The overdue Grenada City Audit for Fiscal Year Ending 2016 has been completed and released.
There is good news, and there is bad news.
First the bad news:
The City’s General Fund is $2.59 million overdrawn, more than twice the $1.11 million deficit listed in the FYE 2015 audit, reflecting pitiful financial management by the Grenada Mayor/Council.
The 2016 audit parrots many of the same serious “Significant Deficiencies and Material Weaknesses” detailed in previous audits and ignored by the Mayor/Council:
- Significant Deficiencies and Material Weaknesses Finding 2016-1: The City does not calculate depreciation expense.
- Finding 2016-2: The City’s financial accounting records required many adjusting entries.
- Finding 2016-3: The City uses one bank account for several funds. There are large cash balances in some funds; however, other funds have large cash overdrafts.
- Finding 2016-4: Several funds had deficit fund balances.
- Finding 2016-5: The City did not conduct inventory observations of fixed assets needed to maintain accountability of assets and prepare a complete listing of assets.
- Finding 2016-6: The financial reports are often incorrect due the fact that the accounts have not been reconciled and reviewed for errors.
- Finding 2016-7: Several transfers from one fund to another did not show up correctly in the receiving fund or account.
- Finding 2016-8: Payroll deductions for insurance are not reconciled to correct amount due to insurance company on employees’ behalf.
The good news is that this report covers the financial fiscal year ending Sept. 30, 2016 before current City Manager Trey Baker took the helm in October of 2016.
It appears he is making progress toward correcting many of the financial problems the Mayor/Council have been ignoring for years.
For instance, he has assured us that he has designated a separate checking account for the proceeds of the Grenada Tourism tax levied on prepared food and motel rooms. The city gets half the revenue, and the Grenada Tourism Commission gets the other half.
The enabling legislation specifically states that the city has to keep the money in a separate account and forbids its use in the general fund.
The law sunsets this year, and it would be difficult to get the legislature to renew it if the city in violation of this vital clause.
We have seen evidence of other progress being made by Baker, and we eagerly anticipate improvements in the FYE 2017 audit, although we understand that the city’s financial ship cannot be completely turned around in a single year.
(For the latest City Audit, click link below.)