The recent audit of the City of Carencro found 26 findings - including problems with financial record-keeping, budgeting, reporting, handling of tax income, and a Constitution-violating donation of legal services to a non-profit.
Auditors also found that the city failed to remit all required payroll taxes to the IRS on time: that was an issue in the payroll software that city officials discovered on their own and are working to correct.
Among other finds were improper spending of federal grant money, a deficit budget for the city's hotel tax, and a failure to amend the budget.
The city's corrective action plan, included in the audit, says that a specialist has been hired to help employees set up processes that will ensure the money and paperwork is handled properly from now on.
All but one of the findings were noted as first occurring in 2023. The current administration took over in January 2023.
A letter from Mayor Charlotte Clavier included in the audit indicates that several of the issues already have been resolved. For instance, new policies and procedures already have been adopted, and the city has adopted a cooperative endeavor agreement with the non-profit to which the legal services were donated; that allows the city to provide assistance - but also ensures that the relationship with the non-profit continues to benefit the city. The name of the group wasn't mentioned in the audit, but Carencro officials tell us it was the C'est Bon Festival, which is set to happen for the first time this fall. To read about it, click here.
Clavier also writes that the city has hired "an outside CPA firm with extensive governmental experience to assist the staff with ensuring that generally accepted accounting principles are followed."
Clavier sent us a full statement about the audit; you can read it below, just scroll past the audit. In it, she reiterates the changes she has made and is making to address the issues, and says she's confident the issues won't be repeated.
The auditor, Brad Kolder, presented the audit to city officials during a committee meeting on June 10. You can watch it here if you want to see the entire presentation.
When he talks about the findings, he says that last year's audit had three findings. One was a repeated - and very common for smaller cities - finding related to not having enough people doing the books. Most smaller towns do have this finding because it's too expensive for them to have the number of people recommended by most auditing standards.
Kolder also says that seven of the 26 findings are duplicates, because governmental accounting practices require that certain findings be reported both as internal control issues and compliance issues.
So there are 19 non-duplicated findings, Kolder explains. Eight of them are related to his audit of grant money the city has, and three are findings from community development agency auditors, he said.
Kolder described some findings as related to "growing pains," and added that a lot of governments had findings related to spending of COVID money. That money came with strings attached - unfamiliar strings you've never seen before - and Kolder said he has "to enforce those strings."
A recurring theme throughout the audit was transfers, cash management and trying to get projects done, Kolder said. There were some issues related to the timing of insurance payments for the damage to Pelican Park, which burned in May 2023.
One council member asked if the Legislative Auditor might take action because of some of the budget issues that are noted. Kolder said he'd be "stunned" if that happened.
"People make mistakes on budgets, and when you change CFOs and have the amount of moving parts that took place during the year, making an error on a budget happens," Kolder said. "There's no money missing. If money was missing, I'd say you'll have an issue. There's no fraud in here. There's no misappropriation, there's no missing money, the budget process was not great. Transfers, as the mayor said, were a problem. Do I think you'll be contacted because the general fund had a finding? No."
The fund balance, which is sometimes referred to as a "rainy day" fund, has enough money for 30 days of city operation, which is an improvement over some previous years, but it's not at the level it should be - which is recommended to be at 60 days, Kolder said.
Here's the summary of the findings from the Louisiana Legislative Auditor:
The independent auditor’s report had 26 findings. The auditor also issued an adverse opinion for the City’s legally separate component unit because the financial statements did not include financial data for the unit and issued qualified opinions for the City’s governmental activities, business-type activities, utility fund, and aggregate remaining fund information because the financial statements did not include financial data for Other Post-Employment Benefits.
The auditor found the City lacked adequate segregation of duties for its accounting functions, failed to include data for Other Post-Employment Benefits in its financial statements, and needed significant audit adjustments to correct its financial statements.
Additionally, the City lacked appropriate policies and procedures to collect money, failed to remit $115,086 in sales tax proceeds to the Parks and Recreation Commission as required, and failed to remit all required payroll taxes to the IRS in a timely manner.
The City also donated $3,000 in legal services for the formation of a nonprofit in potential violation of the Louisiana Constitution, failed to file all sales tax proceeds with the Department of Revenue in a timely manner, budgeted expenditures that exceeded available revenue in two sales tax funds in violation of the Local Government Budget Act (LGBA), and failed to amend its budget when total General Fund expenditures exceeded the total amount of expenditures budgeted by more than 5% as required by the LGBA.
The auditor found as well that the City failed to comply with a Community Development Block Grant (CDBG) requirement related to financial management functions, failed to notify the Office of Community Development of a contract award within the required time frame, and failed to ensure a CDBG contract was awarded within 45 days of bid openings as required by Louisiana law.
Additionally, the City used federal funds to pay for expenditures already charged to other grant programs, spent $142,051 of Coronavirus State and Local Fiscal Recovery Funds on a contract not properly bid, and failed to file a required annual report detailing the use of its Coronavirus State and Local Fiscal Recovery Funds by the required deadline.
The auditor found, too, that the City improperly asked for reimbursement from the Water Sector Program for expenditures it had not yet incurred and failed to include all federal award expenditures on the Schedule of Expenditures of Federal Awards.
The audit report also had seven findings related to awards from the U.S. Department of Housing and Urban Development and the U.S. Department of the Treasury.
Here's the full audit. The findings and Management's Response begin on page 86.
Here's the mayor's full statement:
