Audit Cost Increases

FAYETTEVILLE — Officials with the Boston Mountain Solid Waste District hope to get an accounting makeover after a recent audit revealed weaknesses and significant deficiencies with the district’s bookkeeping.

The district provides solid waste management in Washington and Madison counties. It operates a transfer station west of Prairie Grove where residents drop off solid waste and recyclables.

The district’s troubles with bookkeeping came as no surprise to district board members Thursday when they discussed the audit. However, they were surprised at the cost to pay the auditors for the time it took to review the district’s 2012 finances.

The board fired its director, Maylon Rice, in September 2012 after he was accused of financial mismanagement, including the improper handling of state grant money.

The audit by Little Rock-based Berry and Associates confirmed bookkeeping that tracks the spending of grant money from the state Department of Environmental Quality was incomplete.

The district also has not properly reconciled cash accounts and accounts receivable. As a result, the district has not kept accurate and reliable financial statements, according to the audit.

The district brought in $1.14 million in revenue and spent $1.1 million leaving $41,893 in profit for its 2012 general fund. The district’s waste tire fund lost $97,909 after bringing in $449,282 in revenue and spending $547,737 in revenue, according to the audit.

Robyn Reed, director, took over district operations Jan. 2.

“One of the (audit’s) recommendations is to hire an accounting firm to do our bank statement reconciliations and then also do our journal entries each month,” Reed said. “I think this is a good idea and would like to recommend it to the board. This will provide the board and the district with monthly oversight by a third party of our current budget and accounting practices.”

Reed told the board she expected to pay auditors $8,500 but later received a bill for $21,000. The auditing company reduced the bill to $17,000 after she complained the price increase was not discussed with her until she received the bill, she told board members.

“They had to go back to original vendors and search online to find invoices that were missing for 2012. There was a lot of work involved in this audit and they didn’t realize it at the time originally,” Reed said.

Reed said the higher price includes training from the auditors to properly maintain financial records and help setting up new financial books. Staff members also will re-enter all financial revenue and spending from this year into the new books, she said.

The board tabled the payment for the audit until they receive more information from the auditors.

“To go from $8,500 to $21,000 then to bring it back to $17,000, that’s a lot of difference,” said Washington County Judge Marilyn Edwards, a board member. “We need something in front of us to show how they calculated all those hours.”

Larry Oelrich, a board member serving as proxy for Prairie Grove Mayor Sonny Hudson, said he’s served on a variety of boards that have used Berry and Associates. He recommended auditors speak at the next district meeting.

Don Marr, chief of staff to Fayetteville Mayor Lioneld Jordan, said he supported spending the money to get financial accounting done correctly to avoid future problems.

“Hearing they had missing transactions, and invoices undocumented and the workload, it doesn’t surprise me,” Marr said. “I think I would agree with everybody that we should have been notified before expenditures continue. I think if we need to have that relationship in the future, we don’t post-approve. We preapprove expenditures.”