The city of Santa Fe needs to get its finance house in order.
The recently released financial audit of city finances for 2020, filed months after its due date, contained multiple findings on bad practices and can hardly be called successful.
And yet, on exam, there is hope of a Santa Fe in which financial practices are no longer embarrassing at best and potentially fraudulent at worst. Because don’t make a mistake, this audit shows progress.
We are not buying the line for the city to excuse the delay due to the pandemic, staff shortages and the transfer of the city’s financial books to a new system. Late is late. The audit of the 2021 financial year is due in December and must be carried out on time.
Likewise, we do not apologize for the report’s 21 findings, which show the city still has much work to do to keep its books in acceptable order.
The exam, conducted by the independent CliftonLarsen Allen, gave a “clean” result – in exam terminology, this means that the documents submitted actually reflect how the city’s finances were performing during the months in question. Good, but don’t confuse “clean” with “clean” or even “tidy”. Because this audit was not a picture of unpretentiousness.
While it seems like a minimal expectation that the books will accurately reflect the actual numbers, an external review of city finances in 2017 found abuses and bad practices dating back years. The books did not necessarily reflect how money was raised and spent.
Among other problems this year, the city discovered major cash handling problems in both the Genoveva Chavez Community Center and the Utility Billing Division. Fraud was suspected at the Chavez Center, while a former employee in the Utility Billing Division pocketed $ 4,600.
Poor internal controls and practices were also discovered, such as writing a customer’s credit card number on sticky notes and leaving the notes open.
To be clear, Santa Fe’s financial troubles were decades in the making. Tidying them up didn’t happen overnight.
Now the city must realign its efforts on a number of fronts. First, the finance department needs enough staff to get the job done. The manpower has been short for months and that’s not a way to do business.
Tyler Munis’ new financial and human capital management system has been installed. Training for all departments must follow. There’s no point in having the latest system if people can’t use it.
The audit also showed that the city is financially well positioned. Despite a global pandemic that is causing gross income taxes to drop, the city has improved its fund reserves and debt management.
City Finance Department staff also managed to distribute $ 17.5 million in federal CARES Act funds in just a few months at the close of fiscal 2020. And that despite a short schedule and a vacancy rate of 40 percent in the office.
The focus now must be on completing the ’21 audit on time and fixing the issues identified in 2020. The city has approved $ 500,000 to hire assistance to get the audit done on time. Closing the books is made easier by a further improvement – of 400 funds, the city now has 70 funds and plans to simplify the budget even further in the coming years.
Pay close attention to how federal funds are tracked and spent. The city is currently unable to compile an exact list of the amounts that have been spent from federal premiums. It also hasn’t requested full reimbursements for some federal expenses, which could result in the city losing reimbursements. In short, a late audit with 21 findings – 10 “significant” and eight “material” – is not where Santa Fe should be.
In 2017, the city took a close look at its business operations and made a commitment to turn things around. The improvements are slow but significant. Now is the time to see more urgency – and get better results.