Before the regular Conway City Council meeting May 14, Mayor Tab Townsell and city council members discussed whether the city should use a private firm or the state services to conduct their audits.
Currently the city uses the state legislative audit.
The city’s chief financial officer Tyler Winningham said his main concern with the legislative audit is timing.
"Here we are in the middle of May and just last week they finished their field work for 2011," he said. "I don’t know when we’ll physically have a report to say, ‘Here’s the 2011 audited financial statements."
Winningham said blame for the late report lies with both the city and the auditors. The city was not ready for them when they came early in 2012 because of a software switch, and then it took the auditors a while to make it back.
The concern with going to a private firm is cost. The legislative audit is free but does not recognize certain certifications and may have an impact on bounding issues, but the private firm could cost the city several thousand dollars. Winningham said the last time the city used a private auditor it cost about $100,000.
The legislative audit does not recognize the most prominent Governmental Accounting Standards Board standard issued in the last several decades, Winningham said, and he said that not being in line with GASB standards may impact the city’s bond rating.
"I’m not saying it will have an effect on our rating, but I would think it would certainly factor into (Standard & Poor’s) analysis," he said.
Some of the aldermen thought the money that would be used for a private audit could be better spent elsewhere.
"It just seems like we could use $100,000 in a lot more other ways and fix a lot more other things that we’re having problems with and have put on the back burner," said Councilman Theodore Jones Jr. "The legislative audit might be slow but it’s accurate."
Townsell said the legislative audit looks to make sure the city is in compliance with the laws but a private auditor would look at the numbers. He said the money might be worth the credibility the city could gain by using a private auditor.
"In the grand scheme of things we have a $50+ million budget. $100,000 - while it’s a significant amount of money - isn’t big beyond the validation we get with an independent business auditing firm helping make sure your numbers are right," he said.
Winningham said he looked at peer cities including Little Rock, North Little Rock and cities in northwest Arkansas and they all do independent audits.
The legislative audit team needs to know if the city will be using their services by May 31. Winningham said he would check with peer cities to see what they pay for private firms to get a ballpark figure as well as an estimate of how the different audits could impact bond ratings. Council will make a decision at their May 28 meeting.
(Staff writer Angela Spencer can be reached by email at firstname.lastname@example.org or by phone at 505-1212. To comment on this and other stories in the Log Cabin, log on to www.thecabin.net. Send us your news at www.thecabin.net/submit)