Springfield’s annual audit shows the city needs to reconcile accounts more regularly and show proper documentation, amend the budget prior to spending more than planned and be careful with utilities overdue to the city.
Donald Caines of Rincon accounting firm Caines, Hodges, Pace and Corbitt told city council members the number of receivables that were paid past the due date were a slight cause of concern.
Caines said a difference in cash receivables showed that the average receivables are older than 30 days.
“You just need to be looking to see if we’re staying current and pursuing our cutoffs and those kinds of things,” he said. “I honestly believe that your staff’s doing a good job; we just don’t need to let that get out of hand because once it does, it kind of starts to run wild.”
Caines also advised city council members to have more regular reconciliation for the utilities accounts receivable. He said the accounts payable also were not being reconciled monthly.
“I realize things have changed since 2007, and we are going in a different direction now with a new manager on board, and we have some other things in transition,” Caines said. “I fully believe these things will be corrected; however, they weren’t at the end of the year, so we have to disclose that.”
He said that while there were several adjustments that had to be made while performing the audit, nothing was deemed to be a fraud concern.
Caines said there were items paid missing the original invoices and approval documentation, which is recommended for all transactions. Springfield was found to have two law violations in 2007.
“Everybody always gets bent out of shape over, and I really don’t blame you,” he said. “First one is the city violated state law by expending funds in excess of appropriations at the legal level of authority, which is the departmental level.”
There were two departments in two funds that spent more money than was appropriated during the 2007 year. Caines explained that the state requires a balanced budget for all special revenue and debt service funds, the general fund and an annual budget for capital projects funds. He said before the city spends in excess of its budget, that budget should be amended before the money is spent.
He said while he had never heard of any consequences for spending more than is budgeted he would not “make a habit of not amending your budget.”
“I would suggest in the future especially, now that you have your city manager, that you make sure before you spend the money that you’re not over budget,” Caines said.
He also warned that the city violated state law by entering into a short term debt agreement to purchase real estate.
The short-term financing must be paid off by Dec. 31, according to state law.
“The general theory of the law was to not commit future councils,” he said. “However, the law says it has to be paid off by Dec. 31 and then you can re-borrow it the beginning of the next year.”
He said his only recommendation was for the city not to do that again.
“It’s not a good practice to get into,” Caines said. “The whole purpose in this even being a law to allow short term borrowing is to make up for the time lag between the time taxes are levied and they’re collected with your budget year.”