City of GoldsboroLocal Government

2021-002

2021-003

Finding 2021-001: Compliance Reporting Name of Contact Person: Catherine Gwynn, Finance Director Corrective Action: The Management for the City recognizes the seriousness of the late audit submissions, and how critical timely financial information is for the efficient and effective administration of local government. A brief timeline is presented below to outline the various issues, challenges and actions taken to complete the audits. Management and staff urgently wanted the information to be timely, but also to be accurate and ensure that past errors were identified and corrected so that the records generated moving forward would be accurate. Contributing Factors ? Retirement of key management personnel in Finance ? Deficiency in succession planning ? Insufficient delegation of duties ? Lack of staffing ? Lack of cross training ? Inadequate written policies procedures ? Hurricane Florence September 2018 ? Coronavirus Pandemic March 2020 ? Additional workload from CRF grant funding (2020) and ARPA grant funding (2021) ? Loss of staffing related to HUD CDBG and HOME programs ? Office of State Auditor Performance Audit FY2020 and FY2021 (2022) Actions Taken 2019 ? Management hired a new Finance Director and Assistant Finance Director with appropriate education and local government accounting experience. ? Finance Director and staff worked to reconcile the 2019 records, finding that there were reconciliation issues whereby 2018 records had to be reconciled before moving forward to 2019. 2020 ? Council authorized the Finance Director to use contract professional accounting personnel to assist with reconstruction of 2018 books to determine various errors and misstatements so that reconciliation of 2019 records could be done. ? Council authorized one full time accountant position in March, 2020. Position was filled in August, 2020. ? Coronavirus Pandemic declared March, 2020 causing additional strain on Finance staff with additional record keeping requirements and mandates. ? Finance Director requested four full time positions in the FY2021 budget for purchasing and inventory, accounts receivable and accounts payable. Two positions for purchasing and inventory were approved by Council. ? Management authorized part-time temporary positions for accounts receivable, accounts payable and payroll to help with workload. 2021 ? Filled the Procurement Manager and Procurement Specialist positions in March, 2021 and October, 2021 respectively. ? FY2019 audit issued on 5/12/2021. ? Filled part-time temporary positions over the course of 2021, however not able to retain staffing due to part-time status. ? With the adoption of the FY2022 budget 6/18/2021, Council authorized four permanent part-time positions to fill technician positions in accounts receivable, accounts payable, payroll and office assistant. ? First tranche of ARPA funding received 7/15/2021. Additional responsibilities placed on Finance for the program management of the grant. ? Due to difficulties in filling the part-time positions, Council authorized the four permanent part-time positions to be converted to full-time positions on 9/20/2021. 2022 ? FY2020 audit issued on 3/7/2022. ? Filled payroll and accounts payable full-time positions in March, 2022. Covid and labor market created difficulties in finding qualified candidates. ? Filled accounts receivable full time-position in June, 2022. Covid and labor market created difficulties in finding qualified candidates. ? Now fully staffed the process of cross training and delegation of duties began to help relieve some of the extra duties being carried by the Finance Director and Assistant Finance Director, and allow some additional capacity to work on the late audits. ? Due to request of State Treasurer, Dale Folwell, a performance audit for the City was initiated by the Office of State Auditor?s Beth Wood covering FY2020 and FY2021 in March, 2022. 2023 ? Staff turnover in August, 2022 of the full-time accountant resulted in the final full time position being filled in January, 2023. ? FY2021 audit issued February, 2023. Overall During this time the Finance Director has enacted multiple policies and standard operating procedures to address the lack of written directives to guide staff. This continues to be an ongoing process necessary to establish a sound set of financial policies and procedures to ensure continuity of operations. The performance audit being conducted by the Office of the State Auditor is expected to wrap up in the spring of 2023, but has been a substantial strain on the Finance staff since it was initiated in March, 2022, which contributed to the lengthy delay in the 2021 audit. We expect since Finance is now fully staffed that resources will be committed such that the FY2022 audit will be completed by July, 2023, and the FY2023 audit will be completed by December, 2023.

2020-002

Name of Contact Person: Catherine Gwynn, Finance Director Corrective Action: The lateness of the financial audit was caused by a number of factors being the retirement of two key management personnel in the Finance Department (director and deputy director), deficiency in succession planning, lack of sufficient staffing in the Finance department, insufficient delegation of duties, lack of cross training, and inadequate written procedures. A contributing factor was also Hurricane Florence in September 2018, and Coronavirus Pandemic in March 2020 to present which further strained finance personnel resources. The issues were handled as follows: Staffing - City management hired an experienced and credentialed professional to help bridge the gap between the retiring finance director. The new director hired an experienced professional to serve as the deputy director. Upon assessment of the financial accounting system, structure and processes, the director began implementing critical improvements to the system to ensure accountability and adherence to federal, state and local laws, policy and procedures. Training and counseling continues to be an ongoing process with all City staff related to finance matters. In January 2020, the Director requested and was granted the use of contract professional accounting assistance to help with reconstructing and reconciling the fiscal 2018 books to determine the various errors and misstatements, and reconciling the 2019 records. In March 2020, the Director requested and was granted one full time professional position in fiscal year 2020, which was filled in fiscal year 2021. In the fiscal year 2021, budget the Director requested four full time positions in fiscal year 2021 for the critical functions of purchasing and inventory, accounts receivable and accounts payable, and 2 positions for purchasing and inventory were approved. Director requested and was granted part-time staff to assist with providing backups to critical functions such as payroll and accounts payable in fiscal 2021, and these positions were filled mid-year fiscal 2021. In the fiscal year 2022 budget, the Director requested and was granted permanent part-time positions, and the part-time personnel that were hired were converted to permanent part-time effective July 1, 2021. However, COVID concerns and lack of full-time employment lead to vacancies in the positions shortly after being filled. Due to the lack of qualified candidates to fill the permanent part-time positions, the Director requested Council approve the reclassification of permanent part-time to full time positions for the payroll, accounts payable, accounts receivable, and office assistant technical positions, and Council approved the addition of 4 full-time employees for Finance. Economic conditions in our area as well as the ongoing COVID-19 pandemic have hampered the efforts to fill the full-time positions with qualified candidates. The Director has requested and has been granted a pay study for the Finance Department to determine an equitable baseline for salaries, which will in turn allow for recruiting of qualified applicants to fill the jobs. Delegation of duties ? With the addition of personnel, it is possible now to have at least one backup for the critical functions of payroll, accounts payable, accounts receivable, purchasing, inventory, and records management. It is now possible for the director and deputy director to delegate those inherited tasks that are more suitable for subordinate staff. With the addition of staffing it allows director and deputy director to provide direction and oversight, as well as cross train on duties so that there is sufficient coverage to meet critical deadlines. The implementation of delegation of duties and cross training has occurred for the 4 positions filled, and will continue when the remaining 3 positions are filled. Written procedures - Director has implemented written procedures to assist staff in performing their tasks to include proper review and approval of transactions. Director requires that the Department Head review and approve transactions affecting the budgets managed, and if warranted approval by the City Manager. The Director has required all staff to provide sufficient data backup and authorization for all transactions entered into the City?s accounting system. The transactions are monitored by the Finance staff assigned to the various accounting functions. Proposed Completion Date: Due to the number of reconciling issues encountered, the above measures were taken from July 2019 through April 2021. The staffing component is approximately 60% complete as of March 2022. It is anticipated that the remaining 3 full-time staff will be onboarded by April 2022, and the training and delegation of duties will take place in order to correct the finding. The audit for fiscal year 2021 is delayed due to resolving the issues with fiscal year 2018 and 2019, which caused the 2020 audit to be late as well. Management expects to have the audit for fiscal year 2021 completed by June 30, 2022.

2019-003

Name of Contact Person: Catherine Gwynn, Finance Director Corrective Action: The lateness of the financial audit was caused by a number of factors being the retirement of two key management personnel in the Finance Department (director and deputy director), deficiency in succession planning, lack of sufficient staffing in the Finance department, insufficient delegation of duties, lack of cross training, and inadequate written procedures. A contributing factor was also Hurricane Florence in September 2018, and Coronavirus Pandemic in March, 2020 to present which further strained finance personnel resources. The issues were handled as follows: Staffing - City management hired an experienced and credentialed professional to help bridge the gap between the retiring finance director. The new director hired an experienced professional to serve as the deputy director. Upon assessment of the financial accounting system, structure and processes, the director began implementing critical improvements to the system to ensure accountability and adherence to federal, state and local laws, policy and procedures. Training and counseling continues to be an ongoing process with all City staff related to finance matters. Director requested and was granted the use of contract professional accounting assistance to help with recreating and reconciling the fiscal 2018 books to determine the various errors and misstatements, and reconciling the 2019 records. Director requested and was granted one full time position in fiscal year 2020, which was filled in fiscal year 2021. Director requested four full time positions in fiscal year 2021 for the critical functions of purchasing and inventory, accounts receivable and accounts payable, and only 2 positions for purchasing and inventory were approved. Director requested and was granted part-time staff to assist with providing backups to critical functions such as payroll and accounts payable in fiscal 2021, and these positions were filled mid-year fiscal 2021. Director has requested part-time staff to assist with providing backups to the critical function of accounts receivable and records management in fiscal 2022, and the outcome of which is yet to be determined. Delegation of duties - With the addition of personnel, it is possible now to have at least one backup for the critical functions of payroll, accounts payable, purchasing and inventory. It is now possible for the director and deputy director to delegate those inherited tasks that are more suitable for subordinate staff. With the addition of staffing it allows director and deputy director to provide direction and oversight, as well as cross train on duties so that there is sufficient coverage to meet critical deadlines. Written procedures - Director has implemented written procedures to assist staff in performing their tasks to include proper review and approval of transactions. Director has required staff to provide sufficient data backup and authorization for all transactions entered into the City?s accounting system. Proposed Completion Date: Due to the number of reconciling issues encountered, the above measures were taken from July 2019 through April 2021. Staffing has not been completed for several of the part time positions, and will be necessary in order to correct the finding. The audit for fiscal year 2020 was delayed due to resolving the issues with fiscal year 2018 and 2019 and has not been completed as of April 18, 2021. Management expects to have the audit for fiscal year 2020 completed no later than October 1, 2021.