Auditor gives City of Claxton a ‘D’ in financial well being

The Claxton City Council received some troubling details on the state of the city’s finances at Monday’s regularly scheduled council meeting.

Following the unexpected resignation of the city’s former auditor and a slew of financial record concerns, the Claxton City Council recently put out to bid an independent audit to obtain a snapshot of the city monies. Richard Deal of Lanier, Westerfield, Deal & Proctor presented both the FY 2015 audit as well as an analysis of the last three fiscal years audits to the Claxton City Council noting deficits, deficiencies, and losses across the varying accounts.

Deal noted in the FY 2015 audit (July 1, 2014 thru June 30, 2015) that the city overspent by $74,000, while the proposed budget far exceeded the revenue for the fiscal year year.

The natural gas fund showed a loss of roughly $167,000 while the the General Fund owes that account, due to loans, $229,000. Additionally, the General Fund owes the water and sewer account $735,000 in loans from FY 2015. A total of $966,000 is owed from the General Fund to other accounts in the city.

Other notable findings:

• The City of Claxton saw a 57% in fund balances in FY 2015
• Over the last two fiscal years, the City of Claxton’s General Fund account decreased by 67% while taxes increased by $32,000, which is an increase of 30% from the previous period.
• Additionally, fines increased by $11,000
• Claxton also saw an increase in SPLOST funds from Evans County, totaling $106,000.

When pressed for a letter grade by the council, Richard Deal said he would award the city a ‘D’ for their financial state.

Deal said the city should have at least $550,000 in the bank to allow for three months of city operating expenses in the reserves, but currently, the funds for that purpose only total $230,000.

Deal also criticized the record keeping, citing multiple credit card statements that had no accompanying receipts and loans made to other accounts without documentation other than a handwritten note.

In analyzing the past three years, Deal said one of the problems is the city’s negligence in following personnel policy. Current ordinances cap financial allocations of vacation and sick time at 96 hours per year, but Deal noted some employees were collecting 200-300 hours in accumulated sick and vacation time, with one employee going as high as 648 hours accumulated in compensation. An annual accrual is strictly prohibited in the personnel policy and the practice has cost the city an extra $106,000.

Deal said all three of the last fiscal years were graded by the Georgia Department of Audits and all three audits yielded required changes and re-submissions because of errors. Some of the changes included:

• lack of documentation for credit card purchases
• lack of documentation for travel expenses for former mayor Luther Royal and the current city administrator
• Some purchase orders lacked checks
• Some expenditures exceeding $5,000 were not brought before council for approval or sent out for bidding
• At least three employees received a raise over the proposed 3% but the raises did not have documentation in personnel files or in the minutes of council meetings.
• failure to provide interim financial reports and monthly financial statements to council members at meetings
• Having upwards of 23 various bank accounts for everything from the general fund to a recycling account

Check back to AllOnGeorgia Tuesday evening for the full story and audit analysis.