Kicking the can

Though the Town of Saratoga is well into the Fiscal Year 2021/2022, work is continuing on the audit for Fiscal Year 2019/2020.

During the October 19 meeting of the Saratoga Town Council, Mayor Creed James informed the rest of the council the audit had been “a lot more in depth” than the auditors-Fagnant, Lewis & Brinda-had originally anticipated. Due to the increased amount of work, Tim Fixter of Fagnant, Lewis & Brinda had submitted a change order as it was believed it would require an additional $7,000 to $12,000 beyond the original engagement of $27,500.

The letter stated if the firm were to come in under the amount, they would not bill for the full amount in the change order. Additionally, the amount of $7,000 to $12,000 was an anticipated 50/50 split between the firm and the Town of Saratoga.

“We greatly appreciate everyone’s help thus far and everyone has been doing their honest best to locate information for us but it has taken more time than initially thought and seems like every audit section has multiple problems that have to be overcome,” wrote the auditors in a letter to the Town of Saratoga. “Additionally, with the personnel changes that have taken place we have had to perform a significant amount of ‘digging’ to try and find the information necessary to complete documentation and comply with standards.”

In addition to the letter, an email from Fixter to James went into further detail on the issues faced by the current auditors. Both were provided to the Saratoga Sun following a public records request.

“There are numerous holes in the beginning balance testing that we have had to back into to get comfortable. Things like procedures and policies should have been documented better and I just don’t think your past firms coached the Town the way they should have,” wrote Fixter. “It seems like many of your past audits sort of ‘kicked the can down the road’ on some issues … especially with the fund balance.”

Fagnant, Lewis & Brinda are the third auditing company to have engaged with the Town of Saratoga in the past three years. Last year, the Town had been engaged with Carver, Florek & James for the audit of Fiscal Year 2018/2019. During that same time, the Town had engaged with a third-party accountant, James Childress of Childress Accounting and Consulting. While that engagement began in September 2019, it effectively ended December 2020.

Following the retirement of Town Clerk Suzie Cox at the end of December 2020, Carver, Florek and James expressed hesitation in engaging with the Town of Saratoga for a second audit. That hesitation, according to then Mayor Pro-Tem Bob Keel, stemmed from the lack of a mayor, no clear direction on how to resolve problems with the Town’s budget and the need for outside help in preparing financial reports.

After James was appointed mayor, and despite engaging with Stuart Webster, Carver, Florek & James still expressed hesitation about an engagement with the Town of Saratoga.

Prior to Carver, Florek & James, the Town of Saratoga had been engaged with Anton, Collins, Mitchell for multiple years. In fact, the Saratoga Town Council had been engaged with the firm until 2019 when Councilmember Jon Nelson expressed his concerns with the Fiscal Year 2017/2018 audit and pushed for a new audit firm.

In his email to James, Fixter wrote he wanted to work with Webster and dig into detail to try and get the issue of the fund balance resolved. He added he couldn’t guarantee the issue could be resolved even with the change order.

“Full disclosure we will have numerous findings and some level of adverse opinion with the way control testing went. In payroll and expenses testing it just wasn’t pretty but I believe it’s due to the personnel change and poor documentation versus something malicious,” wrote Fixter.

He added it was up to the council if the firm were to close the Fiscal Year 2019/2020 Audit with the adverse opinion or continue digging to try and resolve some of the issues.

“We can also address these for 2021 if you would rather. I presume 2021 will look very similar to 2020,” Fixter wrote. “Closing it very well may be the best option.”

James said after the email from Fixter, the two had discussed the audit further. According to James, it had been suggested the Town of Saratoga complete the 2020 Audit and address the issues of the fund balances in the 2021 Audit.

“With that fiscal year behind us, it’s not like we can go change policy and procedure now and really affect that,” said James.

In the email from Fixter to James, the former provided a recommendation which could be implemented immediately and centered on Town procedures.

“From our testing and questioning of employees it does not appear there are formalized procedures and everyone is doing what they think is best,” Fixter wrote. “Procedures need to be formalized so the employees know the Town of Saratoga’s method. Everything from bank reconciliations to how expenses are processed.”

The Saratoga Town Council will have met on November 2. The next meeting of the Saratoga Town Council will be at 6 p.m. on November 16 at Saratoga Town Hall.