Incomplete Carbon Hill audits may go back to '13


CARBON HILL - Fayette accountant Rick McCabe was appointed Monday by Mayor Mark Chambers Monday night to handle an audit of the city's books going back to 2013, but not before McCabe gave other options and laid out the challenges in even finding documents that far back. 

City officials - including the Carbon Hill City Council, which met Monday night - have been pushing for an audit of the city's finances. 

McCabe, who works on the Carbon Hill Utility Board's books each year, said during a break for executive session that District 3 Councilwoman April Kennedy Herron and Chambers separately contacted him recently about the need, and he said he intended at that time to help them find someone else to do the work. 

However, he noted getting bigger departments or firms to come in to help catch up with more people is expensive for a town with a limited budget. 

McCabe said he did not know how long it would take to catch up, pointing out that the earlier year to catch up with is 2013, "and it was a draft, which means I'm not sure if it was issued or not." He received a package of financial information just before the meeting. 

He said he would see if the work is doable for his office and, if not, he will tell city officials to pay extra to find the necessary help to catch up. 

McCabe said earlier during Monday's council meeting the city is required to have a financial statement audit each year. 

"I think we're roughly five years behind on audits," he said, noting the end of Fiscal 2019 is in a week, meaning another audit will need to be added now. 

"To be blunt about it, this is a problem," he said. "Is it fixable? Yes, it's fixable. But it is a problem. As the mayor and the council, you have a fiduciary responsibility for facilities of this town. Part of that responsibility is to ensure the financial integrity or the integrity of your financial information, for the citizens to know the money is being spent, where it is supposed to be spent, what was supposed to be collected and so forth." 

He said the audit process that delivers that information in financial statements gives citizens a "piece of mind" over the finances. 

Five or six years of audits will be "difficult," McCabe said, as the process involves confirmation through various sources, through state records, bank records, and so on. Going back five years makes it harder to get the information, as the records may be hard to find or no longer there. 

He also noted in 2014 or 2015 the city dealt with a Community Development Block Grant for a water line extension helping the Utility Board. "That grant came through the city, meaning you guys are responsible for that grant," he said. "Where are those grant files? That is a big issue there." 

He said the city needs to get moving forward now to fix the problem, adding he would go through the information given to him that night and give "a game plan" to the council, involving a quote for fees and a time frame.

The city has three options, according to McCabe, noting he would be glad to help with whatever option picked. First, they could hire someone like him who does small town audits. "One of the problems is that all our towns have a Sept. 30 end. That means Oct. 1, we start all of our audits," he said. "We would have to slide Carbon Hill in there. We can do it. But this is going to be a long process. Not only is it going to be a long process, it is going to be a costly process." 

A quote for the front end, in the older years, is subjective, as it is not certain what anyone will be getting into, he said. 

"I'm not even sure if our clerk was here five years ago, so we will be grilling her about information that she has no idea about, where the files are, etc, etc. That is something we get into," he said. 

City Clerk Nanette Brown was hired in November 2016. 

McCabe said the second option would be to hire a larger firm in Birmingham which has more employees to work on it, speeding up the process. "You know that that means. Big money," he said, saying they will charge two to three times what McCabe would charge. 

"The third option is to get the state examiners to come in. The Department of Public Examiners, they also do this. Now, they do charge and they have a lot of manpower," he said.

He prepared them that the audits could take a while. 

"I don't think you can do five or six audits in one year," he said. "I don't think the town can afford it. Even if you go to Birmingham and get one of the big firms, you are talking a substantial amount of money." He said later the city doesn't have the resources "to knock this thing out in a six-month timeframe." 

Not being able to complete the work in a year would mean that all the audits cannot be completed in time for next August's municipal elections. 

A typical town audit for a current year normally takes three weeks, he said. 

McCabe said he would start with the oldest year, while the last couple of years would not be as difficult. 

Chambers said, "I'm pretty well set with you doing it. I would just assume you go ahead and start on it and get it done." McCabe said he would like for the city to know the cost "before we get into this." However, the mayor said there will be a cost regardless and it sounded like McCabe would be the cheapest option. 

He said while he could get the work in with his employees, the work needs to get done. 

"Quite frankly, I'm quite surprised the state examiners have not been knocking on the door. Typically, they are knocking on the door before now," he said. Herron said she also was surprised they haven't come. 

McCabe said in a worst case situation, when information is not available, an modified opinion is given, saying not everything is documented. "That's a big no-no. You don't want that. State examiners come knocking at your door. You try to get a grant, it is a problem. If you try to borrow money at the bank, it is a problem. But if you don't have the information, that is ultimately what we get into," he said. 

On the other hand, he said the problem concerns several years ago, while institutions look at more current information. 

McCabe said he would send a written proposal to Brown and Chambers on Friday. Herron said the mayor can appoint him without the council's approval. 

Chambers said he would appoint McCabe.

"Good. We want it going," Herron said. McCabe said he would still send the proposal, adding if there are problems with the work he would come back to the city officials. 

Herron said for the past two years, she and District 2 Councilman Clarence Colbert have been trying to start the audit process.

In August, Chambers suggested raising the salaries of the mayor and council for the next term. Herron said, "I'm not willing to vote on anything until we get our audits down and we know where we stand." District 6 Councilman Gary Anderson said, "I agree. I have asked for an audit and have not wanted to vote on this kind of a raise." Herron added, "I'm not even going to entertain it." 

Brown said at the time officials are working on the audit situation, and Chambers said the city's first priority is to get the audits completed.

In a related item, District 1 Councilwoman Cindy Killingsworth, who recently asked Brown for regular financial reports for council members, said Monday Brown gave members a financial statement with amounts in each account. 

"I do want to make it clear that what we are asking for are statements that give the income statements, in addition to your liabilities, your assets, things of this nature," Killingsworth said. "We need something to go by here. We need to know what is coming out and what's coming in. How much is coming in and what is in each account is good, but then it also does need to be generated from the accounting system. That is very important. Anybody can type this up. I can get on a computer and type this up. But in order for the system to print it out, this is real, this is true. This is up to date." 

Brown said the figures came from the bank's online system. Killingsworth also noted that Brown "did find on the computer what I was talking about and she would get those ready for us."