Fairfield County received a clean audit report for the 2011-2012 fiscal year, although Tom McNiesh, of the auditing firm Elliot Davis, LLC, told Council Monday night that there were areas that required some improvement.
“The good news is we’ve issued an unqualified opinion,” McNiesh said. “That means that, based on the testing we’ve performed of these balances and amounts and your financial statements, we feel like they’re materially correct in accordance with general accepted accounting principles.”
One finding noted in the audit, McNiesh said, was in the Procurement Department. According to the audit, during the fiscal year “the County engaged in a single contractor to perform approximately $400,000 in projects on buildings throughout the County. In selecting the contractor, a formal bidding process was not conducted as required by the County’s procurement policy.”
The audit noted that, per the County’s procurement policy, formal bids from a minimum of three qualified sources are required for purchases in excess of $25,000. In the event that three qualified sources are not available, McNiesh said, it is important that that fact is documented, which had not been done in this case.
“As auditors, we go under the adage that if it wasn’t documented, it wasn’t done,” McNiesh said. “We just want to make sure there’s a document for that kind of procurement situation in the file.”
McNiesh also told Council that two County employees received tuition reimbursement in excess of the maximum amount allowed by the Internal Revenue Service (IRS).
“The IRS is going to set a hard and fast limit as to the extent of what educational expense can be reimbursed,” McNiesh said. “That amount was $5,250 for the 2012 year.”
Anything over that, he said, would have to be reported as income by the employee receiving the reimbursement. The County’s Educational Assistance policy makes available to all eligible employees reimbursement of educational expenses that are considered essential to an employee’s job requirements, the audit noted, and that, McNiesh said, was perfectly acceptable.
McNiesh also said that the Magistrate’s Office’s bank account contained $82,000 in funds that could not be identified as either fines and fees to be transferred to the County Treasurer or as bail bond funds to be repaid to individuals. The audit states that the Magistrate’s Office has, over the last 20 years, gone through two system conversions and that the unidentified funds arose during those conversions. The audit recommends that the Magistrate develop internal controls to ensure that the entire account balance can be identified on a case-by-case basis and can be properly reconciled monthly.
The County’s property tax ledger system, McNiesh said, could also be at risk, as it relies heavily on a single third-party vendor for its maintenance and operation. The software on which the property tax ledger system is based was developed by and is exclusively supported by this single third-party vendor.
“The problem is if something happened to that vendor, if they went out of business or if they had key employee turnover, then potentially the County is left with a system they would have a very hard time maintaining without a proper level of support,” McNiesh said.
McNiesh recommended the County develop a contingency plan, which would include identifying alternate software supported by more than one vendor.
Finally, the audit found that the Planning and Zoning Department does not maintain a receipts journal for transactions paid in cash. “A sufficient audit trail should be available to ensure that all cash receipts are deposited at the bank and recorded in the County’s general ledger in a timely manner,” the audit states.
“I think that’s a simple fix,” McNiesh said. “None of these are what we would consider ‘red flags’ or major issues. These are areas that, due to the improvement in your process, gave us the opportunity to go in and delve a little bit deeper.
“One thing the County has had a really good history with is when we have had findings or when we’ve had issues we wanted to see addressed, we’ve always had a very prompt specific response to shore those areas up,” he added, “and we anticipate that will be the same for next year.”
