An audit of the town’s finances has left the Smithfield Town Council confused and looking for answers.
At its meeting last week, the council received the audit of the town’s 2012-13 spending. It showed flaws in accounting that ultimately created a paper loss in the electric fund, and the auditor recommended a rate increase to shore up the fund.
The council was seeing the audit for the first time last week and had many questions that it hopes a subsequent meeting with the auditor will answer.
Smithfield has had turnover in its finance department. After four people held the job of finance director in two years, Greg Siler became the new director last October.
During an interview after last week’s council meeting, Siler said an oversight happened at some point during the personnel turnover in the finance office. Smithfield didn’t transfer money out of the electric fund and into the general fund like it was supposed to.
The auditors caught the mistake in the most recent audit, which covers July 1, 2012, to June 30 2013. The town then corrected the oversight, moving all the money at once, which created the paper loss in the department.
The electric department paid all of its bills last year, Siler said. But after the transfer, it now has about $650,000 in unfunded liabilities, though it has enough savings to pay those bills, he said.
Normally, council members would have received the audit in advance of their meeting, giving them time to review the report. But the document was running late, and councilmen didn’t get their copies until the meeting.
As auditor Phyllis Pearson began presenting her findings, council members kept hearing details that suprised them. After getting unclear answers to their questions, Councilman Charles Williams said, “She’s giving some good information here that I can’t absorb all at one time here at this meeting.” He then suggested meeting with the auditor later.
“This year’s (audit) went a lot better than last year,” Pearson told the council. “Last year, a lot of documentation we would request, it just didn’t exist like it should have.”
Pearson found two main problems in the town’s 2012-13 finances: incomplete record-keeping and failure to meet accounting standards for bonds tied to the electric fund. What happens next is unclear, but she said staff training should fix the problems.
The weather hasn’t helped the Smithfield Crossings street project. Crews haven’t had a chance to pave the final section under Smithfield’s portion of the project, said Town Manager Paul Sabiston. Meantime, the N.C. Department of Transportation won’t begin to pave its part of the project until mid-March, when the weather breaks.
The council agreed on a name for new road: Outlet Center Drive. It will also change Industrial Park Drive to Outlet Center Drive.
Sabiston gave mid-year spending reports for the town’s departments. All are on track to end the fiscal year within spending limits set by the budget, he said.