CPA: Repeat Findings a Concern

WINNSBORO – While Fairfield County, in their fiscal year 2012-2013 audit, received an “unmodified opinion” from the Elliott Davis accounting firm, Elliot Davis CPA Tom McNeish told Council Monday night that his firm found several “material weaknesses” in three areas. Two of those findings, McNeish said, were repeat findings that also showed up in the audit of the previous fiscal year and were, he said, “of particular concern.”

McNeish said the County’s financial statements were sound and that the County was in compliance with their federal grant requirements. The weaknesses, he said, were in internal controls and processes and procedures, and fell under compliance with policy, proper segregation of duties and reconciliation practices. The weaknesses were:

Procurement (repeat finding) – Required documents missing. “What we need to see, in those instances, is documentation,” McNeish said. “We’re going to want to see requisition/purchase orders – even if we’re looking at Council minutes for approval by you as a governing body, particularly if we’re looking at an estimated project that’s in excess of $25,000, as expressed by your procurement policy.”

Proper segregation of duties – Cash disbursements and journal entries should have at least two people involved. “In the Treasurer’s Office, for both journal entries and cash disbursements, we’d like to see a more consistent application of segregation of duties. If I prepare a journal entry that affects the general ledger, I should not be the one putting it into the system. I shouldn’t have full control over it. Somebody should be signing off and documenting that that occurred. Same thing with cash disbursements.” (In the Assessor’s Office), “if the appraised values are changed due to an appeal, one person inputs it after someone else has approved it.”

Reconciliation (repeat finding) – In Planning and Zoning, cash receipts ledger needs to be reconciled every month. In Delinquent Tax Collector’s Office, unclaimed funds in excess of tax amounts owed need to be reconciled in detail so tax collector knows to whom those amounts are owed. Difference of $22,000 between what is in subsidiary ledger and what was in general ledger. “For any given balance that’s in the general ledger we want to see the details, we want to see the specific transactions that are making that up. Not only that, the total of those transactions has to reconcile what’s in the general ledger.”

McNeish said that issues with how the County handled their Local Option Sales Tax (LOST) funds had been addressed after meetings with Elliott Davis last fall, but since the issue occurred in FY 2013, the LOST issue was included among the findings. Milton Pope, interim County Administrator, said many of the findings had either already been addressed or were being addressed. Findings in the Treasurer’s Office as well as the Assessor’s Office, Pope said, were being addressed, while in Planning and Zoning, issues have already been addressed.

“However, we did have some deficiencies that need immediate attention,” Pope said. “Primarily, those focus around procurement. There are clearly some weaknesses we have with our policy.”

Since his arrival last summer, Pope said, the County has been following the procurement policy that exists. Next month, he said, he will ask Council to review that policy and consider additional changes. Pope also asked Council to consider a more extensive review of the audit at a future work session.