Ac­count­ing er­rors found in Por­terdale au­dit

The Covington News - - Front page - DANIELLE EVER­SON deverson@cov­news.com

An in­de­pen­dent au­di­tor’s re­port found ac­count­ing er­rors and sev­eral other fi­nan­cial prob­lems for the city of Por­terdale.

The coun­cil lis­tened to an au­dit pre­sen­ta­tion from Clifton, Lip­ford, Hardi­son & Parker, of Macon at a called meet­ing Tues­day night.

Cer­ti­fied pub­lic ac­coun­tant Mark Hardi­son read through an in­de­pen­dent au­di­tor’s re­port for the city for the year end­ing Dec. 31, 2011. Dur­ing the pre­sen­ta­tion, Hardi­son ad­dressed sev­eral is­sues that were found while au­dit­ing the city’s fi­nan­cial state­ments.

Hardi­son said the au­dit found that the city had miss­ing records, is­sues with pay­roll and a sig­nif­i­cant amount of post­ing er­rors in their ac­count­ing. He told the coun­cil a lot of ad­just­ments were made to com­plete the au­dit.

Hardi­son said in the wa- ter and sew­er­age fund they found that the cus­tomer de­posit sub­sidiary records were not be­ing rec­on­ciled with the gen­eral ledger con­trol ac­counts.

He said the cus­tomer de­posit re­port gen­er­ated from the billing sys­tem had an uniden­ti­fied vari­ance of $24,849 when com­pared to the de­posits as shown in the gen­eral ledger sys­tem.

The com­pany rec­om­mended that the city es­tab­lish pro­ce­dures to make sure that their sub­sidiary records were rec­on­ciled to their gen­eral ledger con­trol ac­counts on a monthly ba­sis.

In an­other fi­nan­cial state­ment find­ing, CLHP re­ported that the city did not have an em­ployee with ad­e­quate qual­i­fi­ca­tions and train­ing to pre­pare their year end-fi­nan­cials, which caused the city to im­prop­erly record transactions for the rev­enue cy­cle.

Hardi­son said they had to

make au­dit ad­just­ments to cor­rect rev­enue and ex­pen­di­ture transactions.

He said they also had to make ad­just­ments to the city’s gen­eral fund.

In the pay­roll bank ac­count, CLHP found that pay­roll ex­pen­di­tures were not prop­erly clas­si­fied in the gen­eral fund and the wa­ter and sewer funds. Hardi­son said they had to make au­dit ad­just­ments to­tal­ing $476,954 in the gen­eral fund, $132,683 in the wa­ter and sewer fund and $66,194 in the san­i­ta­tion fund to prop­erly clas­sify ex­pen­di­tures.

Hardi­son also noted that the city did not file their quar­terly 941 pay- roll re­ports with the IRS in a timely man­ner for the fourth quar­ter of 2011, which re­sulted in in­ter­est and penal­ties.

The city also did not prop­erly file their 2011 W-2s and W-3 re­ports with the So­cial Se­cu­rity Ad­min­is­tra­tion, he said.

The city has con­tracted with Ca­pa­ble Fi­nan­cial So­lu­tions, a pub­lic ac­count­ing firm, to help fix prob­lems found in the au­dit.

The firm will help the city es­tab­lish util­ity billing rec­on­cil­i­a­tion pro­ce­dures re­lated to cus­tomer de­posits, pre­pare year-end fi­nan­cials for the 2012 au­dit, rec­on­cile bank state­ments and process their pay­roll. In ad­di­tion, the com­pany will in­clude elec­tronic pay­ment of pay­roll taxes.

Hardi­son also told the city that they were miss­ing ac­count­ing records such as in­voices. He said dis­or­ga­ni­za­tion could be a flag of po­ten­tial fraud or other abuse. The city said in its au­dit that it has de­vel­oped a fil­ing sys­tem of its in­voices to pre­vent in­voices from be­ing mis­placed.

Af­ter the re­port, coun­cil mem­ber Mike Harper com­mented on the find- ings.

“We re­al­ize we have prob­lems and we’re tak­ing care of them. We’ve made some ad­just­ments in our of­fice,” Harper said.

Ac­cord­ing to a let­ter from CLHP, the au­dit was con­ducted to ex­press opin­ion on the city’s ba­sic fi­nan­cial state­ments; the fi­nan­cial state­ments are the re­spon­si­bil­ity of the city.

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