Village finances appear to have come through the pandemic (thus far) with flying colors, but an audit of the of the fiscal year ending Sept. 30 identified several ‘significant deficiencies’ and recommended corrective actions to improve ‘inadequate’ internal financial controls. The annual audit, which will be discussed by the Village Council on Tuesday, is required by state law.
It’s the second consecutive year that auditors from the Marcum firm found deficiencies, but they also noted the Village was making improvements.
The repeated criticisms marred an otherwise strong report that showed that Village finances appear healthy. The net asset position improved by about $4 million compared to fiscal 2019. Revenues exceeded expenditures by $1.9 million, the report said. The gain comes at a time when other municipalities have experienced significant revenue declines because of COVID-19 pandemic, according to the National League of Cities.
Council Member Brett Moss said while he’s pleased to see village finances “moving in the right direction,” more attention needs to be paid to getting reports done correctly and on time. Moss said part of the issue is that Village staff was trying to get the audit done much earlier this year than the 2019 audit. That report wasn’t submitted until late June, nine months after the fiscal year end.
“We’ve gotten way too late,” Moss said. According to 2011 research done by the Governmental Accounting Standards Board, the average small municipality takes six months to issue reports.
Areas requiring corrective action according to Marcum’s auditors included the following:
- In the Pension Plan, auditors wrote that officials missed deadlines to “completely close and reconcile the plan’s financial records.”
- Auditors had trouble finding evidence to support six months of bank reconciliations, saying there was “inadequate documentation of internal controls.”
- A schedule of spending for beach renourishment did not properly report a state grant, understating the amount by $831,000. The auditors noted that “failure to develop internal controls over preparation and review could jeopardize future state funding to the Village and report its financial information inaccurately.”
- Auditors found several clerical errors in tracking paid time off, including computation errors and incorrect beginning balances. The Village underreported holiday and compensatory time by about $477,000 in 2019 that was corrected in 2020.
The auditors noted that the Pension Plan has hired a new pension administrator to correct control deficiencies and that Village officials were implementing other corrective measures.