New Roads audit notes budgeting, oversight problem areas

An audit report released Monday cited the city for spending about $500,000 more than originally budgeted in its 2012 general fund without amending its budget.

The audit report, prepared by New Roads accounting firm Major, Morrison and David, also criticized the city for not adhering to several stipulations in the state’s Community Development Block Grant Program and lacking proper oversight for several financial transactions.

“I’m happy with the report,” Mayor Robert Myer said. “Overall, we’re pleased with how we managed the money. We’ll just continue to pay more attention to detail.”

Auditors said the city overspent about 9.5 percent of its projected expenditures in its general fund in 2012.

State law restricts municipalities from exceeding their total budgeted expenditures by 5 percent or more without amending their budgets.

The city spent $5.9 million from its general fund in 2012 in spite of projecting approximately $5.4 million in expenditures, according to the audit.

Inaccuracies were discovered in the city’s general ledger because of two improper budget notations regarding the construction of Memorial Boulevard, the city’s new business corridor.

Auditors also said the city needs better oversight of credit card use within its departments, after discovering several credit transactions lacking receipts.

The audit report also noted the city failed to submit preliminary change orders to the state for approval prior to granting contractors additional time to finish several projects.

Oversight shortcomings were also noted in the city’s violation of another CDBG stipulation requiring grant funds be expended within three working days of their deposit into city coffers.

The city didn’t expend nearly $50,000 in CDBG funding until four working days after it received the grant from the state, the audit report states.

The auditors suggested the city take a more aggressive approach with its cost-cutting efforts because its current rate of spending is rapidly depleting its savings.

“Projects being completed, specifically the Memorial Boulevard project, are estimated to increase economic development resulting in an increase of tax and license revenues,” the report says. “We recommend caution in undertaking any future projects until it is determined that the estimated increase in revenues will materialize.”

Myer said the city exceeded its projected spending in the general fund because final billing for most of the capital projects hit the books earlier than expected when the projects were completed ahead of schedule.

And Myer said part of the Memorial Boulevard project was coded incorrectly in the city’s general ledger because the project was a mixture of utility and road infrastructure improvements billed jointly by the same contractor.

The mayor said the city has implemented improved oversight procedures to address the concerns raised in the audit.

As for cost-cutting recommendations, Myer wrote in his official answer to the report, “We have reduced personnel in areas where we were overstaffed and have analyzed additional areas where reductions could occur. However, we will strive in analyzing all areas in which costs can be reduced and will take an aggressive approach to reducing them.”