City moves quickly on audits in hopes of restoring bond ratingBy BUSTER WOLFE,
The City of Hattiesburg hopes to have its financial status in good enough shape by this fall that it will be able to convince Moody’s to restore the city’s bond rating, a city official told the City Council Monday afternoon.
Interim Chief Financial Officer Connie Everett said completing the Fiscal Year 2016 audit has cost an additional $49,770 since January because the accounting firm of Carr, Riggs & Ingram – which prepared the 2015 audit – refused to give the city the workpapers.
The company now auditing the city – Topp McWhorter Harvey, PLLC – has been forced to recreate the FY 2015 audit in order to “track the details involved in converting the city’s cash-basis reports to modified accrual basis for the audit,” according to an update provided to the City Council.
The $49,770 research amount does not include audit preparation expenses, which to date is $167,649.50. The $225,000 budgeted for the audit preparation still remains accurate, according to Paige Johnson of Topp McWorter Harvey. However, Everett told the City Council, “We have exhausted the budget we have in place for the audit costs.”
Everett said not having the 2015 audit workpapers caused a big problem.
“Without that trail of paperwork and trail of workpapers that the previous auditor had, it is almost impossible to figure out how they reclassified everything,” she said. “The current auditor has to go back and basically recreate workpapers, so it has been complicated and it is not something that their junior audit team could really do. It involves them picking up where they left off in the FY 2013 and working through what the previous auditors did.”
The more senior staff at the higher rate of pay for their expertise was necessary, Everett said.
“I have added funds to cover that that I think will be enough to do the rest of this fiscal year,” she said. “Although I am not really at a point to commit to what the cost of the FY17 audit will be because they just haven’t quite worked through FY16 yet, so this is Connie Everett’s estimate of what the additional cost will be based on any additional research necessary plus the simple audit fee for FY17.”
Everett said more funds may be needed.
“I may have to come back to you and do another amendment to that as we get to the summer,” she said. “I just don’t know right now. This gets us through being able to cover their billings over the next several months.”
Everett said handling of finances in the court system has also been a problem.
“Another area of concern has been a large liability on the city's books for court fines, which need to be distributed to various state agencies and the city revenue account,” she said. “We have examined the court software reports and compared them to accounting reports in an attempt to determine how to distribute these funds. We have also examined internal procedures in the Municipal Court to determine if changes need to be made that would affect accumulation of undistributed fine collections.”