Michael Rossi of West & Company CPAs PC and Lauren Poehlman appeared before the common council at Tuesday’s Finance Committee meeting to give a report on their progress and answer questions about their work to reconcile the city’s financial records. Although neither could give an exact time-frame for the completion of their work, both reported that progress was being made.
“You’ve got the financial statements, I think for all practical purposes will be tied down by June 11,” said Poehlman, who is responsible for working on the city’s capital projects accounts. “I’ve started the reconciliations…I’ve gotten a couple months done. I think the hardest months are done.”
According to Poehlman, the months of July, August and September of 2011 were the most difficult to work with because at that time the city was transitioning from one accounting system to another.
Poehlman said that she was guiding city employee Joy Chiariello to complete the work on records for 2012.
Rossi reported that his firm had been placed on hold for a time so that the controller’s office could ensure that the information they were sending to him was accurate.
Controller Matthew Agresta explained, “We wanted to make sure that all the information we had given him originally was worthwhile…now that we are pretty much done with [years] 09-10 we should be able to move forward with the [years] 10-11 which includes the work you guys (West & Company) have been doing.”
According to Agresta, the corrected records for fiscal years 2009-2010 are within approximately $5000 of the original audit.
“As bad as everyone thought this was going to look, it isn’t as terrible as they thought for 2009 and 10,” Agresta said later in his report to the common council, “This is still a process, it’s not going to be done tomorrow. I know everyone wants it done immediately. But we are working through it. There has been progress. It isn’t as bleak as everybody has thought it was going to be at least to this point.”
Rossi mentioned that one of the biggest problems with the records has to do with a “z fund” which contains records totaling at least $500,000 that were not properly categorized.
Agresta clarified, “what the ‘z fund’ was – when KVS (the new accounting system) was installed, they had a lot of information from the county that they never got direction on where to put it, so they put it into this ‘z fund’.”
Poehlman also pointed out, “The problem you have after 2011 is because the bank was never balanced, any of your receipts that were not in the normal accounting systems weren’t recorded. So if anything, we have unrecorded deposits…it’s good news…you have money coming in that hasn’t been put on the books. ”
3rd Ward Alderman Ron Barone asked if anyone could give him an idea as to what the fund balance was. Agresta said that only the balance from years 2009-2010 could be stated accurately at the time, and that the rest of the work would have to be completed in order to come up with a current figure.
“We’ve got a job in front of us because we’ve got to do a budget…In all the budgets in all the years I’ve done it at the county, I’ve never done it without a fund balance,” said Barone.
Agresta stated the proposed budget for 2014-2015 did not call for drawing down the fund balance.
Both Poehlman and Rossi agreed that even though there were many mistakes in the financial records, so far they had seen no evidence of any deliberate wrong doing or fraud.
Poehlman added, “You’re getting through it. Overall, with the new system, it seems as if the day-to-day operations are flowing through with your current system very well.”
In regards to a time-frame for completion she said, “I hate to give you one because some of the most frustrating pieces – you don’t know what you don’t have until you get there. Alot of the time – to this point – has been struggling to find the pieces. Not so much getting the work done but finding the pieces that will let us get the work done – because of the lack of history in the office.”
Agresta explained that the lack of experience in the his office is one of the reasons he had asked to extend Poehlman’s contract so that she could provide up to 55 hours of additional training to his staff. The common council later approved a resolution authorizing the extension.
In regards to how the accountants’ work would affect the budget process, Pouhlman said, “If you have a good handle on what your expenditures are, and talking with Matt earlier…it sounds like he’s got a good handle on where your revenue pieces are, if those are matching up and you are not relying on what’s in fund balance, that’s a good place to be.”
