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County audit on time and on track

Archuleta County marked a major milestone in its financial history Tuesday when the board of county commissioners and staff received the organization’s 2008 audit without a disclaimed opinion and well before the state imposed a property tax freeze — a penalty reserved for those agencies who submit their audits after the state deadline.

“This is probably the first time in a lot of years that financial statements have been ready this early,” said Karla Willschau, auditor and certified public accountant with Wall, Smith, Bateman & Associates.

“This is an unqualified opinion, and you haven’t seen that opinion in a few years,” Willschau added.

During the last three years, the county suffered disclaimed audits in 2005 and 2006, and a qualified audit in 2007.

A disclaimed audit is reserved only for those organizations in the worst financial situations, while a qualified audit means the organization faces serious troubles in a variety of areas.

Archuleta County Finance Director Don Warn said a disclaimed audit occurs when “the financial statements are so unreliable that auditors can’t express an opinion on them.”

Although Willschau lauded county staff for their monumental achievements in cleaning up the ledgers and instituting policies and procedures that have helped put the county back on track, the 2008 audit depicts an agency still hamstrung by it’s 2007 financial meltdown.

That said, the 2008 audit shows a series of negative fund balances— $1.38 million in road and bridge, $618,072 in human services, $2.1 million in the airport fund and $53,750 in the fair board fund — and problems with accounting for dollars in the human services department, interest earned on federal dollars for airport improvement grants and troubles obtaining source documents in the treasurer’s office in 2009.

Warn said the source document troubles were linked directly to challenges with the treasurer’s winter 2009 software conversion project.

In regard to the negative fund balance issue, Archuleta County Finance Director Don Warn said, “The only way to fix negative fund balances is to build reserves, and that takes time.”

Nevertheless, and in a another major operational shift, Warn said the county appears poised to bank nearly $200,000 in reserves for the General Fund by year’s end, and that, just 18 months after the county teetered on bankruptcy.

Despite said challenges, Willschau noted a key difference between Archuleta just three or four years ago, and Archuleta County today: Archuleta County staff is well aware of its financial issues, has taken aggressive proactive steps to fix problems, and most importantly, county finance staff knows the organization’s financial position on almost any given day.

“A lot of action has been taken in 2009 to rectify what happened in 2008. You have gone from one of our most difficult clients to one of our best — as far as accounting knowledge goes,” Willschau said. “For Don to be able to stand up here and tell you where you are as of July 31, that is significant. I think that is a really great step for the county.”

By contrast, in the past Willschau told the commissioners, “You didn’t even know what your cash was.”

In order to solve two of the challenges listed in the audit, Willschau encouraged staff to continue working toward instituting “a complete system of internal controls to prevent and detect financial misstatements.”

In addition, she suggested continued use of outside consultants to ensure timely and accurate accounting in the human services department.

“It was an ongoing problem in human services. The accounting just wasn’t quite right,” Willschau said.

In fact, it was those troubles in human services that ultimately led to the county’s missed audit deadline of July 31.

With the missed July 31 deadline, the county asked for, and received, an extension to Sept. 30.

Warn said the county’s audit will be submitted to the state auditor’s office before the end of August.