Trauger’s voluntary fire department did not pay sufficient interest on two loans from its subsidiary aid association, and other procedural requirements for borrowing about $ 9,700 were missed, according to government audit.
After warning of problems with loans, the department corrected them, according to state auditor Timothy DeFore.
According to an audit by the Mount Pleasant Township Volunteer Firefighting Association # 2, the association granted a loan of $ 2,526 to the fire department from 2018 to 2020 on November 14, 2016 and $ 7,257 on November 19, 2018. The loan was to be repaid within three years, and the second loan was to be repaid by March 2019.
But government auditors found that the loans were not secured with adequate collateral. They were also not set out in formal written agreements, which were to include the signatures of two representatives from each organization. In addition, the department paid 2% per annum on loans, rather than the minimum 3% required.
Don Hill, president of the fire department, said the 2% interest rate was based on loans from years past, and he didn’t realize that the minimum rate had been increased.
Upon learning of the problem, he said: “We paid another 1%.”
Government auditors acknowledged that “the officials of the aid association received all remaining loan payments and were reimbursed for the total interest payments of US $ 183 at the rate of 3% on June 3, 2021”.
The first loan was used to pay insurance premiums, and the second loan helped pay for the truck, Hill said.