Nothing but blue skies over Richmond? Not yet.
by Jon Baliles
Last week Richmond’s Mayor and Chief Administrative Officer (CAO) reported to City Council that the Annual Comprehensive Financial Report (ACFR) was completed and had been turned in to the Virginia Auditor of Accounts. The report was due in mid-December, but better late than never I guess (and still it was way earlier than Mayor Jones, who tuned them in super-late three years in a row).
The external auditor called in virtually for the brief presentation to Council and went over their firms’ processes and evaluation methods (video starts at 1:03:30 mark) but never referred to any numbers or conclusions; she pointed out that certain figures could be found with corresponding footnote numbers in the report, which Councilors did not have.
After the auditor finished her brief presentation, Councilwoman Jordan had to inquire as to what figures the external auditor was talking about and where could she see them (at the 1:11:25 mark of the video) because the Council did not have the audit report in front of them so they could ask questions. The auditor told her they disclosed what they were required to and that she would be happy to go into the numbers. That’s when CAO Saunders stepped in and told Council the reports had been delivered to each Councilor’s office on Friday. Talk about collaboration and communication.
Councilwoman Lynch also asked the external auditor for the “Top 3 bullet points or risks” from the audit.
The auditor said:
First, improve the City’s financial reporting. The City has been using unrecorded retainage of funds (holding of funds for City projects from contractors that the City has not been showing as a liability on the financial statements); it is a best practice to show it as liability on the statements.
Second, the City is listing too much accounting of spending under the code “miscellaneous vendors;” She said “that code is being used more than we’d like to see and that we see in practice;” it is a best practice in the industry not to be used too often and should only be “used when absolutely necessary and not to bypass any procurement rules.” Exactly no one is surprised by this finding, are they?
Third, she said the cash reconciliation process still needed monitoring and improvement (my words) and that the City was “still working on it” and taking steps to try and improve and correct it. Let’s hope that means we won’t see what she politely papered over, which is the “incident” from December 2021 where the external auditor found a $12.1 million whoopsie in which that amount was subtracted from the City’s fund balance and had inflated the City’s surplus for several years. Mayor Stoney blamed that error on Mayor Jones and the high turnover in the Finance department and said the error had its roots all the way back to 2015 (according to Chris Suarez in the Times-Dispatch in December 2021).
Greg Bussink, of the Minneapolis-based accounting firm CliftonLarsonAllen, which assisted with the audit, said the problem seems to have started around 2017 (Stoney’s first year in office). Bussink told the Times-Dispatch: “What was discovered was there were some older, reconciling items that were carrying forward from some years in the past. It was required to reduce the cash balance and effectively reduce the fund balance and net position for the city’s general fund and then for governmental wide financial statements.”
At Monday’s meeting, the CAO told Council that some the recent problems are because HALF of the leadership positions on the accounting team in the Finance Department are vacant and the other half have been with the City for less than two years. At years end, they were at 57% staffing, he said. So, if high turnover can delay the ACFR in 2015, it also seems that high vacancies can also have a detrimental effect on meeting the deadline.
Speaking of vacancies, they seem to be everywhere. The CAO also mentioned that staffing challenges are a recurring issue in other City departments and that “we need, as a broader Administration, to support” the Human Resources Department in their efforts to help recruit talent for the Finance Department. But if you look at the City’s job web site, there are 20 positions advertised for the Human Resources department alone, which makes their task infinitely harder. The Police have over 150 vacancies; Emergency Communications (911) has a lot; code enforcement, and on and on. It will be worth keeping an eye on the budget when it comes out next month to see if there is any kind of initiative to fill many (or even some) of these positions so the services residents expect and pay for can be delivered. On time.
Republished with permission from RVA 5×5.
