Mayor and Council
I appreciate the time given me to present my concerns this evening. As you may be aware, I am disappointed in how the city has been operated for some time. I think much of this disappointment is because some in government are not informed and aware of their responsibilities. Some appear to have mostly operated as a rubber stamp when stronger personalities were present.
In that regard, I am attempting to help the council understand that it is the council that is responsible for the audit. If the auditor is not reporting to the council, both the auditor and the council are failing but the council is responsible for the failure of the auditor for not understanding the role of the council in the audit process.
Attached are my remarks from this evening’s meeting. I am available to respond to the questions or comments you may have.
Remarks from March 1, 2022:
Thank you, Mayor and Council, for your time and attention this evening. I have some prepared remarks about the city’s annual audit, will be brief, and welcome any questions or comments after I finish.
I am a Mississippi CPA and formerly a regulator of auditors at the Public Company Accounting Oversight Board where we essentially audited the auditors worldwide. We did not always see good quality audits and many instances of bad audits were identified. But some correlations could be drawn between bad audits and bad oversight of the auditors.
The auditor has the city council as its client. Not the CFO, not the mayor. The city council alone is charged with hiring and firing of the auditor. During the audit process, the city council, or its designee outside of management, should be in regular contact with the auditor to make certain management facilitates a smooth audit.
Management is supposed to be responsible for the preparation of the financial statements and discussion and analysis–not the auditor. If not competent or for other reasons management is unable, the financial statement preparation role should be hired out or the accounting personnel upgraded. That will allow the auditor to be as independent as possible.
There are several recommended best practices from the Governmental Finance Officers Association that the city has not implemented. The first best practice is forming an audit committee to assist the council with oversight of the auditor. While the city council alone is charged with oversight of the auditor, the council can help itself perform that oversight by establishing an audit committee that includes financially savvy individuals, ideally a CPA with audit experience, that is apart from city government management.
The next best practice is to have financial statements that meet and exceed the minimum requirements. The past financial statements may meet the minimum requirements, but important information is omitted that could make the information more relevant. The city should consider preparing an Annual Comprehensive Financial Report rather than just basic financial statements. Alternatively, the relevant information could be added on a perceived benefit basis.
Given that the city no longer has a debt rating, the need for additional information is even more important. Some of the additional information could include current debt capacity versus current debt outstanding, and a 10-year statistical section with trends in financial, economic, demographic, and operating information. Some of this statistical information could include government employment levels, capital asset statistics, and identification of important employers and property owners in the city. The statistics allow data to demonstrate whether the city is getting worse or better over time. Other cities of similar size present this type of information. Peter Druker of business management fame is quoted as saying “If you can’t measure it you can’t improve it.” The city needs to be run on data and not just feelings.
Another best practice is timely financial reporting. Currently, the city does not have the audit for the September 30, 2020, fiscal year end. Perhaps more alarming, the city council has not issued requests for proposals for the 2021-year end. The city council not engaging an auditor on a timely basis will certainly result in an untimely audit. Engaging an auditor prior to yearend demonstrates a greater level of planning and responsibility. An audit that is not provided timely is of little value.
Timely financial information is considerably more relevant than stale financial information. Currently the city council appears to be making financial decisions with no relevant information. Deciding to do nothing is still making a decision. The time to make decisions leisurely is past. The time for emergency, definitive action is now. I and others in Columbus are asking you to do your job and, if not well, at least do the minimum required by law. You must move forward with engaging a qualified firm to conduct the annual audit for 2021 and 2022.
My concerns are motivated by fair financial reporting, integrity in the audit process, integrity in the administration of the city of Columbus and all with the goal of making my hometown better. So, we are asking you to take responsibility for the annual audit, form an audit committee, hire a qualified CFO, prepare an Annual Comprehensive Financial Report, and Request Proposals for the 2021 and 2022 annual audits. Only by doing things both correctly and together will Columbus be better.
Will Sanders
