The Cortland County Legislature’s failure to properly oversee county finances goes back further than the 2017 records a state Comptroller’s Office audit planned to examine. Auditors had to go back to 2012 records, and still found problems dating from a 2004 audit.
A draft of the audit, provided by the county, said the county lacked so much essential financial information, key financial officials and policies and procedures that it should not have been making financial decisions.
“The county experienced significant deficiencies with its records and reports because the legislature did not fulfill its fundamental responsibility of providing oversight and leadership of county finances,” the audit report states.
The lapsed management has its costs. So far, the county has spent $373,500 on audits and experts to help it re-build its records and establish new procedures. The audit found more than $21,754 in 93 outstanding checks dating to 2015. The audit found $346,000 in checks had been double-counted, meaning the county’s cash balance was overstated.
And, on top of that, the state is withholding $19,300 in aid — and probably more in the future — until the county complies with audit requirements.
“This has been a long time coming,” said Legislature Chairman Kevin Whitney (R-Cortlandville) on Wednesday.
The legislature is looking at taking $1.7 million from its savings to balance its budget and keep the levy within the 2% tax cap. It’s not the first time the county has taken from the general fund or reserve funds to balance budgets. Whitney told legislators in his tentative budget that the county will be insolvent within five years if it continues the practice. Other legislators suggest three.
The audit period was originally Jan. 1, 2017, to Sept. 6, 2018, but was extended back to Jan. 1, 2012 “to analyze financial trends.”
The key findings:
- The legislature failed to fill key financial vacancies. A county administrator position has been
vacant 1,572 days — since October 2014. A fiscal manager position has been vacant since December 2015. The director of budget and finance position, now director of finance, was vacant 20 months, since November 2017 and Peggy Mousaw’s departure. An auditor position was similarly vacant for 21 months after it was abolished to create the budget and finance director position and then recreated last August. The treasurer position remains un filled since April, when John Tucker resigned.
- County officials did not address deficiencies identified in previous external and comptroller audits. The Comptroller’s Office said that “many findings” from an audit their office did in 2004 remain unresolved.
- The county lacked appropriate and updated procedures and policies to “ensure complete and accurate records were maintained or that operations were effectively managed,” the audit states. The audit also found that only two committees received financial information from the departments they oversee and the legislature didn’t receive budget-to-actual reports or annual financial reports
- Officials did not maintain adequate records and reports, including filing an annual update document with the Comptroller’s Office on time, which threatens state aid. The 2017 document was 519 days late.
“Officials have a history of not filing the AUDs on time and the 2015 ad 2016 AUDs were led after the deadline,” the report stated. The deadline to file is 120 days after the close of the fiscal year.
The comptroller gave three key recommendations:
- “Fill key financial positions within a reasonable timeframe.”
Andrea Herzog was hired in July as director of finance, said Whitney in his response. A manager of audits and projects and the assistant director of finance position were both hired in September.
Three unpaid deputy treasurers now handle that office’s duties until a new treasurer is elected.
No candidates filed for the office, but four people are campaigning for write-in votes.
A search committee created in December has been working since January to find a county administrator.
“It is unknown when the administrator search committee will make a recommendation to the Legislature for consideration,” Whitney said.
- “Address deficiencies identified in previous audits to ensure the accuracy of the account records.”
Whitney said that Herzog is reviewing the county’s 2019 financial information and that in 2020 she plans to review the budget variance monthly.
“Regarding external audit findings, all findings reported by the external auditors will be reviewed by the director of finance with the Budget and Finance Committee and corrected as soon as possible,” Whitney said.
The county has spent at least $373,500 working with ProNexus, LLC, Bonadio Group and EFPR Group to get financial records in order, complete audits and create procedures and policies.
The county is still completing the year-end external audits for 2017 and 2018. They are anticipated to be done by Dec. 31, Whitney said.
“Due to the condition and disarray of those records the process has taken considerably longer than anticipated,” Whitney said.
- “Update and/or develop policies and procedures to ensure the legislature and county officials are provided with accurate and complete financial information.”
All committees that oversee departments will receive monthly budget reports that Herzog reviews, Whitney said.
County employees are being trained on the “proper use of the county’s financial software system and specific accounting functions.”
Whitney said now that the proper finance people are in place, the county is on track to begin fixing the financial problems it has.
“People have got to be patient and give them time,” he said.