Providence City Council members approved two city audits on Monday night, getting the city’s finances up to date for the first time in over a decade, opening the door for the city to apply for Kentucky Infrastructure Authority (KIA) funding needed to address an agreed order between the city and the state dealing with the sewer system.
As to why the city’s annual audits have been behind for so long, the answer is still unclear. Until Monday night city officials had stated that they simply had to wait for the Henderson-based ATA CPA firm to complete the audits.
During Monday’s meeting, which was conducted online over the GoToMeeting app, accountant Malcolm Neel told the council that his firm had to wait on Barry Kington and Utley (BKU), a Madisonville-based accounting firm to prepare documents before they could conduct audits.
“We’ve been doing the city’s audits since 2011, and we’ve never gotten the information until 120 days (passed the state mandated deadline),” Neel said.
While ATA accounting firm is contracted to handle the city’s state required yearly audit, BKU accounting firm is under contract to handle more of the day-to-day book keeping for the city, according to Neel and Providence Mayor Doug Hammers. BKU has been under contract with the city since 2006.
Currently, according to Neel, the city does not employ anyone who can prepare financial statements for the audit, thus the need for the outside firm. That makes the city of Providence unusual, at least in Webster County, where in the rest of the county’s municipalities, city employees normally handle the day-to-day book keeping and preparation of financial statements for the outside auditors.
The 2017-18 audit passed with a 3-2 vote. Councilman Mark Turner voted against approval, and councilwoman Myra Bell voted present. Before the vote on the second audit report, Hammers pleaded with council members to approve the audit so the city could move forward.
“We have a looming agreed order with the state, and we have to get these audits passed so that we can get money from the KIA,” Hammers said. “I know there is a lot of negative in there, be we‘re gonna get through this.”
The second audit passed with a 4-1 vote, with Turner being the lone hold out.
Getting the audits up to date is just one of several issues that was addressed through the most recent audit report. As mentioned by Hammers, the reports revealed a number of issues within the city’s finances, all of which were issues that had been going on for years. They included:
• Lack of review of bank statements by the mayor
• Lack of monitoring of finances at the Providence Municipal Golf and Recreation Center (PMGRC)
• Lack of monitoring of cash payments at PMGRC
• Lack of Inventory Management at PMGRC
• Lack of review of monthly financial statements by the council
•Lack of a formal purchasing policy
•Tourism Budget not submitted to the council for review
•Lack of use of budget amendments
•Lack of timely audits
Neel reported that since taking office at the beginning of 2019, Mayor Hammers had overseen the correction of all of those issues, none of which should be present when the audit report for the current year is made in September.
Among the changes is that the council will begin hearing monthly financial statements, which will hopefully assist them in monitoring the city’s cash flow. Neel cautioned the council that watching those funds was going to be very important moving forward as the city’s operating funds have been getting lower with each audit.
“Be very mindful of your fund balances,” he stated. “You may have to look at cutting expenses.”
The city has also begun using new accounting software at PMGRC, and will be working with BKU on other issues at the golf course and on presenting monthly statements to the council.
Turner pressed the mayor for information about how these problems had been allowed to go on for so long, but only got assurances that the problems had been corrected.
“You have to take into consideration that I came in at the first of 2019,” Hammers stated. “I am taking care of this. My goal is to get what we can accomplished.”
“I’m just disappointed that this has been allowed to go on for years,” said Turner, who joined the council at the beginning of 2019 when Hammers moved from a council seat to the mayor’s office.
Contact Matt Hughes at firstname.lastname@example.org or 270-667-2069.