Accounting errors found in Porterdale audit
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.