Amsterdam 2019-2020 audit receives unfavorable opinion
AMSTERDAM – The results of the city’s long-delayed 2019-2020 audit were finally presented to the Joint Council on Tuesday, showing that the city has made progress in reducing its budget deficit and cleaning up accounting practices, although the auditors indicated that further action was needed.
RBT CPA Director Linda Hannigan and audit partner Thomas Kennedy on Tuesday presented the Joint Council with a summary of their firm’s findings when conducting the city’s 2019-2020 independent audit.
The auditors issued an adverse opinion on the city’s financial statements that did not follow government accounting standards, which Kennedy admitted city officials were already aware of.
“When you look at the opinion, it’s probably not a shock, it’s what we call an unfavorable opinion. An unfavorable opinion sounds terrible, but that’s because the city is not currently following current guidelines for GAP which requires the value of infrastructure and the assessment of other post-employment benefits. We made recommendations on this, ”Kennedy said.
“I hope in the future we can go down a path where you will receive unmodified opinions in the future, but we have audited everything else and it gives us the best possible advantage,” he said. added.
Apart from the audit and its findings, the city has already received a number of recommendations to update accounting practices and made various corrections to the financial records over the past year on the recommendation of the Office of the Comptroller of the state.
The city is under the oversight of the comptroller and is required to submit quarterly financial reports to the state for review and comment under a 2019 law that allowed the city to borrow $ 7.7 million in 2020 for finance its accumulated budget deficit.
The extent of the deficit and significant accounting issues were discovered by the City’s former audit firm, the EFPR Group, when it was hired to review the City’s 2013-2014 budget. Since then, the city has struggled to put its books in order and unravel past practices to improve its finances.
Although the city has made progress, Hannigan partially attributed the delay in completing the 2019-2020 audit to contrasting practices between the city and RBT, as well as complications created by the pandemic. The city’s fiscal year runs from July 1 to June 30 each year, which means that the fiscal year under review ended almost a year and a half ago.
“I would say the audit, because it was a new audit for the city with us and vice versa, that there were differences in the processes, procedures and expectations,” Hannigan said. “Fortunately, we were able to work together and complete the audit. “
City officials partly attributed the delay in completing the audit to the transition of materials from the EFPR Group to RBT. The 2019-2020 audit is the first that RBT has completed for the city since he was hired last October after Mayor Michael Cinquanti recommended seeking a new auditor in line with the state’s preference that municipalities change regularly. independent audit firm every five years.
Overall, RBT auditors found that the city’s assets grew in fiscal year 2019-20 by more than $ 9.4 million from the previous year to reach $ 47.45 million. of dollars. However, the liability also increased by over $ 16.3 million to approximately $ 56.72 million. Auditors attributed the increase to an increase in the city’s share of pension obligations and funding the deficit the city must pay off.
The city also saw its revenue increase over the year from around $ 3.72 million to around $ 34.67 million. Spending also increased by approximately $ 4.21 million to approximately $ 36.68 million. Due to spending more than revenue, the city had a negative net position of around $ 2 million.
Still, the city has made progress in tackling the accumulated budget deficit to bring it down to around $ 6.6 million. The auditors noted that although the city funded the deficit because the money was acquired through a bond anticipation note, the borrowed funds that must be repaid over time have not actually reduces the deficit.
Cinquanti noted that the audit did look at financial statements from two years ago, and the city has since refinanced deficit financing to an even lower level of $ 6.1 million.
Beyond financial highlights, Hannigan said city officials should focus in part on maintaining records and regularly reviewing actual income and expenses against budgeted numbers.
“There are certain tools that you can use to manage, to find out where you are at with budgeting,” Hannigan said. “This improves the accounting during the year and makes it easier at the end of the year.
When Deputy Mayor and Alderman of 5th Ward James Martuscello asked auditors whether the city should consider upgrading its accounting software, City Comptroller Matthew Agresta said such a move would have little impact on the financial situation. current city or its ability to be improved.
“No matter what system you use, if you put the wrong information in it you are going to take out the wrong information and for four years we put the wrong information in it, so we worked to fix that,” Agresta said. “The more we move forward doing the right things, the better off we will be. “
Cinquanti pointed out that state oversight and the contribution of the new audit firm contributes to the city’s continued efforts to improve its financial situation.
“We are doing better, but we have to keep doing it and improving,” said Cinquanti.
The mayor added that he is eagerly awaiting the 2020-2021 audit that RBT will soon begin, anticipating that the city will see the deficit and debts further reduced in a process that is expected to unfold more smoothly than the mayor. 2019-2020 audit.
“I think we have now reached the point where we understand each other better and we hope that next year’s audit goes very well in terms of process,” said Cinquanti.
Contact Ashley Onyon at [email protected] or @AshleyOnyon on Twitter.