I was somewhat surprised last Thursday that what was billed on the City Council workshop agenda as an update on the progress of the very late 2015 FY audit turned into a full blown audit report presentation before five City Council members with Councilpersons Boudin and McDonald not attending. To get a flavor of why members of the City Council began questioning the thoroughness of the latest City auditor, we need to refer to Geoff Belcher’s story on the report presentation for the Seacoast Echo which ran this past Saturday, Bay council questions new audit report. Belcher did a good job recapping the meeting and only left one thing out that was of interest to me but for now we need to circle that for later exploration:
“You’re – in essence – healthy,” Bobby Culumber, of Gulfport-based CPA firm Culumber, Harvey & Associates, told council members at a workshop meeting on Thursday. “You aren’t over-leveraged, you’re under-leveraged.
“The city has expanded in size from 2005 and you’re working with 10 percent less staff (than you had then) for a much larger-sized city, so you’re doing okay.”
I happened to be at the City Council meeting not long ago when the Mayor first dropped the “10% less staff” talking point and it is true. However, as Councilman Farve pointed out when Mayor Fillingame first used the phrase that the 10% less has largely been taken out of public safety. This in turn explains why the City has periodically closed the Highway 603 Fire Station including in December 2014, which was in Culumber Harvey and Associates audit year. It is also symptomatic of the larger financial and management problems that the new auditors evidently missed but it gets deeper folks as I circle back to Belcher’s story:
Culumber said that the administration’s internal controls “were definitely improving,” and that several negative findings from earlier audit reports had been cleared up.
Both Councilman-at-Large Mike Farve and Ward 6 Councilman Lonnie Falgout were puzzled by Culumber’s comments
I’m unsure how those negative findings were cleared up in the 2015 fiscal year since the 2014 report was not issued until after the 2015 Fiscal Year ended with every finding re-reported in the 2015 audit report. Maybe its possible the auditors worked ahead into the 2016 fiscal year but that would have exceeded the scope of their contract but the giveaway was when audit partner Robert “Bobby” Culumber removed all doubt:
Culumber said Thursday that the DOJ funds had not been “missing,” just put into the general fund.
“Basically, the money was there,” Culumber said, “It was just in the general fund. All the reports were filled out correctly … I feel if there was something criminally wrong, something would have been done by now.”
This too is a favorite talking point of Mayor Fillingame, whose bond is on the line for the missing money but it is one that has no basis in reality. The mathematical concepts are not very difficult in understanding the concepts of greater than and less than.
For instance the September 30, 2013 audit indicates the City had $49,139 total cash in all of its governmental funds including the DoJ Fund while the related affidavits sent to the Department of Justice swore the City had in excess of $284,000 in the DoJ fund alone. The September 30, 2014 audit indicates the City had $99,367 total cash in all of its governmental funds including the DoJ Fund while the related affidavits sent to the Department of Justice swore the City had in excess of $298,000 in the DoJ fund alone. Is $49,139 greater than $284,000? How about $99,367 and $298,000?
In laymans term to say “the money was there” in the general fund when it clearly wasn’t is foolishness, not auditing, thus the reasons the Councilmen are now questioning the rigorousness of the 2015 audit, which itself cost the City’s taxpayers over $50,000. As far as not hearing anything from the DoJ the City is suspended from the program. Perhaps the Mayor and Police Chief did not give the auditors that memo but that fact is widely known among those that regularly attend Council meetings.
More interesting is the fact that the new auditors did not find anything else to report in the audit beyond the audit findings they inherited from their predecessors. I can think of one major finding that was missed just from attending council meetings but that would be another post.
Not mentioned in Belcher’s story is due to a new accounting pronouncement regarding pension liabilities, the City of Bay St Louis’ general fund deficit is $7.7 million dollars. Auditor Culumber tried to downplay the significance of that fact but I feel compelled to point out that if the new accounting pronouncement had been in effect in 2009, the games CEO Chris Anderson played at the Singing River Health System would not have been possible. If the GASB thought it was important enough to make governments accrue their unfunded pension liabilities there is a good reason for it.
Is the City of Bay St Louis really “healthy” per the auditors? Let’s check in with Lisa Monti who was at the Tuesday Council meeting:
The public forum speaker said he wishes money was being spent on grass cutting and other services in the outer ward. Councilman Reed felt his pain. He said there are 56 piles of trash waiting for pickup in Ward 3 alone. (I know where one is: right around the corner from where I’m writing this.)
That sure does not sound like Bay St Louis is a “healthy city” where piles of rubbish do not get picked up for weeks on end and public rights of ways are not maintained. Maybe the City would be doing something if the 10% less hours came out of the payroll budget for the Mayor’s cronies but gutting public works and public safety is not very healthy IMHO. Neither is trying to spin the misappropriation of over $300,000 in federal funds.
It is not clear that the City Council will vote to approve the Culumber, Harvey & Associates audit as it was presented last Thursday night to an empty City Council Chamber. Mr. Culumber is due back to present the report at a regular council meeting when the Council can actually take action on it. Stay tuned.