RIO COMMUNITIES—The city of Rio Communities received an unmodified audit from SIT Group LLC, a CPA and accounting firm in Albuquerque, which specializes in governmental audits.
The council approved the audit at a special meeting on Monday, March 29.
Jeremiah Armijo, the senior audit manager for the auditing company, told the council the audit process with the city’s staff went smooth.
While SIT doesn’t audit 100 percent the city’s financials, they make statistical opinions based on the samples they pull, Armijo told the council during a recent meeting.
“Management was very cooperative and collaborative, and there were no disagreements as related to the audit,” Armijo said.
Armijo said an unmodified audit is a clean opinion on the financial statements, meaning that its the best type of opinion a municipality can get. He told the council there were no material weaknesses identified, although there were two significant deficiencies.
The first was a segregation of duties. He said the city had two check signers who have access to the general ledger.
“Typically, these two duties are incompatible because if someone were to do something inappropriate, and they had access to sign a check and have access to the general ledger, they could potentially go into the accounting system and make entries to cover up something,” Armijo said. “Naturally, those two duties should be separated.”
During the same meeting, the council voted unanimously to allow Councilor Josh Ramsell and City Manager Martin Moore to sign checks for the city.
The auditor also found a deficiency in financial close and reporting. He said they looked at the fire department’s records, which showed adjustments required to restate beginning fund balance of the county fire GRT fund and the county EMS GRT fund.
“We found the (revenues) that came in in July and August of 2019 and they were really for fiscal 2019 revenues, but they didn’t get posted last year,” he said. “There really needed to be a revenue and receivable booked last year; however, that didn’t happen.”
Armijo said as a result, a restatement had to occur to reflect the revenues. Those got corrected, but he said it’s important that accruals get recorded.
“It seems as though the accounting management and staff have developed corrected action for that, and are scheduling out receivables on a monthly basis,” the auditor said. “We don’t expect this deficiency in the future.”
Armijo said there were five findings in the city of Rio Communities audit, including:
• A violation of the Travel and Per Diem Act by the previous city manager. The auditors found an instance in which the former manager, Leisa Haynes traveled for out-of-state training, but the cost of the lodging exceeded the state statute for overnight lodging. The city council should have approved that overage cost.
In addition, the former manager didn’t attend the entire conference, missing one day of the conference that the city paid for.
• A second finding regarded fringe benefits, in which a city employee was allowed to use a city vehicle to and from their personal residence.
“That is a city’s prerogative if you would like an employee to utilize a city vehicle to commute to and from their residence, although that’s considered a personal commute, therefore it is a taxable benefit ...,” Armijo said. “If the city does elect to allow employees to do this, it’s important that a formal policy be drafted.”
• The third finding was dealt with procurement. Armijo said the previous manager made some purchases that didn’t comply with law.
One instance was for the purchase of Christmas decoration that cost more than $10,000 but no quotes were obtained. A park survey was done, however there was no purchase order. Armijo also said there was an advertisement in a magazine for $13,000 but there was no purchase order.
“In speaking to management, it seems as though the city has made great strides in improving the procurement policy and procedures to ensure purchase orders are required and bids will be received for purchases over a certain amount,” Armijo said.
• Another finding was a violation of the anti-donation clause in which there was a purchase from eBay for fencing in the amount of $537, but the material was never received from the vendor.
• The last finding dealt with a lack of supporting documentation for credit card expenditures. Armijo said they found that in November 2019 and March 2020, there were a total of $859 of purchases without receipts.
“It seems as though management has clarified the credit card procedures and gas purchases,” Armijo said. “The city is making great strides.”
Moore, who was hired as the new city manager in January, said the finance department is currently making improvements to policies and procedures.
Mayor Pro Tem Peggy Gutjahr thanked Armijo and his team for their hard work and professionalism throughout the audit process. She said there have been significant changes to procedures as well to city personnel.
“The (former) city manager was terminated because of some of these issues ... the there have been changes within the fire department,” Gutjahr said.
In other business, the city council:
• Voted unanimously to increase the city’s gross receipts taxes by .25 percent, which will take affect on July 1. The GRT in Rio Communities is currently 7.6875. The additional revenue could bring about $40,000 per year to the city’s general fund.
• Approved changing the meeting dates of the council’s workshops and regular business meetings. The council will now hold its workshops at 3 p.m. on the second and fourth Monday of the month, and the business meetings will be held at 6 p.m. on the same days.