BLYTHEWOOD – Gary Bailey, with Love, Bailey Auditors of Laurens, S.C., got to the point rather quickly at council’s meeting Monday night.
“This is a financial statement audit,” Bailey said, “not an operational audit. We’re not telling you how to run the town. We’re basically just coming in and making sure that the numbers you’re presenting each month are accurate numbers and that you can make decisions based on those numbers.”
Bailey praised the town for having good internal controls. “We had no findings,” Bailey said.
That was not the case last year when Bailey told council that the town’s “books were really in a mess.” This year, the town used an outsourced CPA firm as additional controls after last year’s books were, in the words of the auitor, “really in a mess,” and had to use that firm to bring the town’s books up to the level that they could be audited.
During the May, 2018 town council meeting, Mayor J. Michael Ross announced that the town’s books were not in order and hadn’t been for some time. He said the town “has not even commenced the annual audit process for the 2016-17 audit.”
To that end, the town hired the CPA firm of Sheheen, Hancock and Godwin of Camden to bring past year’s books up standard. That audit was presented just seven days before the July 30 deadline when, by state law, the state could begin to withhold state funds from the town.
“It appears this situation has resulted from management’s failure to properly transition to the new accounting software system which was recommended to this council by professional public administrators who then failed to attain implementation,” Ross stated during the May, 2018 council meeting.
Ross credited the town’s newly hired administrator, Brian Cook, for detecting the deficiency very early in his service to Blythewood. Cook was hired last February to replace Gary Parker who retired. Assistant administrator Chris Keefer left her position in June.
Cook said at the time that the town was evaluating how it wants to reconfigure staffing to handle the town’s accounting. He said the 2016 transition from outsourcing the town’s accounting to an in-house system bogged down.
By the July, 2018 council meeting, however, all appeared to be well.
“[Sheheen] did an excellent job,” Bailey told council. “After they took hold of your books, we didn’t find any major issues. The town is in a very strong position.”
Bailey gave the town a stern warning, however, going forward.
“You can see the alternative of not having a qualified person in place [to do the town’s accounting.] Hiring someone without expertise cost you way more than just outsourcing for a fraction of the time that was needed [to get the books in order],” Bailey said.
Bailey said Monday evening that the town now uses an outsourced CPA firm as an additional control which, he said, is really good for a small staff.
This year, Bailey told council the town had zero journal entries which means the town has a nice clean set of books.
Hitting the highlights of the audit, Bailey said the town’s cash balances in the general fund increased to $1.8 million on June 30, 2019 from $1.2 million the previous year. That about a $600,000 increase in cash.
“That’s significant,” Bailey said, “because your operating budget in the general fund is about $1.3 million So you have about a 165 percent of your operating budget in reserves. That’s very strong, financially. You have a very strong balance sheet. It’s mainly cash and a little bit of debt.
“By refinancing their bond last year, council saved the town $113,000 in interest charges in just in one year,” Bailey said.
“On the revenue side, Bailey said, “the town’s revenue was about the same as last year, but your expenses were down $273,000, so again, $113,000 of that was reduction in interest charges.”
The town also had a reduction of about $80,000, mainly a reduction in outside services, such as not using the COG sometimes, Bailey said.
Overall, the general fund had a change in fund balance of about $514,000.
“You’re revenues were higher than you budgeted and your expenses were lower than expected,” Bailey said.
The Manor
“While the Manor hasn’t quite turned a profit yet, the revenues continue to rise. It’s going in the right direction. We do about 30 governmental audits every year in little towns and this is the nicest facility of all,” Bailey said. “It’s a compliment to the town to pull up here.”
