City leaders to review 2020 financial audit; auditors continue to find city lacks proper financial controls

Lawrence City Hall is pictured in this file photo.

City leaders will soon receive the annual outside audit of the city’s finances, which like the past couple years continues to red-flag a key aspect of the city’s bookkeeping.

As part of the Lawrence City Commission’s meeting Tuesday, auditors with the firm RSM will present the audit findings and the 2020 Annual Comprehensive Financial Report to the commission. The audit provides information about the state of the city’s finances as well as the effectiveness and quality of the city’s bookkeeping.

Like in the 2018 and 2019 reports, auditors found that the city had a “lack of internal controls over financial reporting” in 2020, meaning that the city’s processes for tracking its cash, assets and liabilities weren’t reliable enough to ensure that the city had accurate financial records. As a result, auditors have had to make significant adjustments to the city’s books each year before signing off on them as being accurate. Ultimately, once those changes were made, auditors gave the city’s financial statements an “unmodified opinion,” or a clean audit, according to documents the city provided to the Journal-World.

Though the other accounting problems identified in the last audit were addressed and did not reoccur in 2020, that the city continues to be flagged for a lack of internal controls is a significant finding, though not necessarily unexpected. Like the 2019 audit, the 2020 audit flagged the issues due to the number of adjustments that had to be made and again noted that most of the adjustments related to record keeping errors such as accounts payable cutoff errors, proper revenue recognition and activity recorded to the city’s beginning fund balance.

Following the completion of the 2019 audit, Finance Director Jeremy Willmoth, who began his position at the end of 2018, said the underlying issues leading to audit findings were being worked on, but that addressing them would be a yearslong process and similar findings could persist in the 2020 audit.

Some of those underlying issues included turnover in the city’s finance department and problems with the city’s financial accounting system. As part of the 2019 audit findings, auditors said that the finance department suffered from staff turnover just months before the audit began and struggled to keep up with the demands of the daily assignments as well as the added workload of the annual audit. Since then, the city has been making efforts to add staff in the finance department.

In April, the City Commission approved an amendment to the 2021 budget that added 20.5 new staff positions overall, including two positions related to purchasing that would allow accountants to focus more on accounting duties. A city staff memo regarding the positions stated in part that one factor that has contributed to turnover among accountants has been requiring accountants to do a large volume of non-accounting work related to purchasing and procurement. The city manager’s recommended budget for 2022 also calls for adding another eight positions overall, including another two positions in the finance department.

Another underlying issue that has been cited is limitations of the city’s current financial accounting system. For instance, the system requires city staff do workarounds that auditors say open up the city to risk. The city has been planning for a replacement to the system, and Willmoth said a request for proposals was released in Nov. 2020. He said the city is working on finalizing those documents so that the City Commission can consider the proposals at its meeting Aug. 17. Willmoth previously said that depending on the selection and the complexity of the conversion, the new finance system would most likely be operational sometime in 2022.

The Lawrence City Commission will meet at 5:45 p.m. on Tuesday at City Hall, 6 E. Sixth St. Residents who want to provide public comment can do so in person at City Hall, in writing or virtually via Zoom, and more information about those options is available on the city’s website,


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