Published: March 16, 2008 11:32 pm         

State audits placing hardships on towns

Pax Mayor Peggy Sasser says she is well aware her town hasn’t had a completed state audit since 2003.

“We just haven’t had the time or the money to catch up on our audits,” she said. “An audit can be very expensive and we have a very small budget.”

The Fayette County town isn’t the only municipality in the state that is behind on its yearly financial audits. A report from the state auditor’s office reveals many towns across the state haven’t been audited in years.

Deputy state auditor Stuart Stickel insists the audits are important because they can determine if a municipality’s financial statements are fairly represented or if there are any problems officials and taxpayers may not know exist.

“Audits are important to really understand the financial condition of the municipality,” he said.

Despite the importance of annual audits, many municipalities aren’t getting the job done.

“Without a clearer legal requirement, we will most likely continue to see some municipalities get behind in annual audits,” Stickel said.

Other towns behind in financial audits in Fayette County include Ansted, which hasn’t had a completed audit since 2004, and Gauley Bridge, which hasn’t had a completed audit since 2005.

Alderson in Greenbrier County hasn’t had a completed audit since 2004. Others in Greenbrier County include Ronceverte, which also hasn’t had a complete examination of its financial records since 2004.

“We will be starting on some previous years’ audits very soon, but we did get behind,” said Jackie Villars, a clerk for Alderson. “We are a small town with a small budget. With a major hit in fuel and energy costs to the town budget, it’s just not feasible that we could catch them up all at once.”

With the economy nearing recession, many small towns say they just can’t afford to have the audit done annually.

“It’s not practical,” Villars says. “Hundreds of towns across the state would go over budget if they had to catch up on these audits all at once.”

Villars said Alderson has procured a certified public accountant firm.

“We sent out 40 bids that ranged from $3,000 to $9,000 for each annual audit,” she said. “If the state does it, they charge $5,000. So a state audit is not feasible for us.”

In Raleigh County, the list includes Lester and Rhodell, which haven’t had complete audits since 2004.

Stickel agrees many small towns in West Virginia are facing financial crises.

“I’m sure many of them have legitimate reasons for thinking they can’t afford an audit,” he said.

He says state law requires the audits in most cases, but not all.

“When the Single Audit Act doesn’t apply, state codes says, ‘the examination shall be made at least once a year, if practical,’” Stickel said. “This doesn’t mean mandatory, in all cases.”

Stickel says the audits can range in cost from $2,000 for a small municipality to $40,000 for a large city.

“If federal funds are involved in the budget, the audit will cost even more,” he added.

Sasser said it would be nice to have some help from the state.

“They used to do it and it would help if they would do it again at a reasonable cost to the town,” she said. “I wish the state had a program to help small towns with financial audits.”

Larger municipalities are normally caught up on financial audits. They are usually performed by accountants within the state auditor’s office. However, many smaller municipalities are placed on a procurement list and are responsible for contracting with accountants and CPA firms approved by the state for their audits.

Sasser says Pax had trouble finding a state-approved auditor.

“We’ve been able to speak to two CPAs,” she said.

Stickel said there are only 32 state auditors.

“We want to hire, and are hiring more auditors, but finding qualified applicants that want a job with the state auditor’s office has been challenging,” he said. “We have had turnover problems, just like many other state agencies.”

Stickel said the state auditor’s office keeps track of about 750 different governmental bodies, including all 55 county school boards, county commissions and magistrate courts. State auditors also oversee the books for about 235 municipalities in the state and about 300 miscellaneous organizations such as public library boards and utilities.

“Making matters worse is that there are more and more CPA firms around the state that are getting out of the government auditing business,” he said.

Some wonder if the state could provide more help.

“Without some help on the costs of these expensive audits, I think we will continue to see small towns get behind,” Villars said. “These annual audits are really placing a hardship on many small towns.”

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