‘Grueling’ county audit finds weaknesses in financial controls

Working without food, drink or sleep, a single accountant would have needed over 3 2/3 months to finish the audit on Buncombe County’s fiscal year 2017-18 books. Being human, the team with Minneapolis-based CliftonLarsonAllen took considerably longer.

The firm conducted roughly 2,700 hours of work — over three times its original estimate of 885 hours — from July 1 through May 14, when principal Bill Early presented the results to the Board of Commissioners. The audit came in more than six months past its first deadline and roughly $233,000 over the initial budget of $118,125, issues which Early said were due to the “extenuating circumstances” of fraud among former county leadership, staff turnover and the county’s implementation of a new financial system.

“It was a very grueling process,” Early told the board during a special called meeting on the audit. “It’s probably the longest and most detailed audit I think I’ve ever had to go through, just the additional procedures — it was a perfect storm.”

While that fine-toothed approach still gave Buncombe an “unmodified opinion,” indicating no major financial misstatements, CLA found six “material weaknesses” and nine “significant deficiencies” in the county’s internal controls. Protocols with the potential for abuse, Early said, included the approval of wire transfers, recording of receivables for insurance policies, authorization of procurement card limit increases and expense reimbursements for department directors.

Board Chair Brownie Newman asked why previous audits, conducted by Asheville-based Gould Killian CPA Group for over a decade, had not identified those problems in county practices. Early explained that his firm used a lower threshold for examining transactions, which may have caught more issues, and brought extensive experience with government audits. Reading the indictments of former County Manager Wanda Greene and other former county employees, he added, gave his accountants a better idea of where to look.

“Because we knew of, I’ll say, ‘the tone at the top’ and management override, we looked at controls in a different way,” Early said. “Because of what everyone was going through, employees were more open to admit if there was a mistake made or say, ‘Yes, we could improve our policy there.’”

Don Warn, the county’s finance director, said staff members had already addressed many of the issues identified through the audit and had developed a “corrective action plan” to deal with other findings. He noted that county staff would meet with CLA before the end of the fiscal year to focus on meeting the Oct. 31 deadline for the next audit.

Board members voted unanimously to accept the results of the audit, but Commissioner Mike Fryar suggested that Buncombe’s work wasn’t over. Because the extra time and expense for the process was driven largely by the need to investigate fraud, he argued, the county should work to recover its audit expenses from Greene and others.

“It’s not the county taxpayers that should be paying the bill. It is the people that caused the bill,” Fryar said. “It’s a cleanup, and we had a hard time doing it.”