The City of Grenada remains three years behind on its state-required financial audits.
With FY22 in the rearview mirror following this month’s start of FY23, that number looks to climb to four years if the 2019 audit is not received soon.
City Manager Stanford Amos gave the City Council an update on the audit process during last Monday’s City Council meeting at City Hall.
Amos began by informing the seven-member Council that CPA Ronnie S. Windham, along with the city’s Director of Finance Donna Harper, Deputy City Clerk Sandra Edget and himself had met the first week of October. City Clerk Lois Freelon was out that week, according to Amos.
“He gave us an update on ’19, ’20 and ’21,” Amos said. “This is from Mr. Windham in summary of the meeting that we had. All requested information has been received, they’re reconciling items outside of the year-end cutoff that were not posted correctly, so we’re working and have assigned Ms. Edget on that to identify those postings that were not posted correctly, auditing the grant expenditures and verifying that all grant activity is recorded. I’m checking on possible findings on the 2019 Bond and proposing adjusting journal entries for items that are not posted, which is connected to the posted items that were not posted correctly. Again, we are identifying those journal entries, have someone assigned to that to make the corrected adjustments.”
The documents and other information required for the financial auditing process is the city’s responsibility to provide to its auditing firm.
According to 4 Miss. Code R. § 7-1.1-IV – Municipal Audit Requirement, state law requires all municipalities have an annual audit. This law is specific with regard to type of audit, who may perform the audit and other conditions. The State Auditor is charged with the responsibility to prescribe guidelines for the audit process.
Section 21-35-31(1), Miss. Code Ann. (1972), requires all municipalities have an annual audit of their books. One of the many requirements of this law reads that “the governing authority of every municipality in the state shall have the municipal books audited annually, before the close of the next succeeding fiscal year, in accordance with procedures and reporting requirements prescribed by the State Auditor.”
“He’s also investigating Sunshine Aviation and Suburban Plastic payments that were from – I believe – 2017-2018 that there still may be some questions about that may have reached into the 2019 budget,” Amos continued. “And, then investigating funds that are out of balance. Part of that, his explanation is, because of the postings that need to be adjusted.”
Amos also told the Council that Windham was asked “when is he prepared to hand us the budget,” but was still not able to give them an answer.
“Although, he did not ask for any additional information from us about 2019,” Amos added.
Amos then discussed the next two years of audits.
“2020 and 2021 are basically going to be the same in that all the Renasant Bank information has been received; we’ve given him the ability to go into the accounts that the city has,” Amos said. “The 2020 account history has been received, property tax evaluations have been received, vacation and sick accrual have been received and that’s the same for 2020 and 2021.”
According to Amos, Windham provided a print-out of various tasks that he said are being assigned to the city clerk, deputy clerks and finance director, as well as himself.
“I have asked us to have weekly meetings; he agreed to that,” Amos said. “He’s going to more directly send me information, along with the information that he sends to the City Clerk, so that I’ll be able to follow on those things in a more timely manner.”
“He didn’t have any other concerns outside of the things that he said that he seen,” Amos said.
Mayor Billy F. Collins then asked if the Council had any questions. Ward 1 Councilman Warren B. Cox spoke up.
“I hope he’ll really move this forward,” he said. “I don’t know if he has any idea of the grants that we can’t even apply for because we are so far behind on our audits. Some we’ve attempted to apply for and it just didn’t work out because we are so far behind on our audits. Like you said, we need to meet with him on a regular basis with the City Manager and move him ahead quickly, quickly.”
A majority of state and federal grant applications require up-to-date financial audits for cities to be eligible for funding. If a current audit is not provided by applicant cities, they are eliminated from the selection process.
“We feel pretty sure – he’s pretty confident as well – he’s already got ’19, so we’re looking at ’20 and ’21 and we’ve already got him most of the information that he’s asked for already and we should be able to have those prepared to give to him before the end of the year.”
The remaining legal requirements for city audits include:
The municipality shall pay for the audit or report out of its general fund.
No advertisement shall be necessary before entering into the contract, and it shall be entered into as a private contract.
The governing authorities of the municipality may enter into a contract for the audit, without the necessity of soliciting bids.
The audit or report shall be made upon a uniform formula set up and promulgated by the State Auditor.
Two copies of the audit or compilation must be mailed to the State Auditor within 30 days after completion.
A synopsis of the audit, as defined by the State Auditor, must be published within 30 days after completion of the audit. The publication must be in a newspaper published in the municipality or, if no newspaper is published in the municipality, in a newspaper having general circulation in the county. As an alternative to publishing the synopsis, the audit may be publicized as provided by Section 21-17-19, Miss. Code Ann. (1972). Further, the publication shall be made one (1) time and the municipality may only pay one-half (½) of the legal rate prescribed by law for such legal publications [Section 25-7-65, Miss. Code Ann. (1972)].
Section 21-35-31(2), Miss. Code Ann. (1972), states, it shall be the duty of the State Auditor to determine whether each municipality has complied with the requirements of subsection (1) of this section.
If upon examination the State Auditor determines that a municipality has not initiated efforts to comply with the requirements of subsection (1), the State Auditor shall file a certified written notice with the clerk of the municipality notifying the governing authority of the municipality that a certificate of noncompliance will be issued to the State Tax Commission and to the Attorney General thirty (30) days immediately following the date of the filing of the notice unless within that period the municipality substantially complies with the requirements of subsection (1).
If, after thirty (30) days from the giving of the notice, the municipality, in the opinion of the State Auditor, has not substantially initiated efforts to comply with the requirements of subsection (1), the State Auditor shall issue a certificate of noncompliance to the clerk of the municipality, State Tax Commission and the Attorney General.
Thereafter, the State Tax Commission shall withhold from all allocations and payments to the municipality that would otherwise be payable the amount necessary to pay one hundred fifty percent (150%) of the cost of preparing the required audit or report as contracted for by the State Auditor.
The cost shall be determined by the State Auditor after receiving proposals for the audit or report required in subsection (1) of this section.
The State Auditor shall notify the State Tax Commission of the amount in writing, and the State Tax Commission shall transfer that amount to the State Auditor.
The State Auditor is authorized to escalate, budget and expend these funds in accordance with rules and regulations of the Department of Finance and Administration consistent with the escalation of federal funds. All remaining funds shall be retained by the State Auditor to offset the costs of administering these contracts. The State Auditor shall not unreasonably delay the issuance of a written notice of cancellation of a certificate of noncompliance but shall promptly issue a written notice of cancellation of certificate of noncompliance upon an affirmative showing by the municipality that it has come into substantial compliance.
~ 4 Miss. Code R. § 7-1.1-IV ~
