Todd Paris, Associate Editor and Salisbury Attorney
♦ So, try this on for size. You have just been newly elected to Salisbury City Council, and at your first real meeting, staff dumps a 165 page document in front of you entitled, “Comprehensive Annual Financial Report Fiscal Year Ending June 30, 2015” prepared by the City Financial Services Department. Pages 153 to 165 are the Compliance Section prepared by law by an Independent Auditor. This is the report sent to the NC Local Government Commission (LGC) so they can make sure we are complying with state laws on finance reporting.
Then, Mayor Alexander explains there was no opportunity for any council members to review this document, as it just was returned by the LGC. Of course, since this document up to page 153 was prepared “in house”, it was available (at least in draft form) for days – if not weeks – before the meeting. The Auditor’s Compliance Section had to have been prepared by the CPA’s some days – if not weeks – before, to make it to the LGC. Had the mayor and incumbent council not been provided access to any copy or draft before the meeting? Really?
Why is this important? The Report is the most important document in the whole city. It tells us what we spent and the financial health of the city. The Audit portion tells us whether financial reporting irregularities exist and if the city is complying with state financial law. You need to know if your city may be stolen from or if it’s breaking the law, right?
The auditor arrives and speaks for a short time, and discussion of the matter is “tabled” to a later time. At no time during her oral presentation does the auditor mention two “negative findings” in the audit.
The first unmentioned negative finding was “Finding 2015-001” in that the broadband fund (Fibrant) is operating in a deficit, which is in violation of N.C. Gen. Stat. 159-13(b)(2) which requires each enterprise fund to be, well, “funded.” They are not allowed to run a deficit. This law is part of the statewide laws enacted after the great depression to prevent cities and counties from going bankrupt. Page 43 of the report shows Fibrant’s net position as over negative 11 million dollars.
The second was “Finding 2015-002.” (Page 154, Paragraph 2) “…our tests disclosed an instance of non-compliance or other matter that is required to be reported under Governmental Auditing Standards.” These are published by the Federal Government Accountability Office.
You can see an overview here: https://en.wikipedia.org/wiki/Government_Auditing_Standards
Reading on, we find out that there are insufficient safeguards in City collections such that misappropriations “could result.” Well “could result” doesn’t sound so bad. Looks like they caught it in time! Or did they?
More curious was the statement made by the auditors: “We noted certain matters that we reported to management of the City of Salisbury in a separate letter dated November 18, 2015.” Of course, you, as a new city council member were given no such letter before or with the audit. This was in spite of the fact that the letter was also addressed to the City Council. After a public information request by a local meddling attorney (and perennial pain in the municipal “keester”), we find out that actual misappropriation had occurred and that it was turned over to the SBI and that this was not just something that merely “could result.” It did result.
Well, new Council members, feeling “miffed yet?” But get this, when the agenda for the next council meeting comes out – the audit is not on it. The auditors did not reappear, and there is no public comment scheduled, even at your low public participation meeting time of 4:00 p.m. (when at least the retired and unemployed could comment on the audit).
Good old Salisbury, NC City Government, as transparent as Yadkin River.
Well, if it doesn’t get into main street media, it never really happened, right? Council Members Kenny Hardin and David Post were elected by the citizens as full city council members, not junior, associate or intern city council members. I demand they be treated honestly and kept “in the loop.”
You can view the Martin Starnes letter not featured in the Report, here: https://rowanfreepress.files.wordpress.com/2015/12/martin-starnes-letter.jpg
Here is my new “public information request” of the City:
Thank you for providing the letter to management of the City of Salisbury dated November 18, 2015. This letter cites that the city retained an independent auditor to determine the extent of alleged misappropriation in the collections department. The letter further cites that there was information and findings of the independent audit specialist that was provided to Martin Starnes.
I am requesting the following:
- All communications between elected officials, staff, and the city’s audit firm and auditor/audit specialist, including emails, letters, and any other communications records.
- The amount paid to the independent audit firm investigating the alleged misappropriations to include contracts, invoices, and other financial records.
- All findings, reports, memos, letters, and any other information provided to the city, the SBI, the city’s law firms, and/or Martin Starnes regarding misappropriation in the collections department.
- The dates or calendar entries of meetings where staff and the elected officials were made aware of alleged misappropriation in the collections department.
- Financial records that document the amount allegedly stolen or estimating the amount allegedly stolen.
My review of case law shows records regarding a city’s finances are indeed public records and not privileged.
