City will miss audit deadline a 2nd straight year
By Paul Nielsen The Daily Advance Staff Writer Aug 24, 2022
Elizabeth City is going to miss its deadline to submit an audit of the city’s finances to the state for the second straight year.
In fact, work on the 2021-22 audit that is due Oct. 31 has not even been started because the city has still not submitted its 2020-21 audit to the state’s Local Government Commission. That audit was due last Oct. 31. The city missed the deadline because of internal accounting problems.
A representative of the city’s new outside auditor, PB Mares, told City Council Monday night that work on the past due 2020-21 audit is progressing but suggested it may not be completed until November, which is five months later than first projected. PB Mares was hired in April after the city ended its contract with its previous outside auditor.
Robbie Bittner with PB Mares told city officials that the firm will have to slow its work on the city’s past-due audit because it must concentrate on performing audits for its other governmental clients whose audits are due Oct. 31.
Bittner said his firm will try to set time aside to work on Elizabeth City’s past-due audit during that time.
“We are getting ready to go into FYI 22 audit season; starting next week all of our people are booked up solid the next two months,” Bittner said.
“Does that mean nothing gets done?” he continued. “No that is not what that means. It just means the primary focus is going to be on the fiscal 2022 audits that we have contracted for.”
Bittner said there have been several setbacks in finishing the city’s past-due audit and PB Mares is “just getting caught up.” City officials said after PB Mares was hired they hoped the past-due audit would be completed by the end of May 2022.
The delay in completing the audit is the result of the city not having several required financial statements ready to be submitted to the auditor. Bittner said the firm is still missing “six, seven items.”
“We are a bit behind, not just us as PB Mares but in general the entire process,” Bittner said. “When we were brought on we were thinking the process of this audit would be completed in May. But that was before several of the larger hiccups were found. We are pretty far along in the process.”
Councilor Johnny Walton asked Bittner when the city’s financial accounting problems started. Bittner responded that it was “probably a couple of years back.”
The Raleigh-based public accounting firm Greg Isley is helping the city prepare material for PB Mares for the past-due audit.
Isley was first hired last October to help straighten out the city’s books, mainly completing bank reconciliations that had not been performed since June 2020. That scope of work has since expanded to help with the audit.
When Isley was hired in October the city agreed to pay the firm $100 an hour. Firm principal Greg Isley told City Council back in February that the firm had already billed the city $60,000 to that point. As of Thursday, that figure is now $237,490.
Beverly Stroud of Greg Isley told council Monday that the bank reconciliations are almost up to date, a process she described as “cumbersome.” She said Isley is training the finance staff on how to keep those reports up to date.
“You have a lot of credit card transactions, a lot of transactions in your utilities,” Stroud said. “Somebody needs to be doing that every day to keep from getting so far behind.”
Isley has one employee in the city three or four days a week mainly working on different financial statements to help the city complete its past-due audit. Other Isley staff are also performing work for the city.
“Most of his (the Isley employee’s) work has been spent doing audit work,” Stroud said. “He is the intermediary between (city) and the auditor and what they need, helping the staff if they don’t know what exactly the auditors are asking for.”
One problem that arose during work on the past-due 2020-21 audit was a discrepancy found in the city’s fixed assets. There was a $4 million difference between the figure the city had on its books and the figure the city’s former auditor had. The discrepancy was discovered in early July.
Isley thus had to perform a full physical inventory of the city’s fixed assets, which took three weeks and was recently completed, to forward to PB Mares.
“They had to walk around and look at everything,” Stroud said.
Once the audit is done Isley will be available to help city staff, Stroud said.
“When we finish the 2022 audit, we can (work) just as needed,” Stroud said.
The Local Government Commission placed Elizabeth City on its Unit Assistance last September after the city filed its 2019-20 financial statements over six months past the Jan. 31, 2021 deadline. While on the list the LGC would likely prohibit the city from borrowing money for projects.