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The City of Selma recently received a nearly 100-page document from Carr, Riggs and Ingram (CRI), the Enterprise-based public accounting firm tasked with providing an independent audit of city financial statements as of Sept. 30, 2018.

Among the findings in the audit, which largely mirror the concerns presented in a report from the Alabama Department of Examiners of Public Accounts earlier this year, were “misstated or improperly recorded” financial statements, unreconciled accounts and a lack of accounting and financial procedures.

At the end of the report is a summary of the key findings and adjustments laid out in the full report, followed by a description of how the city plans to address the issues uncovered during the course of the audit.

According to the report, various financial statement amounts, including accounts receivable, restricted cash, accounts payable, unearned revenues, transactions related to long-term debt, capital assets and more, were “either misstated or improperly recorded at year end,” causing a number of audit adjustments to be recorded.

“CRI noted multiple instances where transactions and/or significant assets and liabilities had not been recorded in the city’s accounting records or were recorded improperly prior to submitting those records to us for audit,” the report states. “Failure to record these items resulted in a significant number of material adjustments to the city’s financial statements necessary for presentation in accordance with [U.S. Generally Accepted Accounting Principles (GAAP)].”

The audit recommended that the city review all transactions to ensure that they have been properly recorded and, where expenditures are concerned, determine that “accounts are appropriate based on the nature of the transaction,” as well as reconcile transactions related to grants and ensure that all transactions have been recorded and posted.

“Due to the treasurer being placed on multiple leave of absences during the past 2.5 years, this process has not been properly supervised,” the report states in relation to actions taken to address the issue. “However, the treasurer and accounting manager will meet with auditors in December 2019 to determine what adjustments need to be properly made. The finance department will make the correct adjustments moving forward during the 2020 year-end close.”

The report also found that two city accounts – the “Due to and Due From,” as well as the “Transfer In and Transfer Out” accounts – were not reconciled during the year and recommended actions similar to those stated previously.

“The city treasurer will work with the accounting manager to reconcile inter-fund accounts on a monthly basis during the 2019-2020 fiscal year,” the report stated as actions taken in response to the findings. “Additionally, the treasurer will seek outside assistance from an independent accounting firm to assist in reconciling prior year balances.”

Beyond improper financial documentation, the report also found that the city “does not have an accounting and financial reporting manual in place” and recommended that a “detailed, comprehensive and instructional accounting and financial reporting procedures manual” be established.

As for actions taken in response to the findings, the report states that a written accounting procedure manual is not available, but “procedures are in place and have been in place since prior to the current treasurer taking office in September 2014.

“The city has maintained a written policy in the past,” the report states in connection to actions taken. “However, the finance department has not been able to retrieve the manual in its entirety. Therefore, the [Selma] City Council’s Finance Committee will work collectively with [the] city treasurer, accounting manager and city clerk during the 2020 fiscal year to re-create a written Accounting and Finance Procedures Manual to include the procurement procedures to present before [the] council for review and approval.”