City commissioners hear financial results for 2020; they express hope that city’s financial reporting is set to improve

Lawrence City Hall is pictured in this file photo.

Lawrence city commissioners closed the book on 2020 at their Tuesday evening meeting as they received the city’s financial audit for the year when the pandemic started to rear its head.

Commissioners were told financial results for the period were solid — given the impact of the pandemic — but the city’s accounting practices received a red flag for a third year in a row from auditors.

Auditors with the firm RSM said the city had a “material weakness” related to a “lack of internal controls over financial reporting.” That material weakness finding means 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.

The city’s financial staff had to make several accounting adjustments before the auditors signed off on the city’s finances, but ultimately the auditing firm attested that the city’s financial statements were accurate and all funds were accounted for.

City Commissioner Stuart Boley, a retired IRS auditor, said that was an important finding, but he also said the city has to get to the point where its financial statements are in better order.

“I have been working for six years on this,” Boley said of his time on the commission. “It is really important. Our financial operations have to be excellent if we are going to deliver excellent city services.”

Boley said he hoped that next year would be the year that the auditors do not find any material weaknesses with the city’s finances, but he said he could not guarantee that would be the case.

The city’s finance director has said the process of working through the accounting issues is a long-term one. Finance Director Jeremy Willmoth, who began his position at the end of 2018, had warned commissioners last year that this 2020 audit might again have such findings. He has said the department needs a new computerized financial accounting system. He hopes the city will make a decision on a vendor this month, which could allow the system to be in place in 2022.

City Commissioner Courtney Shipley said getting that system in place likely will be a key component to improving the financial reporting capabilities of the city. But she also said getting more city staff hired and slowing the rate of turnover in the finance department also was extremely important.

She said that is one of the reasons the commissioners agreed to a mid-year budget adjustment that added new 20.5 new staff positions to City Hall. Those hires included two positions related to purchasing that would allow city accountants to focus more on accounting duties.

In terms of some of the key findings in the 2020 audit, they included:

• The city took in about $200 million in revenue in 2020, up 2% from 2019 totals.

• The city had about $200 million in expenses in 2020, up about 7.5% from 2019 totals.

• Property tax revenue in 2020 totaled about $43 million, up from $38 million in 2019. That was about a 13% increase in property tax collections, as property values generally rose in the community. Sales tax and other tax revenues that were more dependent on consumer spending took a downturn as the pandemic hit. The city’s other tax revenue fell to $52 million, down $56 million in 2019.

• The amount the city collected in utilities — water, sewer and trash — totaled about $68 million, up 3.7% from 2019.

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