Gainesville leaders approve completed 'clean' audited financial reports following months delay

The city of Gainesville has completed and submitted its annual audit reports for the 2021 fiscal year after scrambling to meet an extended state deadline.

City officials voted unanimously Thursday to accept audited financial statements and several independent audit reports from outside firm Purvis Gray more than five months after its due date.

“This was an extremely difficult process to push through,” said Gainesville interim City Manager Cynthia Curry. “At the onset of my appointment, it was clear that this was a priority based on the state Auditor General’s report.”

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In January 2022, the Florida Auditor General's Office released a 64-page report that scrutinized the financial controls of Gainesville, which included GRU's debt.

At the time, the city-owned utility had approximately $1.7 billion of debt, much of which came from the historic purchase of the controversial biomass plant. That amount is expected to balloon — potentially even triple — over the next three to four decades.

Delayed reports

The fiscal year runs from Oct. 1 to Sept. 30, and the city was required to complete its audit nine months after the close of FY21, which was June 30, 2022.

In September, the city was reminded that it was one of 42 municipalities that hadn't yet submitted its latest required financial audit report to the state. It was again reminded in November that its fiscal year 2020-21 financial report was more than three months overdue.

City officials were then given until Dec. 19 to complete its audit at the risk of losing state funding.

Aside from personnel shortages, Curry said the delay was caused by challenges the city experienced in implementing a new enterprise resource planning platform, Workday.

In June, the city hired Sue Wang as controller, who was soon named the city's financial director after the previous director had become ill and left the job.

Wang said she was challenged with a limited staff while also working between two financial systems, as Workday was implemented nine months into the fiscal year.

“The city manager has called the completion of the (FY21 audit) a milestone, and I wholeheartedly agree,” she said.

Independent findings

The city received a “clean” opinion on all five independent audits, which means that its financial statements were in order and properly stated.

Gray also found that the city was in compliance with the local government investment statute, which mandates that investment activity by the city be consistent with a written investment plan adopted by the commission.

In reviewing the city’s internal controls, however, Gray identified four items that had either “material weaknesses” or “significant deficiencies.”

Those with material weaknesses included bank reconciliations and financial close and reporting.

Gray found that the city had not completed its bank reconciliations in a timely manner last year, which required a significant number of adjustments once reconciled.

In addition, the start of the city’s audit was delayed for several months with most audit areas still requiring adjustments.

Both areas have been an ongoing issue since 2018, according to Gray.

Curry said that the city will continue to grapple with bank reconciliations and year-end financial closing and reporting in the 2022 fiscal year, but that Wang has several people on her staff dedicated to the bank reconciliation process.

“Her staff has buckled down," Curry said Thursday. "I know they’ve worked weekends, they’ve worked holidays. It has been stressful, but they have taken this work very seriously.”

Items marked with significant deficiencies were the schedule of expenditures of federal awards and state financial assistance (SEFA), and the retiree health insurance program activity reconciliation.

Audit procedures identified roughly $11 million of additional grant expenditures to be included in the SEFA, according to Gray’s report. In addition, investment and trust fund activity was not reconciled timely during the year and required material adjustments upon reconciliation several months following the year’s end.

As to these findings, Curry said they have been resolved and should not occur again, citing issues with Workday as the main cause.

“I believe that we are on our way for a ‘22 audit to be finished on time, and that is by June 2023," she said. "And in fiscal ’24, I believe the city will be on a much more solid foundation relative to the underpinnings of its financials.”

Javon L. Harris is a local government and social justice reporter for The Gainesville Sun. He can be reached by phone at (352) 338-3103, by email at jlharris@gannett.com or on Twitter @JavonLHarris_JD.

This article originally appeared on The Gainesville Sun: Gainesville commission approve, submit audit for 2021 fiscal year