Charles City County audit reports concerns relating to internal controls

A highly anticipated audit report in regards to Charles City’s fiscal 2024 year has reported findings of two concerns regarding internal controls.

Robinson, Farmer, and Cox representative Aaron Hawkins presented his findings during a May 1 special meeting of Charles City County’s Board of Supervisors.

Hawkins reported two major issues concerned him during his investigation of Charles City’s operations. The first issue was the number of journal entries used to provide a financial snapshot. Journal entries defined in the auditing world are briefs of information in line items that will provide a preassessment and basis for the upcoming audit. The second issue was an account system error where bank reconciliation reported information posting incorrectly.

Control testing for the FY2024 budget began back in June. Hawkins said prior to his testing, he abides by three rules.

“Before I even begin, I need to see that the funds will be in balance, cash [on hand] needs to be balanced, and bank accounts need to be reconciled,” Hawkins told board members. “We had trouble with all three of those things. And it’s hard to start until they are done.”

Hawkins said he began working with the county but continued to run into issues not being able to identify funds. Even after most of the items were completed by January 2025, there was still an item on the bank reconciliation that he couldn’t identify. After drafting a statement, he issued the second finding and added it to the report.

When addressing the fund balance, the auditor reported a drop of $7.7 million in FY2024, ending the year with $6.3 million. Hawkins attributed the drop to major Capital Improvement Plan projects that were significant expenditures.

Journal entries are selected more on a random basis according to the auditor when checking each department. However, Hawkins’ analysis discovered several areas in a variety of departments that consisted of policy errors and procedures that were not followed. Among them include six disbursements approved by the department of social services without proper paperwork from a sample of 25 items, receipts missing from purchases by Charles City County Public School’s with credit cards, an employee that was overpaid by the county (which was corrected), and transactions and disbursements by the Economic Development Authority that weren’t being recorded or had approved paperwork.

Hawkins added while many of these are paperwork issues, it still should cause concern in regards to policy and procedures being followed.

District 1 representative asked if the $5.2 million Revenue Anticipation Note (RAN) factored into the audit. Hawkins responded by saying that it wasn’t reported appropriately, similar to some other grants and funding that were received.

Hawkins concluded by saying that most of the issues could be contributed to outdated technology in the reporting system. County leaders recently budgeted for the updating of a new financial system, but Hawkins advised supervisors that he would run both systems at the same time to make sure workers can get acquainted to it but also have information on another system in case something slips through the crack.

“I know the people who work for the county want to get this right,” Hawkins concluded.

District 3 chairman Byron Adkins Sr. chimed in on the needs to update the system.

“We identified some things we need to upgrade in the county,” he commented. “We don’t want to have a lack of knowledge and this report will assist us.”