Gainesville finds problems with financial controls

A city audit has found Gainesville’s internal controls over financial reporting are inadequate, determining that the government is at “high risk” of reporting incorrect information and reporting it late.

The internal audit was presented to the audit committee this week on the heels of a state Auditor General’s report that identified 18 problems with various areas of the city’s government.

The state audit also found “significant deficiencies and material weaknesses” in the city’s internal financial reporting and said the city’s current personnel did not have the knowledge to complete the required financial reports accurately or on time. 

Problems with financial reporting date back to fiscal year 2018 and have been identified in subsequent years, according to the city’s internal audit report. Similar problems are expected to be identified in the current years financial reports, said Gregory A. Robeson, an internal audit manager for the city who served as lead auditor for the report. 

Robeson said the deficiencies were major findings and identified two categories of problems: one related to issues with inaccurate procedures and a second related to inadequate or delayed account reconciliations.

“Internal controls over financial reporting are inadequate and do not provide for the accurate and timely reporting of the city’s financial activity and positions,” Robeson said during his presentation.

The findings surprised Harold Monk, a Certified Public Accountant (CPA) and experienced auditor who is a new appointee to the audit committee.

 “Some of these material weaknesses have been identified for years. The same ones over and over,” Monk said Tuesday. “In my career, it was very rare, even in some large cities that I was involved with, to have a repeat finding of a material weakness two years in a row, much less four. I was a little dumbfounded, as a matter of fact, when I read that.”

For a city the size of Gainesville, a material weakness could result in a very expensive error, Monk said.

“You could be talking hundreds of thousands of dollars before it reaches what’s considered material,” Monk said. “These are important issues to protect the value of the assets within the city. It’s not something that should be blown off.”

The management action plan, which was included in the report, said that in the short-term they have hired an outside accounting firm to help with their records and reports. The city will also reorganize its finance department, fill vacancies with people with CPAs and knowledge of government-related finance and create a controller position to help oversee the accounting division. 

Interim City Manager Cynthia Curry told the audit committee that the finance department doesn’t currently have a CPA on staff, but said that was something she had talked with the finance director about fixing immediately.

“I think when you look at the findings of material weakness and significant deficiencies, this is going to be one of the most important things that management does all year,” said Commissioner David Arreola, who serves on the audit committee along with Monk and Mayor Lauren Poe. 

Hiring new personnel will impact the budget, and Arreola said he wants to bring the action plan to the full commission as soon as possible for authorization of the budget-related items.

 “I don’t want to sound dramatic but to me this is the most important management item for the year, and I’d like for the commission to have full support for the action plan going forward so that by this time next year we have effectively taken care of the action plan,” Arreola said.

The audit committee also has asked to hear an update on the action plan progress at every committee meeting.

“We have got to take the steps necessary to make sure that a year from now, we’re not seeing the same report,” Poe said.

 

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