After first clean audit in 4 years, Buncombe County again has 'significant deficiency'

ASHEVILLE - After last year's historic clean audit following four years of significant findings of corruption surrounding the scandal of former County Manager Wanda Greene and its fallout, Buncombe County's most recent financial audit from Minnesota-based auditing firm CliftonLarsonAllen made a finding of a "significant deficiency in internal control."

A presentation to county commissioners Dec. 5 by Christopher Kessler of CliftonLarsonAllen, which has been performing Buncombe's audits since 2018, made the finding in a single audit looking at federal Coronavirus State and Local Fiscal Recovery Funds, citing a missing documented verification of a vendor’s suspension and debarment. However, the finding is relatively minor, Kessler said.

"I don't mean to diminish a finding, but it is fairly small in the scheme of everything else that was going on in the financial statements," he said.

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Single audits, he explained, look primarily at compliance with federal and state guidelines around grant money. The issue has already been resolved ahead of sending compliance documents to the federal government, Kessler said, and processes have been put in place to ensure the same problem does not happen again next year.

"When you look at that and have a significant deficiency, the wording sounds maybe a little more intense than is intended, but there is no lower level of documented finding within the compliance testing, and when we have a compliance item, there is no wiggle room," Kessler said. "We have to put it in writing, its very black and white within the standards that we operate under."

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The Coronavirus State and Local Fiscal Recovery Funds grant was one of the two identified by Kessler as newer and "hot" programs, compared to the other four programs looked at during single audits that are more "normal."

The rest of the audit showed no reported findings for the 2022 fiscal year in the financial statement nor the state funds single audits, but some minor suggestions were made verbally to county management about financial management best practices.

"We need to thank our CFO Don Warn, his staff; (Dan) Keister, internal audit, and his staff along with our county manager and all the department heads because this is really an all hands on deck process," County Commissioner Al Whitesides said at the meeting.

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According to a slide showing the highlights of the 2022 fiscal year, which ended June 30, the county has a total fund balance of $124.3 million, with $74.1 million of it unassigned and free from any kind of restraint.

"That's a very healthy percentage of your total fund balance and of your total expenditures on a year-to-year basis, so you all are in good financial shape there," Kessler said.

Revenues were $13.6 million over budget, and expenditures were $18.8 million under budget, leading to an increase in fund balance of $7.7 million compared to the expected decrease of $27.7 million.

During the audit, Kessler said county management was cooperative and helpful, and that the auditors had no disagreements with management. County commissioners voted unanimously to accept the audit.

"We ask a lot of questions, we ask for a lot of information, in performing an audit of this size, so it is a big lift for the finance team and everybody else involved to get us the information that we ask for," he said. "They allow us to come in and complete our work efficiently and effectively and be here today presenting to you all."

The external audit is separate from the internal audit process, led by director Keister.

Because of delays caused by the COVID-19 pandemic, fiscal year 2021's financial audit was not presented until March 15, past Citizen Times reporting shows. That audit was the first in four years to not have a finding.

In the fiscal year 2018 audit, past reporting shows there were six material weaknesses over financial reporting, nine significant deficiencies over financial reporting, one instance of noncompliance and three significant deficiencies over internal control and compliance.

This was the year after Wanda Greene retired as county manager after nearly two decades, on June 30, 2017. Shortly thereafter a federal investigation began into Greene's financial dealings, which led to her indictment on embezzlement, money laundering, fraud and other charges for which she continues to serve a 7-year prison sentence.

Those numbers dropped in 2019 to one material weakness over financial reporting and two significant deficiencies over internal control and compliance.

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By the 2020 audit, only one significant deficiency over internal control and compliance was found, similar to fiscal year 2022's audit.

"I'd like to say, this is a lot better (than) when I started on the audit committee in 2017," Whitesides said. "We've come a long way in thanks to our employees, to our staff, for doing an excellent job to get us where we are today."

Christian Smith is the general assignment reporter for the Asheville Citizen Times. Questions or comments? Contact him at RCSmith@gannett.com or 828-274-2222.

This article originally appeared on Asheville Citizen Times: Independent auditor finds Buncombe County deficiency in financial audit