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2004 county Audit results are not good

In a November BOC meeting the 2004 County Audit was presented.  It has taken us some time to go through the audit, the notes taken at the meeting, and the management letter.  The following is a compilation of all that information.

 

Mark Hardison, auditor, said his firm had a lot of problems.  One reason it took so long to complete the report was because of the condition of the county financial records.  The Auditor’s letter states there were difficulties in performing the audit.  Mr. Hardison said the County is responsible for maintaining accounting records.  He said there were LOTS of problems and a lot of clean up. He mentioned there was a lot of delay in getting things he needed.  He said the county needed to handle the finance director situation; he said this more than one time.

 

TWG Comment:

The finance committee told the present BOC about many of the financial problems starting in February 2005.  However, nothing could be accomplished because of the problems and lack of action by the BOC to change or do something about the problems. This is the reason the Finance Committee resigned earlier this year. We also note that in May, 2003 the Monticello News carried an article about all the problems with the financial statements that were pointed out by the TWG at that time.  None of these problems come as a shock to anyone that has been paying attention to what has been going on over the past 3 years.  Remember—this is the audit for 2004—the last year of the Bennett-Wyatt-Crow-Hill-Pennamon commission.

 

Basically, the problems come down to the fact that the people hired, are not or can not do the job they were hired to do. Back in 2002 when the Budget Control Officer and Human Resources officer were hired, it was pointed out to the BOC, in open meeting, that the people being hired did not meet the qualifications that were in the advertisements.  That didn’t seem to matter to the BOC or to their trainee, Mr. Peevy, but now it has come back on the County.

 

According to the audit, the budget control officer is not posting correctly, has double paid invoices, hasn’t set up new accounts as required, does not post or partially posts transactions, and has yet to produce a financial report that is free from errors There’s even a bank account that wasn’t on the books for 2 years.  The lack of controls allowed the County to overspend by approximately $900,000. The BOC has already interviewed for a Chief Financial Officer and the employee that does curbside is also helping out—so just how many people does it take to do one job? 

 

 

The Human Resource officer faired somewhat better in the audit. The payroll is sent out to be done, but once it comes back, no one checks the payroll over to see if it is correct.  In fact, the audit revealed that payroll errors were caught only if an employee complained about his/her check being wrong.  How many employees complain when they are shorted?  100% of them! How many complain when they are overpaid?  We fear to guess!  The audit also revealed that the REQUIRED federal and state tax forms were not current in the employees’ files.

 

Curbside problems required the auditor to give the County a qualified opinion.  He said that money from curbside was never turned over to the county general fund until it was asked for. Approximately $250,000 was turned over in November & December, 2004.   It is County policy that each office should turn over money each week; however, it was obvious that Curbside didn’t follow procedures. In the end, that has come back on the County because over $14,000 of COUNTY money went to the CITY out of the curbside fund. This money should have already been in the general fund account. This “transfer” of funds should be an issue in the 2005 audit.

 

The auditor said that over $77,000 of  "outstanding checks" had been written off in 2002 or 2003. He said such things as this were unheard of--yet, we note that the previous auditors never mentioned it.  He also mentioned how large adjustments had to be made by the auditors over the past several years. Things were not good over the past 2-3 years, but it was all hush-hush.  The previous auditor’s never brought up any real problems in their reports.  If the past BOC thought they were fooling anyone, the problems certainly came out in the 2004 audit. 

 

Russell Bennett, Jerry Crow, Greg Wyatt, Charles Hill, and Carl Pennamon should be ashamed of themselves for letting the county financial records become so deficient. As trustees, where and when did they exercise their fiduciary responsibilities?  They hired incompetent and inexperienced personnel.  They were questioned about hiring people that did not hold the qualifications that were advertised for doing the job.  But they did hire people who obviously did the job they wanted done.  Now we can all see where that has put the County—in a questionable financial position with no reports to show them where they are now.

 

Following are the actual details of the audit and Mr. Hardison’s comments during his presentation to the BOC:

 

The County received a Qualified opinion (which is not good) due to inadequacies—especially in Curbside.  Here are some of the main problems Mr. Hardison encountered while doing the audit: (There’s a LOT of problems)

  • There was No system in place in Curbside to report the Accounts Receivable.

No detail was maintained in 2004.  No reports were generated or kept by the Curbside office.

  • The SPLOST fund had to be restated.  There was only $2,000+ left at end of year.
  • General Fund Revenues during 2004 totaled $6,193,000; however expenditures totaled  $7,182,000.  County overspent during 2004 by $988,950.  (Note: The TWG guesses that the last few months of excessive spending by defeated commissioners led to much of this excessive spending.)
  • $974,000 of SPLOST revenue was received while there was $1,017,000 paid out during 2004.  (This is for the Courthouse renovation costs.)
  • The County will actually owe $2.1 million in 2005 and 2006 for the SPLOST bonds.  The SPLOST receipts end in December, 2005.  There is much concern that the receipts will be about $500,000 short of the amount due.
  • There is a large liability on the landfill.  The General Fund has been subsidizing landfill for a number of years.  The auditor stressed a need to establish a policy to get rid of the debt on the landfill.
  • The problems with the Curbside were again gone over.  The auditor stated that he had never heard of Planning &Zoning doing Curbside.  He reiterated that the firm could not determine what Accounts Receivable were at Dec. 31, 2004.  He said no controls had ever been established for that account.
  • The County has not been properly budgeting each year.  The County only budgeted for General Fund.  Things change during the year, but the County never did any budget amendments.  State law says you can’t overspend.  Recommended the County change the way they budget—on a periodic basis amend your budget.  He said the County must respond to State. This was also in violation in 2003.

(NOTE:  The County needs to modify budget to keep from having a variance, but that’s HARD TO DO IF DON’T HAVE CORRECT FINANCIALS!)

 

Next the Auditor went over Material Weaknesses of the County Accounting System

  • The System is inadequate—he had to make large number of material adjustments.  These are clean up type things.  He said this has been done for last several years.  The Reports are not accurate
  • He listed problems with Cash management internal control, check review policy, and partial postings. There were 2 bank accounts that had not been posted for the entire year.  There was  also a bank account that was never on books in 2004 or 2005 and it had $117,000 in it!  (Question: How do you post the expenses if there is not bank account set up?  And this Board will be no better off because the same people and “procedures” are still in place—even after 2 or more years of problems.)
  • In  2003 the auditors did an adjustment for $74,224 for outstanding checks.  This carried over and nothing was done.  The auditor said an adjustment like this was “unheard of.”
  • There were double payments on some lease payments on more than one occasion.  The auditor said the staff just paid the bill; obviously they never looked at schedules.  (Question: HOW MANY OTHER BILLS WERE PAID 2X OR MORE???  We know there have been others recently.)  The auditor said this has happened in the past also. This is extremely unusual.  The budget control officer didn’t have a budget line for these payments, which would show overpayments. 
  • There was a lack of accounting discipline—incomplete postings and other problems.  He said the auditors should not be doing accounting clean up.  (NOTE:  The BOOKS were NOT EVEN POSTED IN 2002 UNTIL June, 2003, and the CPA firm was involved in doing it.)  He said the county paid the auditors to do “books” to be able to get to the correct figures.
  • The Contingency account was not used properly.   There should not be posting activity to this account.  There was $400,000 of activity in contingency account.   He said it was like a big jigsaw puzzle.  There was over $50,000 in salaries in contingency
  • He revealed evidence of inadequate Internal Controls in the payroll procedures.  Even though the county uses an outside payroll service, the staff has to make sure they get the correct data.  Controls are not in place to check when information comes back.  There are also inconsistencies with time sheet handling; a policy & procedures need to be developed and enforced.  He stressed that the BOC needed a meeting with department heads as how things must be done.
  • File maintenance—the auditor indicated that records were not in the file and not maintained.  The staff told him “they didn’t know they had to keep invoices, records, etc.)  (Note: Anyone in charge of County records should KNOW they have to be kept.  Do we hire qualified people?  The answer has been revealed by the problems in the audit…answer: NO!) The auditor said the county should have a very formal policy; someone should be responsible for the records.
  • There was inadequate monitoring of Accounts Receivable, Accounts Payable, etc. No one was watching things; some people were not competent to monitor things going on. He said this is type of problem that affects so many other things.  This is type of problem you don’t want to have.  “You didn’t have strong management overseeing county finances.” 

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