New Britain’s Late Audit Filed, Not Given to Council, Shows Deficiencies and Greater Debt
The city of New Britain’s long-overdue audit report was dated as filed one day before the Council meeting at which Mayor Erin Stewart told the Council it would be “available” in January. The auditors’ report cites deficiencies and a jump in taxpayer debt.
While the form filed by the city with the state Office of Policy and Management appears to indicate that the City Council was, “made aware of findings and recommendations resulting from the audit,” the Council was not informed.
The audit report, done by Clifton Larson Allen, LLP, was dated as having been filed with the state on December 12th. But one day later, at the Council meeting on December 13th, Stewart told the Council, “The audit is due December 15th. We should have that document in January.”
The audit report, on the city budget year that ended on June 30, 2022, was due in December of 2022 and is nearly a year late, a deficiency noted by the auditors.
The audit report notes that the city’s taxpayer debt jumped by 11% between the 2021 and 2022 budget years, from $292.5 million to $325.1 million, an increase of $32.6 million.
The auditors said they found a, “Material Weakness in Internal Control over Financial Reporting,” because, “The City’s bank reconciliations were not completed for over a year after the end of the fiscal year.”
The reason for that deficiency was stated as, “Shortage in staffing within the finance department and lack of a formal financial close process.” But documentation from the city included in the audit report appears to indicate that this problem was not new. That document notes that auditors also found that the, “City’s bank reconciliations were not completed timely,” during the 2021 fiscal year, and conceded that it was, “not fully corrected.”
In addition, the auditors reported that, “The City did not comply with the Municipal and State Single Auditing Act and Uniform Guidance Reporting Requirements,” noting that state law requires that the city’s audit report be filed within six months of the end of the budget year. The law allows for a six month extension, the auditors said. But the audit was nearly a year late from its December 2022 deadline.
The city’s responses to the auditor’s findings on the deficient bank reconciliation included changes in job descriptions and cross-training to allow more staff to do the bank reconciliations, and that a, “A spreadsheet containing all the different bank accounts has been created to track where each monthly bank reconciliation is…”
On the late audit, the city said it happened because of, “the loss of higher level staff in calendar year 2022 and in this case the Deputy Finance Director, who handled fiscal year end close.” The city said its action to address the problem includes that, “a formal policy will be drafted and distributed to the Finance Staff to ensure each fund’s year end balances are analyzed in a timely manner and can be corrected appropriately.”
The statements say that City Finance Director, Jonathan Perugini, is responsible for taking the corrective actions.
The lateness of the previous year’s report now raises the concern that the report on the budget year that ended in June of this year will be late as well. That report is due this month.
In October, the New Britain Progressive broke the news about a stern letter from the state Office of Policy and Management, on September 12, 2023, with the subject, “Noncompliance with the Municipal and State Single Auditing Act,” because of, “Outstanding and Late FY 2022 Audit Reports.”
The letter, concerning the city of New Britain audit report for the budget year that was from July 1, 2021 to June 30, 2022 said,
This letter of noncompliance is being sent on behalf of the Municipal Finance Advisory Commission (MFAC). Statutorily, the municipality’s June 30, 2022, audit report was to have been submitted to the Office of Policy and Management (OPM) by December 31, 2022, but remains outstanding as of the date of this letter.
At its December 13th meeting, the Council’s Democratic Council leaders, President Pro-Tempore, Ald. Francisco Santiago (D-5) and Council Majority Leader, Ald. John McNamara (D) proposed an ordinance to create a Council Audit Subcommittee.
The new Council Audit Subcommittee would be responsible to, “provide general oversight of finance department functions, including compliance with applicable laws and regulations relating to financial controls, and other related matters.” The proposal is under consideration by a Council committee.
Editor’s note (12/30/2023): The article was corrected to note that the audit report was nearly a year late, not nearly a year and a half late, as the article initially indicated. The audit report was filed nearly a year and a half after the close of the fiscal year it pertains to. Apologies for the error.
