Audit Update

On March 1 the North Carolina Local Government Commission sent a letter to the mayor with its analysis of the most recent audit, pointing out areas where corrective action is needed.

Of the 23 control deficiencies and material weaknesses listed by our auditor, the Local Government Commission focused on a dozen: four control deficiencies and eight material weaknesses requiring corrective action.

Of the eight material weaknesses, one appears to be partially incorrect. The town was maintaining a fixed equipment ledger. The town manager admits he didn't completely understand what the auditors were looking for. Afterward, when the ledger was found, it proved to be incomplete. That is being corrected. Another material weakness cited - the lack of a contract authorizing the town to act on behalf of Bay River - was recognized by the town board last year. An agreement has been under negotiation since last August. Substantive issues remain.

The remaining six material weaknesses reflect policies and procedures put in place years ago. When the audit was presented to the public, arguments were presented from the floor to the effect that: "we're too small," "it's too much paperwork," "that's a really bad idea," and so forth. The Local Government Commission plainly didn't agree.

Similar arguments were made about the four "significant deficiencies." Again, the LGC didn't agree.

In closing, the letter observed: "Each of the items noted by the auditor was identified to assist the Board in improving the Town's overall accounting system. We urge the Board to develop a corrective action plan immediately and begin eliminating these serious internal control weaknesses."