At a meeting of the Goochland Finance and Audit Committee
held on the morning of December 3, Mike Garber and Andrea Nichols, representatives
of the county’s outside auditors PBMares (https://www.pbmares.com/)
reviewed the annual certified financial report (ACFR) for FY25, which ended on
June 30, and discussed other financial issues. Garber presented the ACFR to the
board of supervisors during its afternoon meeting.
The Committee is comprised of three supervisors, Jonathan
Christy, District 1; Tom Winfree, District 3; Charlie Vaughters, District 4;
County Administrator Dr. Jeremy Raley; and the director of finance. Dave Wilson
is serving as interim director of finance while the county recruits for that
position.
The Committee last met on August 5 for the kickoff of the
annual audit process when the work schedule for the audit was discussed. The bulk of onsite testing that included various
layers of review and quality control for accounting and data collection was scheduled
to begin in September.
On December 2, Garber reported that PBMares will issue an
unmodified—clean—report for Goochland’s FY 25 financial statements, well in
advance of the state submission deadline of December 15.
However, Garber said that some material weaknesses were
identified in the audit process earlier in the year at the county level that did
not include the school division or economic development authority. These errors
were adjusted so that the final numbers are correct. No evidence of fraud or
illegal acts was detected. The issue was one of policy execution focus, or lack
thereof, at the “staff base.” After
several years of glowing audit reports, this was disconcerting.
“Most of this had to do with just being prepared for the
audit when we (PBMares) got here. Once we dug into some numbers and looked at different
things, there were adjustments, which is unusual for Goochland," said Garber.
For the past several years, annual ACFR reports from the auditors commended the
finance department and all county participants in the audit process for attention
to detail and thoroughness of preparation.
When these discrepancies were discovered, Garber said that
he “pivoted” to Raley. “The real comfort is that this is being addressed to
make sure that we go right back to everything we were doing before which is
clean, no deficiencies, nothing noted.”
There were “significant” adjustments in the capital projects
fund. “It’s part of our job not to just gloss over this but to make sure that
we have pointed out to this group what those adjustments have been,” Garber
told the committee.
“The governance is still sound. We now need to make sure
that what we are doing is the blocking and tackling (GOMM told you there would
be sports analogies) to go right back to the standard,” said Garber who
contended this is achievable is short order.
Multiple entry errors, exacerbated by lack of a third
quarter review of reconciliations, were further complicated by
“compression”—too few people trying to do to perform too many complex tasks in too
a short time—caused the issue.
Wilson contended that a third quarter review and reconciliation
can identify entry errors. “Most of this is communication, just sitting down
and looking at things that just don’t make sense.”
He said “We’re going to track what we do and how we do it to
make sure that we reconcile these accounts and look at these accounts
constructively to see if something is really out of whack that we should look
at before handing it to the auditors. The objective of the finance department
is to hand a clean audit to PBMares.”
Garber reassured Winfree that the bottom-line figures used
by the supervisors to make financial decisions last year were sound. Failure to
examine some of the entries to see if they made sense contributed to the
misstatements. The errors included not recording activity in some accounts and doing
it twice in others.
The school division and Treasurer’s office were doing what
they needed to do with reconciliations throughout the year, said Garber.
County finance staff is embarrassed about the situation and
very focused on making sure that it doesn’t happen again, Raley said. He
contended that going forward, the key to avoid a repeat of the situation is to
ensure that quarterly reconciliations are completed to make sure that the
finance department prepares for the audit throughout the year. As financial
reporting standards and county finances grow ever more complex, it is vital to
build staff ability to understand and comply with them.
Raley, Garber, and Audit Committee Chair Vaughters, who was
also involved in identifying and rectifying the misstatements, contended that
the issue was a “one off” and pledged that measures have been taken to ensure
that it never happens again.
Happily, this situation was identified and fixed in a timely
manner.
