BAMBERG – Bamberg County has received an unmodified opinion on an audit report that was conducted for the year ending June 30, 2018.
Dawn Strickland of Orangburg-based McGregor & Company LLP gave Bamberg County Council members an overview of the audit during a Sept. 9 meeting.
“We have issued an unmodified opinion on these financial statements for the fiscal year ended June 30, 2018. It means a clean opinion, although balances as stated are materially corrected after we made the audit adjustments for those.”
Councilman Chairman Trent Kinard asked, “Is there possibly a way to get a better audit than what we got?”
“The opinion is a clean opinion unmodified. The improvement would be in the findings,” Strickland said.
Four material weaknesses and four significant deficiencies were noted, she said.
The material weaknesses included material audit adjustments that had to be made to improve the county’s conformity to government auditing standards. It was recommended the county implement policies and procedures that improve the transfer and/or incorporation of the various department’s financial activities into a general ledger system.
This would include the practice of monitoring the transactions to ensure the general ledger for each fund remains in balance and is properly recorded to include all payables and receivables, the audit revealed.
The county responded that efforts have been made to improve the recording, analyzing and correcting and its financial statements, including with a payroll withholding account reconciliation process, and that it would continue to make it a priority over the next fiscal year.
The county said its problems largely stemmed from a “general ledger failure in one of the service packs,” which impacted both Fiscal Year 2017 and FY18. The county also responded that its staff does review revenues and expenditures on the general ledger on a monthly basis.
The second material weakness was the lack of control over capital assets, particularly to ensure that all county-owned capital assets meeting the $5,000 capitalization threshold are recorded in the capital asset system.
The county responded that it now has a capital asset listing that it didn’t have a few years ago and records additions to and deletions from the listing each year. The county also responded that it now uses a fixed asset module to maintain its capital asset listing, resulting in better reporting and less manual calculations, but is also committed to making more needed improvements.
A third material weakness was the lack of adequate internal controls over family court collections. The county was instructed that the balance of monies held in the bank account should be reconciled to consist of the known balances of the fee portion to be paid to the county treasurer and the payments that are due to individuals.
The county responded that a county employee embezzled funds from the office during FY17, with bank accounts not being reconciled in a timely manner.
The county clerk of court has since issued a corrective plan to help mitigate future problems, it was noted. For example, the clerk of court’s office does not receive nor disburse support funds any longer. The office now implements the state’s new automated child support system, with child support funds sent directly to the state for disbursement.
The fourth material weakness involved the improper recording of expenditures and receivables for both the general fund and capital reserve capital projects fund. It was recommended that management review the general ledger for re-classing entries to ensure proper recording of transactions and review receivables for reimbursements recorded.
The county responded that it disagreed with the finding, noting that the entries in question “were made in December of 2018 and were done so because we believe that the county would be submitting and receiving approval for the courthouse USDA loan soon thereafter.” It did not as the county has not yet submitted a $6 million USDA to make courthouse improvements.
The county’s four significant deficiencies included its delinquent sales tax funds. It was reported that funds held in the bank account from past delinquent tax sales consisted of parcels with unresolved balances or deficits owned. The recommendation was that the matter be investigated and resolved so that only correct balances required to be held for the five-year period from the public auction sale date are on deposit.
The county responded that it had implemented a monthly reconciliation process to that funds held in the bank are reconciled to actual tax sale transactions. In addition, the county’s delinquent tax collection is working to resolve the past years’ tax sales transactions.
The second significant deficiency dealt with magistrate court collections. It was recommended that the bank account be reconciled monthly to the receipts collected and the balance held to the funds required to be disbursed.
The county responded that it would meet with the county’s chief magistrate and work with his office to resolve the overages and discrepancies.
A third significant deficiency involved the clerk of court’s office, where several accounts were cited to either hold unidentified overages, or have deficits so that sufficient funds are not on hand to cover all funds to be dispersed.
The county responded it would meet with the clerk of court and work with his office, which has had “substantial turnover,” to resolve the overages and other issues.
The fourth significant deficiency dealt with the county’s purchasing policy. It was recommended that changes to all county policies including the purchasing policy should be brought before, reviewed and approved by council prior to implementation.
The county responded in disagreement, noting in the audit that purchasing policy “while not yet formally adopted by ordinance, was approved by council during a planning retreat not long after the current administrator was hired in 2012.” It added that the county was “justified in using the new policy, pending formal adoption by ordinance, based on state law and council’s approval at that budget retreat.”
The audit’s financial highlights included the county having a total positive net position of $4,907,576, increasing $453,949 over the previous year. The county’s total assets came in at $23,769,331, with total liabilities standing at $21,352,945.
The general fund reported a fund balance of $2,898,202, a decrease from last fiscal year of $410,121.
Also, the county’s governmental fund balance sheet reported a combined ending fund balance of $8,215,949, an increase of $150,114 from the previous fiscal year.
County Controller Gina Smith highlighted several bright spots in the audit during a separate presentation, noting that the county demonstrated good fiscal stewardship by earning an unmodified opinion on its audit.
“It is perhaps the most important measure of financial stability, and it also builds and confirms confidence in management,” she said.
Smith note there was a decrease in general fund revenue because of reduced collections from vehicle taxes, the local options sales tax credit and delinquent taxes.
“But we had other positives in other areas that made up for it,” she said.
The county’s legal debt margin had also increased from $819,768 to $888,982, Smith said.