CORUNNA — The Shiawassee County Finance and Administration Committee Monday rejected a $15,500 invoice from the county’s auditing firm related to additional expenses incurred during the 2019 audit process, citing a need for more detail as to how the amount was calculated.
Commissioners Gregory Brodeur, R-District 2, and Cindy Garber, R-District 6, voted against accepting the invoice from Rehmann Business Advisers, requesting more detailed documentation outlining the additional hours that were required to complete the audit.
“I just don’t have any way to determine at this point whether that’s perfectly reasonable or not,” Brodeur said Monday. “I would feel more comfortable approving this once we get more detail.”
The county’s 2019 audit, originally due June 30, 2020, was submitted to the board for approval last week, with the Finance and Administration Committee voting unanimously Monday to advance the audit to tonight’s Committee of the Whole meeting. If approved tonight, the audit will go before the full board for final approval Thursday.
The 2019 audit marks the fourth year in a row the county has failed to submit its audit on time. The county also was late completing the 2016, 2017 and 2018 audits, according to the Michigan Department of Treasury website.
Doug Deeter, of Rehmann Business Advisers, said delays in the audit process were partially attributed to the coronavirus, though there were also a number of hurdles auditors encountered, including various county departments being behind in meeting bank reconciliations — actual spending versus what ledgers indicate — through Dec. 31, 2019, at the beginning of the audit process.
The request for an additional $15,500 over Rehmann’s $37,500 annual fee, according to Deeter, has to do with the amount of hours it took to resolve some of those reconciliation issues.
“We audit a lot of counties that are similar to this one, and we have incurred double the hours on this job than we do at other counties in similar situations as yours,” Deeter said. “The reason for double the hours is all those findings that you saw, all the material audit adjustments that are listed in our audit report, as well as this audit dragging on for seven to eight months … The more it drags on, the more that gets incurred.”
Rehmann also got a late start on the audit, according to Deeter. Auditors expected to begin the audit process in mid-April, though the county audit did not officially get underway until “mid to late June,” he said.
Referencing the audit report, Garber noted the county health department was one of the areas where issues occurred. In the report, auditors noted “accounts were received incorrect and (it) took significant time working with the health department to get accounts reconciled, partly due to not posting audit entries from the prior year.”
“There were several phone calls trying to figure out the various accounts receivable amounts, as well as the prior audit adjustments that weren’t posted properly,” Jason Salzwedel, of Rehmann, explained.
Referencing the request for additional funds for the 2019 audit cycle, Deeter noted Rehmann has submitted extra billings each year of its three-year contract with the county.
“This audit has not gone smoothly all three years, it has been a struggle all three years,” Deeter said. “The first couple years, you’ve had transitions in the finance department, that position was vacant for a while, but even before we started the audit in 2017, the county was filing late with their previous auditors as well because things were not getting done, so it’s not a new thing since we took over the audit, it’s something that’s continued every year.”
“What exactly is it that’s not happening on our end that keeps not happening?” Board Chairman Jeremy Root, R-District 5, asked. “We keep getting these unmodified opinions, as though OK, it’s good, we’re good, but then we get the same crap every year. What is it we’re missing?”
“To wrap it up in one word, reconciliations,” Deeter said. “Reconciliations are not being done between what’s recorded in your records and underlying support, and that has been a common theme throughout all three years is that it is not being reconciled to know the numbers are right.”
Deeter added the unmodified opinion — stating all accounts are in order — is reached after the auditors submit, and county officials complete, various adjustments to make things right.
With regard to the $15,500 request, Brodeur reaffirmed his position that he would feel more comfortable voting on the measure once further documentation is provided. Deeter agreed more information could be provided, though ultimately the motion to advance the measure to tonight’s meeting failed 2-1.
Commissioners will reconvene at 5 p.m. tonight inside the Surbeck Building for the Committee of the Whole meeting, where the issue could be revisited, according to Finance and Administration Committee Chairman John Plowman, R-District 7.