Fate audits behind; city has money to operate

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May 1, 2009

Leslie Gibson The Zope Gazette Fri May 01, 2009, 07:49 PM CDT

Audits in the City of Fate are behind, but the city has money with which to operate, said Fate city manager Vicki Mikel.

“First, let me say that the City does have money to operate with. The problem is that we are not 100 percent sure if the money sitting in the general fund belongs to the general fund, or if the money in the water fund belongs to the water fund, or if the developer deposits are recorded correctly,” she said.

“The last completed audit I have is for fiscal year 2004-05,” said Mikel, who has been city manager for five months. “That leaves 2005-06, 2006-07, 2007-08; it’s actually three years, but will be four if we are not caught up by September 2009.”

Each audit is dependent upon the previous year’s audit, so any long-term delay impacts future audits; hence the concern that the 2007-08 won’t be received in time for the council to budget for the 2009-10 fiscal year. State law requires that an audit be on file with six months of the end of the prior fiscal year.

A fiscal year is from Oct. 1 to Oct. 1.

“We are currently operating on current-year revenue and not obligating any funding from the reserves, except for Blackland Road,” Mikel said.

Capital projects can not proceed until audits are done.

“Once we determine through the audits that all funds are accounted for correctly, then we can move forward with capital projects. The lack of audits prohibits the city from seeking financing for projects such as street improvements, water storage tank, etc.,” she said in an April 22 interview. “Normal procedures when seeking financing for these types of projects is that the city will need to show audited financials for the prior three years.”

The audit for 2005-06 is a stickler, she noted.

“As the auditors were working on the 2005-06, there are items that have to be put on schedules and reports in order for the auditors to audit the information,” she said. “If the auditors put the information together, that would put them in the position of auditing their own work. To alleviate this concern, the City has obtained the services of an independent CPA to prepare the reports and locate the supplemental information. We hope to have this process completed soon.”

The audit for 2004-05 is “clean and unqualified”, the best opinion an audit company can render on city and county audits.

That audit was presented by Jeff Weyandt, of Fox, Byrd & Company of Dallas, to the Fate council at its April 7, 2008 meeting.

David Hill, it turned out, was serving his last meeting as mayor, having served for five years. He went on to lose the mayoral race on May 9 to then councilman Bill Broderick.

But that night, Hill was mayor, and after the auditor’s presentation, Hill spoke to Weyandt.

“We discussed that 2006 and 2007 will be done before the next budget season. That’s a tall order,” Hill said.

“Yes, it is,” Weyandt said.

Hill then asked if the city needed to make internal changes.

Weyandt said that “ideally” a city would have separate custody, recording and reconciling of finances. “That’s more responsibility than you would like to see in the hands of one person,” Weyandt said, which was then the case in Fate. “As a city in process of getting new staff, you will have the resources to do different things,” Weyandt added.

At that time, the audit company’s findings were that the city’s fund balance was a little over six months — “excellent” Weyandt said.

Hill was asked by the Herald-Banner in a recent interview about the late audits. “I couldn’t get the city manager or council to move on the audit,” he said.

He pushed Fox, Byrd & Company of Dallas, hard, he said, to get the audits done, particularly after then city manager Gerry Boren resigned in July 2007. “I finally told him (auditor) you put more people on it and you do whatever you’re gonna do and bring us that audit by the first of April 2008, and the next one by middle of June.”

At that time Hill expected the third one in December 2008, which would have allowed the 2007-08 audit to come in on time in May of 2009.

Audits were the city manager’s responsibility, Hill said. Hill said that after Boren’s July resignation, he was accused in August of using the city attorney and city consultants as my own private staff. “I was doing what I was instructed to do by laws of State of Texas. I was chief executive officer of the city,” Hill said.

Broderick has noted that Fate was then a general law city, which meant Hill as mayor was the chief financial officer. He said Hill did not keep the council informed, and that he “used the city consultant and city attorney as his private staff and tried to run the city on his own.”

Boren, a former mayor, was hired in 2002 as city manager. The city had two interim city managers before hiring Mikel who started work in November 2008.

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