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Outside auditor: Lovington not ready for fiscal-year audit; commission to seek CPA oversight
Summary
An outside CPA told the Lovington City Commission the city’s accounting records are behind and contain multiple errors — bank reconciliations months late, a December 2023 payroll liability and system posting issues that show large apparent outstanding balances — and recommended hiring a qualified finance director and contracting CPA oversight.
Ed, an outside CPA the commission engaged to assist the finance department, told the commission the city is not ready for its fiscal-year 2024 audit, citing multiple accounting problems and a backlog in reconciliations. “The audit report was due on December 16; it hasn’t been submitted as of yet,” he said, and added that bank reconciliations had not been completed since October 2024.
Ed described several specific concerns: an apparent payroll liability of roughly $50,000 from December 2023 that either was unpaid or misrecorded; a set of electronic payments to UnitedHealthcare that the accounting system did not reconcile, producing nearly $477,000 in apparent outstanding items on the October reconciliation; and a $19,000 deposit tied to Main Street that was later reversed and not clearly accounted for. “There’s some serious accounting issues within the municipality,” he said, adding that errors have been rolled forward instead of corrected.
The auditor said the immediate priorities are to bring reconciliations up through December, submit required DFA (state) reports, and finish outstanding audit work. He urged the commission to hire or contract the skill set needed and to consider issuing an RFP for a CPA firm to provide oversight and to help establish standard operating procedures for the finance department. “You need checks and balances,” he said, recommending a two-pronged approach: get caught up on records and secure outside expertise to write procedures and oversee the audit-preparation work.
City Manager Mr Miranda and several commissioners expressed concern and asked about timing. Ed said he was “tentatively hopeful” December reconciliations could be completed by the end of March but cautioned the work would be intensive and could require outside help. Commissioners discussed forming a short-term oversight group and moving forward with recruitment for a qualified finance director; Ed advised that hiring alone is insufficient without written procedures and ongoing oversight.
The commission did not take a formal vote to contract a firm at the meeting, but members signaled intent to pursue an RFP and prioritize hiring and procedure development. The auditor also noted that DFA quarterly reporting deadlines were approaching (a DFA report was noted as due April 30) and urged the city to prioritize those submissions.
The commission’s next procedural steps are to finalize the finance-director interview schedule and to scope an RFP or consultant engagement to provide audit readiness work; staff and commissioners indicated they would return with concrete procurement steps and candidate interviews in the coming weeks.
