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There has never been any missing money, but auditor Nancy Miller’s high definition scrutiny of Colonial Beach’s town and school division finance records uncovered no fewer than twenty-two areas in need of immediate improvement.
The Miller Foley Group was tasked last year with taking its evaluation beyond the scope required by law in order to generate a set of findings whose level of detail might optimally facilitate the remediation of the faulty accounting practices.
As reported in last week’s Journal, problems uncovered during the audit of Colonial Beach’s Fiscal Year 2008 financial records were several decades in the making, but the results reported last Wednesday could have serious consequence if appropriate remedies are not introduced in a timely manner.
On Wednesday Miller counseled town officials to take their time and avoid any attempt to hastily remedy all twenty-two of that audit’s findings.
“None of these things happened last year and it’s not practical to think we can fix everything overnight,” Miller told members of the Colonial Beach Town Council and School Board.
“Remember that it isn’t possible to have a perfect system of internal controls,” she stated in her opening remarks.
Later in the briefing Miller emphasized the need to avoid an attempt to address all the findings of internal control weaknesses in a hasty manner.
“Fixing this is going to take a lot of time and a lot of resources. The problems won’t be solved by June 30, 2009,” when financial records associated with the current twelve-month fiscal period are closed.
“You will probably have findings in your 2009 audit,” Miller then stated. “Right now you need to prioritize. To try and tackle all this right now is a recipe for not doing anything well.”
According to the auditor, the town should expect “to address no more than three things in a single year. Then,” Miller related, “you can realistically expect to do them well.
“Your role,” the auditor then advised the two sets of elected officials, “it to keep [the finance office employees] on task. It will be a great process if you allocate the resources and set a tone that is consistent with greater accountability.
“You are the governance and you need to hold management accountable,” she explained.
The auditor recommended that the Council and School Board waste no time in establishing a task force charged with addressing financial record keeping problems identified in the report.
Council responded the following evening. Mayor Fred Rummage and Vice Mayor Trish King will represent the local government on a task force whose first mission will be implementing the computer-based accounting program known as the Bright system in the school division’s finance office. Two School Board members will complete that task force membership.
Miller advised that June 30, 2010 “should be the timeline to really turn this thing around.” She made it clear that addressing problems associated with the school division’s financial records keeping practices should be all parties’ top priority.
In a worst scenario the federal government could demand that Colonial Beach return almost $444,000 that its school division received as grant money from the federal government.
“The federal authorities could ask for the money back, but I have never seen it done,” Miller related. “You just don’t want to have these [same findings] in the 2010 audit. A corrective action plan will be looked on very favorably” by federal government authorities.
The auditor made it quite clear that the school division’s finance office is seriously under-staffed, that existing personnel are being expected to utilize skill sets that they lack and that a properly trained financial staffer charged with tracking federal grants would expect to earn no less than $100,000 a year.
In Town Hall and in the School Board office finance employees “are being asked to do three to four times what they should reasonably be expected to be doing,” explained Miller.
In the school division’s finance office, “program people are asked to do accounting when they don’t have the training. Very few localities have the resources to hire a grant manager, and you guys are so tiny that the State Department of Education budget is really not focused on you guys.
“Ninety-eight percent of the federal money is coming in on the state side, but there’s not much coming into the town right now. For the school system it’s a priority to understand grant management and ledger accounting,” along with creating a mechanism for the filing of timely reimbursement reports to better manage federal grants.
The audit disclosed that lax procedures resulted in actions that caused the school division’s debt to the town to climb to $662,000. Coupled with the previously referenced federal grant accounting issues, a worst scenario consequence would require the Colonial Beach school division to raise a million dollars just to satisfy local and federal government demands.
The three hour briefing included a warning from the auditor that the twelve-month budget period ending June 30, 2012 will likely reflect what state budget experts fear may be dire economic conditions. The town was advised to have a reserve balance it can draw from at that time.
Miller additionally delivered a warning about the unprecedented level of strings and accounting protocols attached to the federal government’s economic recovery allocations to local jurisdictions.
According to information gathered by Miller, the oversight required from local finance employees in tracking allocations from the federal stimulus package will be no less than ten times greater than anything that was experienced in the past.
“There will be such a high level of review on how the money is spent,” the auditor counseled. “You got some pretty big stuff that was packaged really fast.” The details, she related, have not yet been disclosed.
More will be published in subsequent weeks about the latest Colonial Beach audit findings. The final Miller Foley document is scheduled for release later this week.
During last Wednesday’s deliberations, parties refrained from finger pointing. Members of the town government must remedy their own accounting problems and Miller made it clear that all the players have expressed a willingness to embrace the appropriate sets of remedies as soon as possible.
“They already have started working on the problems,” said Council member Sparky Ridgely in the final comment before the March 25 meeting was adjourned.
By Betsy Ficklin