Although Gainesville has made progress in shoring up problems with its Department of Financial Services, an outside consultant said Wednesday that the city will not meet a June 30 deadline for its 2021 audit.
April Shuping, a partner at Carr, Riggs & Ingram CPAs and Advisors, told the city’s audit committee Wednesday that the 2021 audit is expected to be completed by early fall instead.
Both a state Auditor General’s report and an internal city audit had found significant deficiencies and material weaknesses in the internal financial controls and the financial reporting. The internal audit had found that the city was at “high risk” of reporting incorrect information and reporting it late.
Following the audits, Gainesville hired Shuping’s organization as an external consultant, and the interim city manager and the interim general manager for Gainesville Regional Utilities (GRU) agreed to allow GRU’s budget, finance and accounting department to help provide support and leadership to the general government.
Shuping, interim City Manager Cynthia Curry, and Claudia Rasnick, GRU’s chief financial officer, updated the three-person audit committee about the city’s progress in addressing problems identified in the recent audits.
The problems with financial reporting at the city go back to fiscal year 2018, and have been identified in audits every year since. Shuping said she expects problems to be noted in the reports for 2021 and 2022, but said that she hopes the city will begin receiving audits with minimal findings starting in 2023.
“It takes a little time [to correct the issues],” Shuping said. “It’s not an instant fix. It took several years to get there, and it will take several years to get back.”
Among the problems delaying the 2021 audit is a backlog of bank reconciliations that have to be completed. Shuping said the city has completed about 75 percent of needed reconciliations. An internal city memo released as part of a public records request noted that as of March the city still had 17 months of reconciliation to complete.
With months of budgets still not matched to actual expenditures, the risk of significant financial discrepancies is still “extremely high” as is the risk of the city overspending its budgets, Shuping and Rasnick wrote in the internal memo to Curry.
Shuping said during the meeting Wednesday that “the actual flow of money looks like it is happening correctly” but the city still needed to work on the processes and systems that track that flow.
Shuping has been working on what she described as “triage projects” to get the city in better shape to produce financial reports.
Also during 2021, the city switched the computer system that they use to track and manage financial transactions. That change in financial management software has added to the delays as material for the audit has to be pulled from two systems, Shuping said.
The state audit identified a lack of personnel with the needed qualifications as being one of the underlying factors in the city’s continuing problems with internal controls and financial reporting.
The financial services department has several key jobs that are open and not yet filled, including the department’s finance director. Curry said the city was close to making key hires for the department and also said they would ask for additional positions in the budget requests for next year.
Shuping and Rasnick did note in the internal memo that “the [general government] finance staff currently in the department did not cause these issues and are currently working extremely hard to correct this.”
In other audit committee business, an outside audit of GRU’s financial records and an independent review of the municipal utility’s internal controls over financial reporting found no problems that need to be addressed by GRU.