After the audit: Santa Fe has plenty of work to do

The city of Santa Fe must put its financial house in order. Turned in months after its due date, the recently released 2020 fiscal audit of city finances contained multiple findings of bad practices and can hardly be termed successful.

And yet, in the audit, there is hope of a Santa Fe where financial practices are no longer an embarrassment at best and potentially fraudulent at worst. Because make no mistake, this audit shows progress.

We don’t buy the city’s line that the tardiness can be excused because of the pandemic, short staffing and the transfer of the city’s financial books to a new system. Late is late. The 2021 fiscal year audit comes due in December, and it needs to be on time.

Similarly, we don’t excuse the 21 findings in the report that show the city still has work to do to keep its books in acceptable order.

The audit, performed by the independent firm CliftonLarsenAllen, does offer a “clean” finding — in audit terminology that means the records turned in actually reflect how the city’s finances worked over the months in question. Fine, but don’t confuse “clean” with “spotless” or even “tidy.” Because this audit was not a picture of fastidiousness.

While having the books accurately reflect the real numbers seems a minimal expectation, in 2017, an external review of city finances found abuses and bad practices that dated back years. The books did not necessarily reflect how money was collected and spent.

Among other problems that year, the city uncovered major problems with how cash was handled at both the Genoveva Chavez Community Center and the Utility Billing Division. At the Chavez Center, fraud was suspected, while in the Utility Billing Division, a former employee was shown to have pocketed $4,600.

That was on top of discovering poor internal controls and practices such as writing a customer’s credit card number on sticky notes and leaving the notes out in the open.

To be clear, Santa Fe’s financial issues were decades in the making. Cleaning them up was not going to happen overnight.

Now, the city must refocus its efforts on a number of fronts. First, the Finance Department needs enough staff to do the job. It has been short of workers for months, and that is no way to do business.

The new Tyler Munis Financial and Human Capital Management System has been installed. Training for all departments must follow. It does no good to have the latest system if people can’t use it.

The audit also found the city is in good shape financially. Despite a worldwide pandemic causing gross receipts taxes to tank, the city has improved its fund reserves and debt administration.

City Finance Department workers also managed to distribute $17.5 million in federal CARES Act funds in just a few months as it was closing out the 2020 fiscal year. That’s despite a short timeline and a 40 percent vacancy rate in the office.

Now, the focus needs to turn to completing the ’21 audit on time and correcting problems found in 2020. The city has approved $500,000 to hire support to get the audit done on time.

The process of closing the books is made easier by another improvement — from 400 funds, the city now has 70 funds and plans to simplify the budget even more in future years.

Close attention needs to be paid to how federal dollars are tracked and spent. The city currently can’t produce an accurate schedule of amounts spent from federal awards. It also has not claimed full reimbursements for some federal expenditures, which could cause the city to lose out on precious dollars. In short, a late audit with 21 findings — 10 of them “significant” and eight “material” — is not where Santa Fe should be.

Back in 2017, the city took a hard look at how it was doing business and made a pledge to turn things around. The improvements are slow but significant. Now, it’s time to see more urgency — and better results.