Auditors from Wall, Smith, Bateman and Associates, Inc. presented the 2010 Archuleta County audit Monday morning, with internal controls continuing to be an area of concern in terms of the county’s financial health.
The 2010 audit is the fourth consecutive audit with a finding that internal control over the county’s financial reporting is considered a material weakness.
Although a finding for four years, Karla Wilshau of WSBA said the claim is “nothing significant” and that the finding is “changing” over time.
“I know that it’s a work in progress,” Wilshau said.
According to the audit, four areas of Archuleta County’s finances were affected, including one area that is in violation of Colorado Revised Statutes.
In 2010, five funds had expenditures (including transfers) that exceeded the adopted budget for the year — the General Fund (by $929,614), Human Services Fund ($1,620,379), Conservation Trust Fund ($50,000), Fairfield Settlement Fund ($8,612) and the Self-Insurance Fund ($339,166) — potentially putting the county in violation of C.R.S. 29-1-110.
Also according to the audit, “The Finance Department did not reconcile the general ledger cash to the treasurer ledger cash during 2010, in a timely manner.”
A third component of the finding is capital lease transactions that were not correctly recorded in the General Fund according to national standards.
The fourth component of the finding is, as the audit states, “Audit adjustments were proposed to properly state the General Fund and the Solid Waste Fund in the County financial statements as of December 31, 2010, in accordance with generally accepted accounting principles.”
“They are all way, way less in severity and scope,” Wilshau said, adding, “It’s so much better than it has been in the past.”
Wilshau noted another sign of the county’s work to alleviate the issues in the finding — “Just the fact that you’re going to meet that July 31 deadline with no problems.”
Counties are expected to recceive their audit by June 30 and are required to turn in their audit to the state by July 31 — the deadline Wilshau referred to.
Last year, the county’s audit was not completed until late July.
No matter the progress, the finding continues to affect the scope of the yearly audit because the finding means that Archuleta County is not a “low-risk auditee,” and demands auditors must look at more information.
Despite the progress toward alleviating the audit finding, Archuelta County Board of County Commissioners Chair Clifford Lucero called the finding four years in a row “unacceptable,” asking how to fix it and who would be responsible.
Kim Temple of WSBA pointed Lucero to Finance Director Diane Sorensen’s corrective action plan included in the audit document, adding that it would have to be a countywide effort to increase awareness and internal controls.
In a step toward bolstering internal controls, much of the county staff recently attended internal control training sessions with an outside consultant.
Wilshau added that the overspending at the root of the problem, “wasn’t just willy-nilly spending” and said that some of the problem would be automatically alleviated by the next audit due to changes in county structures (for example, completing the process from being partially self-insured to joining an insurance pool, and reporting Housing Authority funds differently than was done in 2010).
Lucero then asked how Archuleta County compared to other counties audited by WSBA, to which Wilshau and Temple responded that the structures and assets in each county made comparisons difficult, adding that comparisons would have to be calculated based on specific criteria, for example, comparing the number of Road and Bridge employees to the number of lane miles.
Continuing his questioning, Lucero asked what Wilshau and Temple considered to be the county’s strengths and weaknesses.
“Upper management staying consistent,” Wilshau responded, referring to the county’s high turnover rate in recent years, adding, “If you can keep your upper management layer consistent and strong, I think that’s your strength.”
Later in questioning Wilshau and Temple on the audit, County Attorney Todd Starr asked the auditors to identify two or three priorities for the county’s financial health.
Wilshau responded that her first priority was the cash reconciliation, adding, “The cash here has been such a challenge.”
Further discussion included the county’s improvement in correcting last year’s findings dealing with the Human Services Fund, and the auditing future with WSBA in terms of contemplating of the benefits of remaining with WSBA due to familiarity or contracting another firm with “a fresh set of eyes.”
“Certainly, the times have been interesting, to say the least,” County Adminstrator Greg Schulte said near the end of the meeting.
Other audit facts presented at the meeting focused on the county’s change in assets and liabilities, as well as the 2010 budget actual data.
According to the audit, the county’s assets exceeded liabilities by roughly $36.6 million in 2010 for governmental activities, with $52.3 million in total assets and nearly $16.3 million in total liabilities.
The county also increased its net assets by $612,454, Temple said.
For Solid Waste, the county’s only business-type activity, assets exceeded liabilities by roughly $590,000, with over $1 million is assets and $454,000 in total liabilities.
The net assets of Solid Waste decreased by $96,254, partially because of equipment that was accounted for in both Solid Waste and Road and Bridge, Temple said.
The BoCC closed the meeting with unanimous acceptance of the audit.