101 is a Lott
Mayor Morton introduced “the Centennial Kid” as he presented Mr. Lott with a framed proclamation of the Council recognizing his 101st birthday.
Mr. Lott’s friend Ed Lightsey was also in attendance to celebrate. Mr. Lightsey will turn 95 in July.
City Financial Audit
Don Wallace, CPA, addressed the council with a summation of his audit report of the city’s fiscal year 2018. This is the first year for Mr. Wallace’s firm to audit the city. The previous accounting firm was let go last year after almost twenty years of service. To summarize Mr. Wallace’s summary, some hot points:
- “There’s some breakdown of communication in there somewhere with the prior staff,” Mr. Wallace said, “There were some adjustments that were being done but that your prior firm weren’t getting updated into the system.” Several items were found to have not been updated at all for many years, or had been adjusted incorrectly. “If you looked internally in your system before we got started, it was way out of sorts of kind of where your audit numbers had been,” he added, “I don’t think maybe there was a sufficient understanding of that.”
- The prior firm worked with Mr. Wallace’s firm to get cutoff numbers, and both firms have worked with the City Clerk “to get it all entered into your system.”
- City Clerk Megan Batte has been working to update city financials in Quickbooks, and working with Mr. Wallace’s firm to make sure everything is set up correctly. “Going forward, we will be auditing your books,” he said, “and ultimately you should be able to get financial statements on a monthly or quarterly basis out of your system.”
- Coding of operational expenses was being done incorrectly, and the 1 cent sales tax revenue was not being used properly, according to Mr. Wallace. It had been used operationally instead of distributed to balance other areas.
- Going forward, operational accounts will be consolidated so that related expenses are grouped and the Council can see exactly how much money is going where as it happens and track what is being paid out. “That shouldn’t be a hard fix.”
- There has been an overall lack of consistency in paying expenses out of the accounts that are intended to be used for specific items. This has caused extra movement of funds between accounts internally, creating confusion and an increased risk of accidental misuse of funds. “It’s very important to try to pay your expenses out of the accounts that they’re due to come out of,” Mr. Wallace commented.
- Bank reconciliations have in the past not been done consistently. Mr. Wallace reports that Mrs. Batte has been diligent in attempting to catch these up and “should be in good shape going forward” when she gets back from maternity leave.
- Due to improper practices in the past, the “balance sheet looked like you had a lot more money than what the City is really entitled to. About 50% of that off the top is going to go to the State or the County. It’s not really the City’s money.” This was due to not allowing for certain items that should have been transferred to accounts to be paid out, creating the illusion of higher balances.
- Payroll taxes have not been paid “in a timely manner” in the past, among other taxes due. Find multiple months of payments caught up at a time, instead of consistent payments.
- Old items removed from books that should have been taken off in some cases many years ago.
- Amended budget to correct for items left off that had not been considered, such as fees for some services.
- Council has not been receiving copies of depreciation schedules on assets. This will be corrected going forward.
- Recommend combining water and sewage on the books internally.
- The General Fund balance was up about 10% from the previous year. “In pretty good shape for 2018.”
- Retirement account balances (which are not managed by the City) are down by about $38,000.
Overall, Mr. Wallace believes that communication with his firm, as well as consistent updating of Quickbooks and the diligence of Mrs. Batte to insure correct procedures are followed will give the City a more solid financial stance in the future. This, he said, will allow the Council to manage and see what’s happening with money as it happens, instead of “flying blind” and waiting for the audit report at the end of the year to find out what happened in the previous year.
All council members except Don Mack voted to accept the audit report. Mack expressed his desire to look over the details more before voting to accept.