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Auditor: Tardiness costing city thousands

 

NATCHEZ — Tardiness in bookkeeping is causing problems for the City of Natchez, including a $156,000 late fee to the IRS, an auditor told aldermen during a special-called meeting Tuesday morning.

The bookkeeping tardiness also resulted in the auditor’s report for 2016-2017 fiscal year being delivered nearly a year late, the auditor told aldermen during Tuesday’s meeting of the Natchez Mayor and Board of Aldermen.

Carr Hammond, a certified public accountant with Silas Simmons LLP, said in order to be in compliance with state regulations, the report should have been completed by September 2018.

In September 2017, the general fund had a deficit of approximately $1.3 million, Hammond said, and a citywide deficit of approximately $48,000.

Hammond also said the city needed to reconcile financial records and bank statements more frequently to check for errors.

The city received $156,000 in late fees from the Internal Revenue Service for more than a year’s worth of payroll taxes that were late being sent out, Hammond said.

“During the course of the audit, it was noted that the city failed to make federal payroll tax deposits in April, May and August of 2017,” Hammond said. “In addition, it was determined that the IRS assessed the city with fines and penalties relating to the failure to accurately and timely file payroll tax reporting forms.”

Hammond said the error in taxes could have been prevented with a monthly reconciliation of bank statements, including the city’s two payroll accounts.

“It is our belief that all the accounts should be reconciled regularly and timely, including the two payroll accounts,” Hammond said. “Someone subsequently found out that these tax payments hadn’t been made, but it was several months later.”

Other findings from the 2016-2017 audit resulted from internal control deficiencies or “material weaknesses,” which are management procedures that have the potential to cause errors in the city’s financial records, Hammond said

Hammond said the also city did not split the duties of its financial transactions among different employees.

“Specifically, it was noted that the City Clerk, which at this time was Megan (Edmonds), was responsible for initiating, recording, authorizing and reconciling any transactions pertaining to the fiscal year,” Hammond said. “Ideally, no single individual should be able to initiate, record, authorize and reconcile any one transaction.”

Apart from the timeliness of the recordings, Hammond said no untrue financial records were found.

Natchez Mayor Darryl Grennell said the city hired the Booker T. Camper CPA firm last month to help reconcile the city’s financial records in preparation for the fiscal year 2016-2017 and 2017-2018 audits which cost approximately $40,000.

Since the 2016-2017 fiscal year, the current City Clerk Charles Crump said the city has hired the staff needed to keep the books up to date once they are fully reconciled.

“We have a new accountant and a new accounts receivable and new payroll manager,” Crump said. “So we have the new staff in place to decrease the internal control deficiencies that the auditor mentioned.”

In other matters during the Tuesday’s meeting, the board:

4Unanimously approved requests from Natchez Police Chief, Walter Armstrong, for off-duty officers to work during the Color Natchez 5K on May 4 and the Bishop Gunn Crawfish Boil on May 11.

4Unanimously awarded construction bids to G. Rayborn Equipment for Emergency Watershed Projects in North Natchez, for $380,116. The Natural Resources Conservation Service EWP program allows cities to receive funding for repairs to land and infrastructural damages resulting from erosion and other natural disasters. The North Natchez repairs that were approved included parts of West Stiers Lane, Roundale Street, Lynden Drive, Wheeler Drive and Brenham Avenue.

4Unanimously awarded a construction bid to Dozier Inc. for EWP projects on Cemetery Road for $724,293 contingent upon the city’s approval for additional funding from NRCS.

4Unanimously awarded the construction of a plaza for the placement of the Proud to Take a Stand Monument at the corner of Canal and Jefferson streets to Thorpe Sheet Metal Inc. for $15,615.

4Deferred approval of a 20-year lease agreement with Viking USA LLC to build a docking facility on city-owned lands on the Mississippi River bank until further review. Under the agreement, Viking would pay the city $1 for each passenger aboard each cruise as well require $1 per passenger from any other boats that would use the dock.

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