can't think of anybody who's going to be more dedicated to making sure that those mistakes don't happen again,” Koskie said.
Those who are interested in the city’s budget and financials can enroll in Clear Gov, as well as attend the city’s budget meeting, which will take place on Saturday, Sept. 28, 2024.
