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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)
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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.
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The SPLOST
fund had to be restated.
There was only $2,000+ left at end of year.
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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.)
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$974,000 of
SPLOST revenue was received while there was $1,017,000 paid out
during 2004. (This is for the Courthouse renovation costs.)
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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.
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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.
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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.
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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
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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.
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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.)
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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.”
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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.
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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.
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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
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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.
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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.
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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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