Auditors present their findings

The Loris City Council met on Wednesday, May 22, at 6 p.m. at the American Legion Hall for the express purpose to discuss the audit from the year 2015-16.

Present at the meeting were Joan Gause, Lewis Hardee, Todd Harrelson, Mike Suggs and Jan Vescovi; Terrence Hardee was not present.  Also present was Kenya Wright, city clerk and treasurer and Damon Kempski, city administrator.  Department Heads present were Brandon Harrelson, Tom Cocke, LPD Chief Gary Buley, LPD Lt. Larry Williams and Samantha Norris.

The meeting began with a prayer by Todd Harrelson and the pledge of allegiance.  Harrelson introduced Grant H. Davis, CPA and Brian Nicholson with Mauldin & Jenkins and asked them to provide the council with their findings for the one year audit.

Nicholson stated that Mauldin & Jenkins were initially contracted to audit the coverage from December 31, 2015 through June 30, 2016, however the city changed the dates of the audit to June 30 when the fiscal year ends.  Nicholson stated that the year 2014-15 were verified, the last year that David Stoudemire and Martha Dorman were in office.  At that point they began working on the audit for the fiscal year beginning June 30, 2015 and ending June 30, 2016.  Nicholson stated the complications with compiling the report stemmed from missing documentation and records that were inadvertently destroyed.  He said, “We came back in August 2017, somewhere in that time period, I think is when documents were shredded.”  It was reported that there was no documentation to be produced and no back up to support any of the figures in this audit report, it was then the only option available was to file a disclaimer with opinions, though the audit cannot be verified.  Davis said, “Over this time period in order to support the numbers we had to have paper documentation such as bank records, bank reconciliations and a list of outstanding checks and various balance sheet items;”  he continued, “as that information was destroyed there are no numbers or paperwork to support the accuracy of the figures in this audit.” They were unable to apply the necessary auditing procedures related to the amounts.

The bottom line in the presentation is that it closes the books on the 2015-16 audit and deemed complete with a letter of opinion providing corrective measures which have been implemented by the city; one being a back-up system for records, bank statements and other documentation to support an audit.  Other corrective measures addressed in the report are suggestions to improve record keeping for future audits.  The audit for years 2016-17 and 2017-18 should be completed within six months, all records and documentation is available for these audits.

Kempski addressed the concerns of the destroyed documentation he said, “We signed a nondisclosure agreement with the individual(s) which limits my ability to discuss anything more.”  .The person responsible for the shredding of the documentation no longer works for the city. 

Kempski said that the state is withholding funds from the city until the audits are brought current, he said the amount of $15,000 is withheld each quarter the audits are not completed; once the audits are completed and filed the money will be released back to the city in full.  He further stated that once this recent audit was complete, although six months of financials (January 2016 to June 2016) were missing which he said is a “big deal” the next two year audits will be finished rather quickly because we have the necessary information.  “The missing documentation caused the wheels to come to a screeching halt and we were in unchartered waters,” said Kempski, “I’m pleased that we are heading in the right direction.”