Finish Line: City’s Contracted Audit Firm Reports FY15 CAFR Filed
By LYNDON GERMAN
Sep 18, 2017, 15:00
The annual financial report with year ending June 30, 2015 is filed this month.
According to Rob Churchman, partner with auditing firm Cherry Bekaert, Hopewell’s Comprehensive Annual Finance Report (CAFR) for 2015 to the Virginia Auditor of Public Accounts (APA). The usual suspects during the Sept. 12 Council session greeted the news with cheers as Churchman went through the results of the audit.
Cherry Bekaert was tasked with auditing the financial statements of the city, schools, compressive services act board and Beacon Theatre As readers will know the city and Churchman went through an extensive process reconciling financial records from the 2015 fiscal year. Over a two-year period Cherry Bekaert went through difficulties described in their presentation not being able to obtain “complete, accurate, auditable, and timely financial data supporting the amounts and disclosures reported within the City’s financial statements.”
Cherry Bekaert determined that a majority of their audit funds earned an unmodified opinion, meaning after examination of the city’s financial statements has not revealed any actual or possible material misstatements in those financial statements.
However the audit team did find that the several business type activities, the Hopewell Regional Wastewater Treatment Facilities fund and Sewer fund did have some data entries that could not be fully backed fairly within the generally accepted account principles. These activities earned a qualified opinion.
In the CAFR report Cherry Bekaert identified what they call material weaknesses in internal control over financial reporting, year-end completeness, accuracy of account balances and a segregation of duties within financial access controls.
For instances Churchman pointed out that within the currently accounting system entries could be me made or changed directly. Cherry Bekaert’s report characterizes the condition as such:
“…we noted that the City does maintain proper segregation of duties over security, administration and end user access to the financial application and database. Specifically, the City’s Database Administrator has access to administer security within the MUNIS application, as well as being the administrator over the MUNIS database. Additionally, other end verse of financial applications, including the Director of Finance, also have administrative permission. These permissions could result in users having inappropriate access.”
Cherry Bekaert also outlines recommendations to remedy some of these issues. As Churchman said all this information goes to Council so that they can better run their business.
“You’re running a cooperation,” Churchman said in his analogy, “you have multiple efforts going at all times and you need information to be able to run your business.”
The CAFR shows in statements of revenues, expenditures and in fund balances for governmental funds the City of Hopewell made $45,826,58 in revenues and incurred $41,930,843 in expenses for an excess of $3,895,815.
Interim City Manager Charlie Dane that although the CAFR is complete it’s important to put the right systems in place to prevent this elongated process from happening again. Dane went on to lay out the auditors plans plans to get the city all caught up.
With the FY 15 CAFR filed the City has approximately 45 days to gather the necessary materials and meet with incoming auditing firm PBMares to complete the FY 16 CAFR. The hope is to finish FY 16 by the end of next year and begin on FY 17, which would be finished by late June or early July. If the City were to stick to that schedule and pick up FY 18, which would put them back on track for completing their CAFRs within the allowed deadline.
“We need to create a better governing process,” Dane said suggesting that whoever the incoming finance director will be that Council consider setting up a budget /audit committee to come to council and inform them on a monthly basis on the city’s spending and audit process. Something similar to what Dane experienced when working in Chesterfield.
Finishing the FY 15 CAFR was the first hurdle in a race the city of Hopewell has lagged behind, but if the Hopewell were to tighten its turns it may soon find itself among the pack.