Fayetteville has missed the deadline to submit its annual audit to the state for the second time in a row.
The city had until April 1 to submit its fiscal year 2022-23 audit to the N.C. Dept. of State Treasurer, but will be turning it in late, according to an April 2 news release.
Loren Bymer, Fayetteville’s marketing and communications director, confirmed that Fayetteville was also among the late-submission list last year; the city turned in its fiscal year 2021-2022 audit on Aug. 3 last year, according to the list of state audit submissions.
Bymer said Fayetteville was late both this year and last year primarily because it has been implementing a new auditing software.
“The reason for this delay is primarily related to the challenging implementation of the new software system that has necessitated a manual and complex process to ensure the financial records of the city are accurate and thorough,” Bymer said.
Local governments must submit audits of their financial statements for the previous fiscal year to the state treasurer’s office by April 1. Fayetteville’s tardiness is not particularly unusual among North Carolina cities; according to State Treasurer Dale Folwell, more than 100 municipalities missed the audit submission deadlines this week.
Still, Folwell said Fayetteville’s tardiness was concerning, particularly given its status as a major city in the state.
“There are circumstances that cause this to happen from time to time,” Folwell told CityView on Thursday. “But when we have major cities like Fayetteville and Goldsboro and Wilkesboro who are late on their audits, that should not just be a concern to me — it should be a concern to all the taxpayers there.”
This year’s state audit deadlines have a kicker: Local governments may face financial penalties from the state if they fail to turn in their audits by July 1, or the start of the next fiscal year. The new penalties are a result of Senate Bill 299, which went into effect on Jan. 1 after being passed by the state legislature last June. These penalties will not be automatic, however, as municipalities will be able to appeal them with the Local Government Commission.
Folwell said he hopes municipalities will take steps before they are hit with financial penalties. At the same time, he emphasized the laws are there for a reason.
“It's our desire at the treasurer's office to never get to that point, but we don't pick and choose which laws to apply or who to apply them to,” Folwell told CityView.
In addition to challenges in implementing the new software, Bymer said the city has dealt with staffing shortages that have slowed down the audit process.
“The city, as in many organizations throughout the country, has experienced staff turnover,” Bymer said. “The result in our case is a relatively new staff in this area. There is an adjustment and learning curve for financial and accounting professionals regarding governmental accounting.”
Ultimately, with local government financial audits, Folwell said the numbers are what matters most.
“We hear lots of reasons why people don't get their audits in,” Folwell said. “We are concerned, always, about, are the books balanced? And is every dollar accounted for? Is the money reconciled and has an outside entity verified all those things?”
Folwell also said that late audits, in addition to raising concerns about the accounting of taxpayer dollars, present a risk to local economic development.
“There's people who may be wanting to relocate or expand their business into Fayetteville, who will also know this,” Folwell told CityView. “So there's nothing good to come from a late audit.”
Bymer said the “delay does not reflect our financial stability or commitment to fiscal responsibility,” and that the city has still met other financial requirements.
“The city has fulfilled its obligations to pay contracts, provide services, pay employees, make debt payments, among other activities, and accurately account for its financial activity throughout the year,” Bymer said.
Bymer said the city is not worried about any potential economic impacts, such as businesses being hesitant to expand in Fayetteville or the late penalty fees from the state, as a result of the late audit submission. He said that the city has taken steps to prevent future tardiness and is addressing underlying causes like staffing shortages.
“We have implemented a comprehensive action plan to expedite the completion of our annual audited financial statements,” Bymer said. “This includes hiring additional individuals, a full review of process, people, and technology. In addition, we have engaged industry-leading experts to provide guidance in these areas and support existing staff.”
Bymer said it will be several weeks until the city is ready to submit its fiscal year 2022-23 audit.
“The city’s external auditor will file the financial statements when their review is complete, and the financials and opinion are issued,” Bymer said.
Fayetteville’s previous audits and financial statements are available on the city’s website.
Contact Evey Weisblat at eweisblat@cityviewnc.com or 216-527-3608.
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