The Journal ran an article this morning about our year ending state audit report. As is often the case, they only had limited space to discuss the issue, so I’ll add more for the public to see if they wish.
The Journal article can be viewed at:
First, remember that the City is independently audited every year to make sure that your tax dollars are being spent correctly. The purpose of the audit it to identify fraud and to strengthen controls. That’s a good thing. Second, remember that we complete tens of thousands of transactions each year. Anytime people are involved, there are going to be mistakes. The key is to keep the mistakes to a minimum and to have checks and balances in place to prevent mistakes, identify possible mis-spending and/or to catch them when they occur. The audit is one of those checks and balances.
The full audit report that the Journal used for the story can be viewed at:
For a short version of the findings… follow below.
Finding # Compliance Requirement
2014-001 Prior Period Adjustment
The City restated beginning net position in the Water Fund and Business Type Activities to correct an error made in prior years related to capital assets. Our professional standards consider the restatement of previously issued financial statements to reflect the correction of a material misstatement due to error a material weakness in internal control over financial reporting. Management Response: Management concurs. One time change needed to correct prior period mistake in fund balance.
Finding 2014-002 Audit Adjustment
During the course of our audit, we identified a misstatement in the financial statements for the period under audit that was not initially identified by the City’s internal control over financial reporting. . In this case, the internal controls over the preparation and review of the City’s financial statements did not operate as designed. The audit adjustment was necessary to correct an overstatement of $1,094,274 in intergovernmental revenue in the Capital Improvements Fund. We recommend the City enhance its internal controls over financial reporting with steps such as management analysis of the financials compared to prior years to ensure the preparation of reliable financial statements in conformity with GAAP.
Management Response: Management concurs and will develop additional internal controls as recommended..
2014-003 14.871 Section 8 Housing Choice Vouchers Reporting
This finding involved documentation issues on the Section 8 program. During the year audited, the City transferred the entire program to Butler and Warren Metropolitan Housing Authorities. Because the records were scattered between two housing authorities as required by our Agreement with HUD, we could not document how we spent the funding as we no longer retained the records. HUD was aware and had no problems with this, but the Auditor’s had to flag the finding since there were no records for verification at the City.
2014-005 14.239 HOME Investment Partnerships Allowable Costs
This finding was due to the salaries charged for administration against the HUD grant. HUD monitors this fund on a regular basis including our manner of charging salaries. That being said, we can and have changed the time cards of grant employees to better document the time they are spending on specific grant administration. Bottom line, we were sloppy. We could and will do better.
2014-006 14.239 HOME Investment Partnerships Subrecipient Monitoring
This finding involved not having an on-site review of the subrecipient that administers our down payment assistance program. While there are internal controls and paperwork that verified that the program was being properly administered, the auditors are correct and we should have performed an on-site monitor of the program. This has and will be corrected moving forward.
2014-007 16.710 Public Safety Partnership Allowable Costs
2014-008 16.710 Public Safety Partnership Cash Management
2014-008 16.710 Public Safety Partnership Period of Availability
2014-009 16.710 Public Safety Partnership Reporting
All of these findings involved administration of our COPS grant, which ended in 2014. The findings were correct. The grant is over and the grantor has closed the grant with no request for reimbursement or further documentation. This will not be repeated.
The final comment regarded ARRA funds used by the Transit Dept.
Condition: We noted errors and inconsistencies in the City’s submission of its quarterly reporting to the Federal Transit Administration (FTA) as well as the reporting and required under Section 1512 of the American Recovery and Reinvestment Act of 2009 (ARRA).
This involved quarterly reporting and documentation from our prior Transit Manager, who retired and was therefore unavailable to answer questions on those reporting issues. We have since supplied FTA with additional documentation and they have closed the matter. We partnered with BCRTA a couple years ago to operate our public transit system to make sure that we comply with all regulations moving forward.
We make mistakes and this is one of the tools to catch them and to keep us on track. We are your government and we are as transparent as we can be with what we are doing and why. Even when we make mistakes….