By Cianna Hope Reeves,
JSU Student Intern,
The city’s budget report (audit) currently stands as incomplete after two deadline extensions, and the City Council wants answers.
Jackson’s City Council members held a finance committee meeting with Charles Hatcher, finance director, who has since resigned, and state auditor Scott Hodges of Tann, Brown and Russ Co. Thursday, May 31, to understand why the audit is unfinished leading into the new fiscal year.
The auditors and the city’s finance department are currently scrambling to produce the Comprehensive Annual Financial Report (CAFR) and submit it to the Government Finance Officers Association (GFOA) by the end of June.
Hodges stated the CAFR could have been issued earlier this year, but the lack of information given to the accountants from the finance division slowed the process down.
“We started this process in November and planned to have it done by the end of January, and we are not done yet…If all the information had been ready when we started, we would have been done at the end of January,” Hodges said.
As a new auditor for the city, Hodges stated it is taking the company a lengthier amount of time due to its new presence and the numerous mistakes founded.
“It is much easier to produce an accurate CAFR when you have previous CAFRs that are accurate.”
Hodges said there are major discrepancies from the previous administration that has prevented the budget from being established such as the Water Sewer System and pension liabilities of $29 million.
“The Water Sewer System accounts receivable has not been merged into the financial accounting system. For years, it has been differences and the reasons of those differences are unknown,” claimed Hodges.
He added, “there are other owed balances that are on the financial records, and there’s no history as to where those balances came from or what they relate to, and the same for liability accounts – they grow forward year to year and no one knows who they relate to.”
Ward 6 Councilman Aaron Banks does not believe the inconsistencies should have prohibited the audit from moving forward.
“I refuse to believe that just because I have a discrepancy in the past that I can’t get work done now. I don’t want a discrepancy from one year, two years or five years to become an excuse for getting work done in a timely manner,” declared Banks.
Hodges admitted the City would receive an “adverse opinion,” if the audit was currently completed; this means the financial statements in the audit would have been identified as misstated and pervasive.
“I can’t put my name on something that is not materialistically correct, and that’s a problem,” he said.
Safiya Omari, chief of staff, suggested that the council provide the auditor with appropriate timing to complete a truthful and proper report since he has discovered several failures in the audits.
“You want accurate information, so I would strongly suggest that we give the auditor time to complete the opportunity to do his job properly,” emphasized Omari.
The incomplete CAFR is becoming a hectic battle against time as council members eagerly await to adopt a balanced budget.
In 62 days, a proposed financial plan has to be discussed with the citizens; after that phase, the planning process to obtain a balanced budget for the new financial year begins.
Ward 4 Councilman De’Keither Stamps said the process of producing the CAFR has placed the entire council on a compressed timeline.
“If we are going to present the city audit by August 1, and we don’t have an audit by June 30, we can’t adopt a budget by September 15 because a series of documents have to be viewed and signed before then… we have a lot to do and time is winding down.”
Stamps also recommended that major spending cutbacks occur until the next financial plan to eliminate more problems.
“We need to stop a lot of things until we can get clearer answers and stop major purchases until we can get a clearer picture of our financial position,” he said.
In a weekly press briefing, Mayor Chokwe Antar Lumumba addressed the audit claims and assured actions are in works to repair the prior miscalculated fiscal periods and to obtain a balanced budget by deadline day.
“What we found when we took office were significant discrepancies within the CAFR, and we then went into immediate action to check. We probably could make those deadlines if we had benefits from just punching in numbers, but we are choosing to doing it correctly. We are going to make sure we deliver an accurate CAFR to the citizens of Jackson, so we make certain we have a proper assessment of what our financial standing is.”
Though differences and lack of communication acted as an obstacle in completing the audit, Hodges said he is working toward a report that will benefit the city and is confident that with heavy efforts the CAFR will be finished by June 30, so the City can complete its budget plan.
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