Newland audit finds budget overruns and material weaknesses; board to appoint deputy finance officer

An auditor presenting the town's 06/30/2023 audit told the Board of Aldermen that auditors identified multiple budgetary violations and material weaknesses that require a formal response to the Local Government Commission.

The auditor (presenting) said general government expenditures exceeded the budget by about $25,002; public safety was over by roughly $72,000; water and sewer administration exceeded authorized appropriations by about $59,000; and debt service was over about $2,200. The auditor added that the town's unassigned general fund balance was $896,003.47, a decline of $109,001.59 from the prior year, and noted the town submitted the audit late (submitted to the Local Government Commission on Sept. 12, 2024; it was due Oct. 31, 2023).

"Material weaknesses were identified in this audit, which included lack of segregation of duties," the presenter said, and told the board that town staff must prepare corrective responses for the Local Government Commission.

The board moved swiftly to adopt governance measures the manager said would address some findings. The town manager read a resolution designating Alderman Gail Haller as deputy finance officer with authority to sign checks and pre-audit certificates only in the finance officer's absence; the board moved to adopt the resolution during the meeting. The manager said the appointment was recommended by the Local Government Commission to help address segregation-of-duty concerns.

The manager also asked the board to adopt a federal procurement policy required for the town to receive a $3.2 million water and wastewater grant. "This procurement policy is required by the federal government for the town of Newland to receive federal grant awards," she said, adding the draft was vetted by the School of Government and the regional council of governments. Board members made a motion to adopt the procurement policy.

Separately, the manager presented a grant-project ordinance for FEMA public assistance tied to recovery work; she cautioned that figures on page two may need amendment as project scope is refined but said the ordinance must be adopted to initiate the work and funding process.

The manager warned that the town's near-term finances will be tight. She said she expects reduced sales and use tax revenue following recent storm damage and described an upcoming commercial insurance renewal that will increase costs. She told the board she may need short-term use of trust funds to cover water and sewer repair bills that FEMA reimbursement will later offset.

What happens next: staff will prepare the corrective-response letter the Local Government Commission requires and continue work to finalize grant and procurement documents so project work can begin. The deputy finance officer appointment and the procurement and grant ordinances were advanced at the meeting.

Provenance: The audit presentation and many of these details were presented by the auditor in the meeting (topic intro SEG 003; topic finish SEG 096). The deputy finance officer resolution appears in the meeting text beginning at SEG 135 and through SEG 167.