City auditors report to the board meeting

Harry Stevens and Chad Elkins, with Watkins Ward and Stafford, reported to the Holly Springs Mayor and Board of Aldermen meeting Sept. 5.

Elected officials wanted to know why the 2021 audit of the city has not been completed and when to expect a report.

Mayor Sharon Gipson has introduced auditors Bruno & Tervalon to the board seeking to hire that company to do the future city audits.

Stevens and Elkins sat for their report to the mayor and board following a heated discussion between the elected officials regarding the TVA (Tennessee Valley Authority) report, which ended at one hour and 11 minutes with Ward I Alderman Bernita Fountain calling for a point of order because of so many on the podium were talking at once, each in an effort to recover the floor.

The auditors were asked to return to their seats while a 26minute breakout of more debate on how the TVA audit will be handled. TVA’s Melanie Farrell and HSUD’s Annie Mason were each asked to come to the table to answer questions aldermen had about the conduct of the TVA audit.

Steven and Elkins were seated again with a quip of humor from Gipson that the gentleman were getting their exercise coming to the table and then going back to their seats.

Stevens said his firm was engaged to do the city audits.

“You are the ones working on the past audits at the utility department? You were working on the 2021 city audit?” Ward 3 alderman Colter Teel asked.

“We are at the very end,” Stevens said. “We have a huge report to finish. The actual audit is written.” Stevens estimated one more day of work, then the report will go to a review process which could take a week or so.

“So we are real close,” he said.

Board attorney John Perry asked Stevens to explain the process of the audit to the board and how auditors have to catch up from year-to-year with the audits.

Perry said a lot of the problem with audits being behind are sometimes blamed on the pandemic. Many businesses, including the City of Holly Springs, were closed to the public in the pandemic.

“We were not allowed to be in at all during that period,” Stevens said. “That has a boomerang effect on everything that happens after that. Everything was more difficult.”

Fountain asked if other auditors in the state were behind on finishing their audits.

“Yessum, that’s very accurate, very accurate,” Stevens said. “We are in constant communication with other people in our profession and they are behind, too.”

Ward 4 alderman Patricia Merriweather asked if other local power companies were behind on their audits as well.

Watkins Ward & Stafford is working to complete yearly audits for HSUD as well as for the city.

She asked Melanie Farrell, in the audience after TVA had made an earlier report, if TVA has other local power companies out of compliance in audit requirements.

Farrell said no. Of the 153 local power companies under TVA, no other local power company is this far behind in its audits compliance as is HSUD, she said.

Merriweather said HSUD’s being out of compliance with audits is near the top of TVA’s list of remedies recommended.

Farrell said audits were number two on the list.

Merriweather asked Stevens if there were other variables causing the company to be behind on its audits.

He said there were other variables not related to the pandemic.

He said the company sent an engagement letter to the electric department after the utility lost its general manager and accounts manager when the new administration took over.

The engagement letter received no response for three months from HSUD.

So, the company provided a list of things needed to begin the engagement, Stevens said. And when auditors arrived very few of these documents had been pulled, he said. The former general manager and accounts manager were no longer at HSUD.

“So, everyone was new,” he said. “So, we arrived asking for certain documents and we found they struggled to find what we were asking for.”

He said CSA (Central Service Agency) was there one time and they helped pull some of the documents.

“And so we left and asked to be informed when this stuff would be available,” Stevens said.

Another two months passed before the auditors were informed.

He said the process is all documented by the auditors by emails.

“And so we come back in after that two-month period and not everything was available then. So, we made further requests for information and another two months. And we ran into this several different times. And the final deal, we asked the attorney for bank confirmation and we were four months getting that. There’s a timeline of almost a year right there waiting for documents for the audit.”

Merriweather confirmed with Stevens that the 2021 audit is nearly complete.

“So, you will begin on 2022. What is the approximate timeline to come in and get documents and complete an audit?”

Stevens said it generally takes around two months from the time they do an engagement. It requires several trips to HSUD.

“It takes a while, but not this length of time. No,” Stevens said.

Stevens and Elkins were thanked and dismissed by the mayor.

Gipson then asked for a motion to hire Bruno & Tervalon as the city auditor.

“So based on the report from Watkins, it is very clear the holdup was not on their side,” Jones said.

He said it is clear the delay was due to not having the documents to work with in a timely fashion.

“So, the 2022 audit, the actions should be more timely?” Jones asked Annie Mason, accounts manager.

“I can speak for our actions, not theirs,” Mason said.

Gipson said part of the delay could be based on people not working for the city, things outside the city’s control.

Gipson asked for a motion to hire Bruno & Tervalon.

“Who performed the audits before?” asked alderman Dexter Ship.

“The gentlemen who just left,” Gipson said. “Is there a motion for this? A separate team with fresh eyes on the matter.”

The mayor’s request failed for lack of a motion.