Late financial audits could be costly to the city

The city of Philadelphia could face fines of $5,000 per year for each year its fiscal year audits from 2018, 2019, and 2020 were late, officials said.

Alderman-at-Large James Waltman has served as the board’s contact person with city’s audit firm, the Pearl accounting firm of Windham and Lacy.

Waltman said auditors were wrapping up their work on the FY 2018 audit. They will be mailing a copy to the city and scheduling a meeting with the board to review it, possibly at their February 15 meeting.

Aldermen learned in September that the city had not completed an audit since FY 2017. Windham and Lady was hired in  October to catch the city up. 

They have been hired to do the fiscal year audits for 2018, 2019 and 2020. Fiscal Year 2021 won’t come due until later this year.

“There were two issues found,” Waltman said. “One was a legal issue  that we are late on filing the audit.

“There is a possibility we could be fined $5,000 per year for being delinquent, They will send this audit into the State Audit Department. A 2018 audit filed in 2022 is a red flag, They may not charge us the $5000 but they can.”

Ward 4 Alderman Shaun Seales asked if the Auditor would consider the problem with the COVID-19 pandemic, and Waltman said he didn’t know how they will manage that.

Ward 2 Alderman Jim Fulton asked why the auditors didn’t mention this earlier. City attorney Robert Thomas said it was a matter of state law.

“The code says if we do not do an audit by the following year, we are subject to penalties,” Thomas said. “It was in that statute I gave you.”

Waltman said the second issue dealt with a report on aged account receivable fines in the municipal courts that could not be produced by the computer system. 

“The other was a report they requested was the accounts receivable for the age of fines,” Waltman said. “We could not produce that. So, they had to make up a figure to work with, not knowing what the outstanding fines (in Fiscal Year 2018) were. They won’t have a true number and it will be tagged.

The city’s computer system could produce the report if the numbers had been loaded at the time by the court clerks. 

The information is in the computer but not in the needed format. Due to the volume, it can’t be loaded now.  This will be a problem in the fiscal year 2019, 2020 and 2021 audits.

The auditors brought this computer function  to the court clerks’ attention and they began loading the figure in January. 

Waltman said he talked to BBI which sold the system to the city about training. It is available. Aldermen voted 5-0 to schedule more training on the computer system for the court clerks.

“It will be good to have documented training,” said Ward 1 Aldermen Justin Clearman.