BY JENNIFER CABRERA
A March 10 memo was sent by Claudia Rasnick (Gainesville Regional Utilities Chief Financial Officer) and April Shuping (Partner, Carr Riggs and Ingram) to Gainesville Acting City Manager Cynthia Curry and Chief Administrative Officer Acting GRU Tony Cunningham showing that the financial irregularities on the General Government side of the City of Gainesville are even worse than previously reported.
Curry hired CRI in early January to help stabilize the city’s accounting division and prepare for the fiscal year 2021 external audit. CRI recommended bringing in GRU Finance employees, including Rasnick, to provide support. in leadership and management, and it started in mid-February.
The audit committee, which then consisted of Mayor Lauren Poe, Pro Tem Mayor-Commissioner David Arreola and Harold Monk, CPA, CFE, heard from the state auditor general on Jan. 11 about material weaknesses that n had not been corrected for four consecutive years. . Since that date, Mayor-Commissioner Pro Tem Reina Saco has replaced Arreola on the committee.
A summary of the internal memo from Rasnick and Shuping was on the agenda for the April 20 audit committee meeting, but the full internal memo was not released by the City and had to be obtained. through a public records request.
The full internal memo can be read here, and it includes the following statements, among many others:
- “Every external audit of financial statements since 2018 has identified internal control weaknesses that remain unaddressed.”
- Weaknesses in internal controls can lead to material weaknesses going undiscovered for years; a material weakness “is often calculated in the range of hundreds of thousands of dollars for a city-sized entity”.
The note underlines the following statement and repeats it at the end: “At the heart of each issue is the fact that those responsible for GG’s finance division and accounting division had no significant prior experience in issuing audited financial statements or performing accounting transactions. correct and accurate in a government environment. This is… the direct result of the decisions and oversight of previous City leaders.
The “previous city leadership” appears to refer to former city manager Lee Feldman, who was hired in October 2019 by a unanimous vote of the six commissioners present. Commissioner Adrian Hayes-Santos was absent, but Mayor Lauren Poe, Commissioner David Arreola and Commissioner Harvey Ward all voted to hire Feldman. Poe, Hayes-Santos and Ward all voted to retain Feldman in November 2020 (Arreola voted against the motion) after receiving an equal opportunity report finding he retaliated against acting CFO Diane Wilson. Feldman resigned on September 13, 2021.
The internal memo regarding financial reporting issues at the City also noted significant turnover in the accounting division and delays in hiring replacements.
“Serious and substantial elements”
Some other “serious and consequential elements” are:
- As of March 2022, 17 months of bank reconciliations have not been completed.
- No monthly exercise has been closed in 17 months: “The risk of significant deviations is extremely high.”
- “It is not possible to determine the budget against the actual figures for the last 17 months. The risk of overspending is extremely high.
- “The financial records for fiscal year 2020 do not agree with the audited financial statements.”
- “Initial fund balance [for Fiscal Year 2021] does not match the closing fund balance for fiscal year 2020.”
- “Fiscal 2021 has no closed months.”
- “Significant write-off adjustments” may be required to complete bank reconciliations for all months in fiscal year 2021.
- The “retirement expenditure in all general government funds… [is] incorrect by large amounts.
- The financial statements necessary for the preparation of the mandatory information on the pension plans were not available.
- The GRU might not be able to publish financial statements within the mandatory deadlines.
- Reports on federal funds used by the Gainesville Police Department were at risk of not being released within the mandatory timelines.
- “Purvis Gray’s external audit has provided a checklist of items required for external audit of financial statements. There are 222 items on this list and, to date, none have been completed.
The memo notes that a mid-year rollout of the Workday system of record added to existing reporting issues. Many financial reporting and recording functions were not properly moved to the new system, and the mid-year changeover now requires a large amount of manual conversion to upload nine months of data into the new system.
“[T]there is no quick fix or easy solution to these problems. »
The memo notes that it will take a long time to resolve all of these issues: “They have grown over the past five years and have been allowed to continue and worsen by former city leaders… [T]there is no quick fix or easy solution to these problems. The memo indicates that the focus for the next 12 months will be on triaging 2021 and 2022; the hope is that a “stabilization base” can begin in 2023. “The audited financial statements for fiscal year 2022 may not meet the March 2023 deadline.”
At the April 20 audit committee meeting, Shuping reported on progress since issuing the March memo, including filing many of the mandatory reports mentioned above. She said most transactions are currently recorded correctly, but there is still a lot of work to go through the source documents to correct previous months and years. Shuping said, “The money is not going to run out. It’s just hitting the wrong account. It is a disentangling process.
City will miss reporting deadline for fiscal year 2021
Shuping also said the city will miss the June 30 statutory reporting deadline for audited financial statements, but they hope to have them completed by September 30 and are contacting the auditor general’s office. “You will not be the first government to have failed; you won’t be the last government to miss it… It’s not great, but it happens. She said the city is unlikely to get a clean audit until 2023.
Poe told Shuping that the city commission had unanimously agreed that this would be “one of our organization’s top priorities” and that resources would be made available to complete the task.
During public comments, Nathan Skop told the committee that “this is a critical issue that has not been adequately addressed… The fact is that the Mayor and the City Commission of Gainesville have the fiduciary duty to provide effective oversight of the management of municipal government. The Mayor and City Commission of Gainesville have negligently failed to provide effective oversight of the management of city government, as evidenced by the findings of the state audit in this memo, dating back several years. There are always excuses. Accountability begins at the top of any organization. The municipal commission and the mayor are the heads of the municipal government.
Armando Grundy-Gomes pointed out that a month had passed between the distribution of the note and its discussion at a public meeting: “If your house is on fire, are you going to wait a month to call the fire brigade?” He said the memo contained plenty of “finger-pointing” about past administrations, but no discussion of why the acting city manager was unable to fill vacancies.
Poe claimed that the commission asked staff “from the start” to brief them on anything they needed to resolve the issues, and “so far, throughout the work that has been done, there has been no there was no discovery of missing money, any wrongdoing or fraud or anything else.” The committee voted unanimously to receive the report.
During a general public comment, Jo Beaty said that when the state audit was announced, Poe and others dismissed it as unnecessary. At the time, a letter from Poe stated, “The politically motivated nature of this request is palpable.” Poe also claimed that the letter from State Senator Keith Perry and State Representative Chuck Clemons, requesting the audit, contained factual inaccuracies. Beaty asked committee members to discuss the memo at their full city commission meeting the next day instead of putting it on the consent agenda.
Poe said, “Are we spending money we don’t have? I would like to know how this trick works.
“To answer the specific question of whether we are spending money we don’t have: when the accounting records are not complete and have not been reconciled, it is difficult to say with certainty that the budget n has not been exceeded.” – Claudia Rasnick, CFO of GRU
Rasnick replied that everyone was working very hard to complete the reports and financial statements. She continued: ‘To answer the specific question of whether we are spending money we don’t have: when accounting records are not complete and have not been reconciled, it is difficult to say with certainty that the budget was not exceeded.”
Poe continued to insist that there is no evidence the city is spending money it doesn’t have.
Executive summary removed from City Board consent agenda and continued until next regular meeting
The topic came up again at the April 21 City Commission meeting, when Commissioner Cynthia Chestnut requested that the memo be removed from the consent agenda and placed on the agenda for the future municipal commission. Poe emphasized that this was not an action item, just an update.
Saco said, “As you said, Mr. Mayor, this is just a memo. We have discussed this with the audit committee. These are open to the public, open to all Commissioners. It’s literally a memo that we need to receive. I don’t know why this needs to be put on the regular agenda or continued for that matter… Accept it and move on, and we’ll get our regular quarterly updates on the ongoing situation.
The committee voted 6-1, with Saco disagreeing, to continue this item at their next regular meeting on May 5.