Audit: Patterson credit cards lack documentation

The Patterson city government didn’t properly document some credit card charges, according to a report for the 2013-14 fiscal year released this morning on the state legislative auditor’s website. The city says it already has a better policy in place.
Kolder, Champagne, Slaven & Company performed the city’s audit for the fiscal year ended June 30, 2014.
The audit report stated that “certain credit card purchases were not adequately documented to support a valid governmental purpose.”
The Louisiana Constitution of 1974 states, in part, “the funds, credit, property, or things of value of the state or of any political subdivision shall not be loaned, pledged, or donated to or for any person, association, or corporation, public or private,” the report stated.
The auditor said the city “should adopt a formal credit card policy which should include provisions for the maintenance of adequate supporting documentation and prohibit charges which do not represent a valid governmental purpose,” the report stated.
City management’s response to the finding stated that the city adopted a new credit card policy effective Jan. 1, 2014, according to the report. The new policy places limits on credit card usage and stipulates penalties for purchases without appropriate documentation, management said.
After implementation of the new policy, the city “has realized significant improvements in its recordkeeping and maintenance of documentation to support credit card charges,” city management said in the report.
The audit stated that “management believes that strict adherence to the policy will lead to increased awareness among those limited individuals authorized to make purchases using City credit cards that supporting documentation must be obtained and submitted to the finance department for matching with the credit card statement.”
Kolder, Champagne, Slaven & Company issued an unmodified opinion, the best opinion that can be issued, for Patterson’s financial statements for 2013-14.
Also in the report, the auditor said the city’s administration did not present the annual financial report to the council within the required time frame set forth by the City’s Home Rule Charter, the audit stated.
The city’s Home Rule Charter requires the city administration to provide a complete report on the financial and administrative activities of the city to the council within 45 days of the end of the fiscal year, the report said.
Also, the city didn’t complete its 2013-14 budget 45 days before the start of the fiscal year as the charter requires.
In the city’s response to the finding, management said “financial staff is aware of and is continuously working to ensure that Council is provided with reliable financial statement data in a timely fashion.”
Management added that the mayor, through the city’s accountant, presents a monthly financial report including comparisons to budget figures at each monthly council meeting. The mayor and financial staff “are working to ensure that complete and accurate data necessary to provide the annual report of the city’s finances as per the city’s charter is gathered in a timely manner,” management said.
According to another finding in the report, audit adjustments were proposed to correct misstatements that, individually and in the aggregate, were material to the city’s financial statements, the report said.
“The identification by the auditor of a material misstatement of the financial statements under audit in circumstances that indicate that the misstatement would not have been detected by the City’s internal control is an indicator of a material weakness in internal control,” the report said.
The auditor recommended that the city should develop and implement procedures to ensure that material misstatements in the financial statements are identified and corrected in a timely manner, the report said.
City management responded: “With the addition of an accountant to the city’s financial staff, accounting activities are being performed on a timely basis and errors including unrecorded transactions have been significantly reduced,” city management said.
The city’s financial staff tries to capture all transactions prior to closing its books and uses the city’s independent auditors for assistance in conversion of its books from the cash basis to the accrual basis, management said.
Auditors also discovered budget variances in excess of 5 percent in the Ad Valorem Tax Collection Fund, according to the report. The report recommended that the city “periodically compare actual activity to budgeted amounts and adopt budgetary amendments as necessary to cause compliance with state statute,” the report said.
City management’s response to the finding stated the city amended its budget for the Ad Valorem Tax Collection Fund at the same time it amended budgets for other city funds.
“The unfavorable variance in the Ad Valorem Tax Collection Fund was the result of tax collections in excess of what was anticipated,” management said.
“In the future, management will more closely monitor revenues and expenditures and propose amendments to the budget to ensure that variances are within the five percent variance allowed,” management stated.

This story is by Zachary Fitzgerald of the Daily Review staff. Reach him at zfitzgerald@daily-review.com.