Click here to subscribe today or Login.
For the second year in a row, Luzerne County’s audit will be late due to unresolved issues with financial statements, the administration announced Tuesday.
June 30 is the audit deadline under the county’s home rule charter.
Last year’s 2017 audit wasn’t released until late September, and it cited a lack of supporting data to verify $5.4 million in transfers to and from outside agencies.
Lingering discrepancies with the same accounts will again cause the 2018 audit to be late, prompting a new target completion date of July 31, county Budget/Finance Division Head Brian Swetz told council in a letter Tuesday that was discussed at the subsequent evening council meeting.
According to his letter:
Auditor CliftonLarsonAllen LLP informed the county June 21 that the delay primarily stems from “an unreconciled material difference” in accounts tracking reimbursements owed between the county’s general fund operating budget and some of its agencies, including human services, 911 and community development.
Swetz’s department spent more than 100 hours the last few weeks solely reviewing the $5.4 million and had hired another outside auditor, Baker Tilly, in February to help reconcile account differences.
“To date, despite best efforts, no such reconciliation has been able to be finalized,” the letter said, noting Baker Tilly will be visiting county offices Wednesday to continue working on the matter.
A few remaining auditor requests for financial documents also can’t be furnished by the county until separate outside audits of Children and Youth and Domestic Relations are completed, which is not expected to occur until Friday, the letter said.
Clearing up the $5.4 million is necessary to show the county does not owe that amount and to ensure the audit is “unqualified,” which means it is more thorough, complete and in compliance with generally accepted accounting standards, the administration has said.
Swetz said the $5.4 million involves records dating back several years and told council Tuesday it is “like a Rubik’s Cube” that can’t be solved until all pieces of the puzzle match.
“Until this issue is cleared, we’re not going to get an unqualified audit, and the goal has always been to get an unqualified audit,” he told council, saying auditors will come before council with an explanation if the problem is not fixed.
County Manager C. David Pedri said there is no evidence any cash is missing — an assertion verified by Swetz.
Councilman Stephen A. Urban asked Swetz if he is confident the July 31 target will be met.
“Very, because we have to,” Swetz said.
Two major capital projects are on the horizon — a 911 emergency radio communications system upgrade estimated between $16 million and $24 million and state-mandated, paper-trail voting machines projected to cost $4 million. Both are expected to be at least partially funded by new borrowing.
The administration also said a year ago it wants to soften the blow of proposed new borrowing by factoring in savings from the refinancing of four existing 2008 and 2009 bond notes that have expired “call protection.” The county had provided this protection — a period of guaranteed return to investors — to encourage them to take the risk of buying the county bonds, officials had said.
An audit would be necessary to obtain the best interest rates for both borrowing and refinancing, officials said.
“We have to have it done,” Swetz told council, referring to the audit. “If it’s not done by July 31, there’s no way this county can even come to council asking for borrowing.”