City works to correct problems after audit
Wednesday, July 19, 2006
News staff writer
Montevallo's belated city audit for fiscal 2004 revealed several weaknesses in the city's handling of its finances, although most of those have been corrected in the almost two years that have elapsed since then.
The problems the auditors turned up included "absence of appropriate reviews and approvals of transactions." This could result, they said, in "unauthorized transactions occurring and misuse of public funds."
Another serious problem was omission of bookkeeping procedures such as bank statement reconciliations and timely financial statements
Lack of up-to-date financial records "could result in management not being able to properly ensure the sound financial status of the city," but that situation has been corrected, according to the auditors.
Montevallo has been playing catch-up in the auditing game over the past several months. John DeLoach and S. Wayne Barber of DeLoach, Barber and Caspers, a Hoover accounting firm, had to reconstruct financial records of previous years before completing those audits and moving to the latest one.
DeLoach said the process is on a relatively fast track now, "and we hope to have 2005 done in September."
Although she was on the City Council during the period represented by the 2004 audit, Mayor Sharon Anderson did not take office as mayor until Oct. 1, 2004.
The city has begun revising purchasing procedures according to DeLoach's recommendation of a purchase order system.
Other problems DeLoach and Barber noted in auditing more than $4 million in expenditures and $2.8 million in revenue included the failure to set up a capital budget for such expenses as library construction.
"The budget should include all known capital projects," the auditors wrote, "and, if additional items arise during the year, the budget should be amended to include these unexpected items."
Anderson and City Clerk Carey Thompson said the budgets will be prepared and amended as the auditors recommend.
Other procedural changes include:
Ending the practice of advancing employees money to attend seminars. Expense vouchers are to be submitted later for reimbursement
Keeping more detailed employee files.
Updating the employee policies and procedures manual.
Delineating lines of authority, because "the city is in desperate need of a strong boss figure," the auditors' letter states.
Creating clear job descriptions.
Making an accurate list of all capital assets and creating a capitalization policy for each category of assets, using inventory tags to help with record-keeping. DeLoach noted that the city has updated its capital assets list and is working to develop fixed asset policies.
Keeping current budget information so department heads can better monitor their spending. That situation, the auditors noted, has been corrected.
The report also noted that the city's two gasoline storage tanks should be controlled better. "The gasoline usage reports indicated unaccounted-for variances between gallons purchased and gallons pumped," it said.
Control over checkbooks, reduction in workers' compensation claims, a computer disaster recovery plan and personal use of cell phones and cars were listed as problem areas, too.
Anderson said all the issues raised in the audit either have been or are being corrected.