After months of waiting Selma’s City Council finally got their first look at the audit for the 2002-2003 fiscal year.

City Auditor Bill Long, of Caston, Long and Company, presented the council with a preliminary audit report Monday afternoon in a specially called workshop meeting. Some council members were unable to attend.

Though the full report is not finished, the preliminary audit’s numbers are apparently “concrete.”

According to the report, the city’s general fund was $1,625,718 over budget last year.

However, that fund is just one of 35 funds in the city’s budget.

When all of the city’s bond issues are factored in, the deficit is reduced to $878,503.

When all the city’s holdings are consolidated, the city’s total change in assets is $551,000.

“The $550,000 is the real number,” Long said. ‘The $550,000 deficit is the number you should pay attention to.”

Councilwoman Rita Sims-Franklin said the $1.6 million overage in the general fund is the relevant number.

“I’m not talking about bond fund (money), I’m talking about $1,625,000… I don’t throw those others in,” she said. “I’m looking at money in, money out. When the accountants came they said a million dollars (in the) red and I was hoping they were right and it was no more than that. But I was figuring a million five (in the red). When I saw that million six it made me cringe.”

Long stressed that it is impossible to look at one line of the audit report and get a accurate portrayal of the city’s financial situation.

“Remember I kept saying don’t go to that one fund and that’s what people are going to try and do.” Long said. “Don’t go to that one fund and deal with that $1.6 (million), because that was just one fund you have 35 funds in the city. You have to add and subtract, that’s what we meant by consolidation.”

Franklin said the bond money should be considered separately.

“I do not consider bond money as operating money because that’s not what you operate on,” she said. “That’s what you buy a fire truck out of, that’s what you fix stuff with, infrastructure. What I’m looking at is day-to-day operation, paying the lights, paying the telephone, payroll, payroll taxes and insurance just like what you pay to operate your house.”

Mayor James Perkins Jr. said his administration has tried to keep projections down with the idea of putting pressure on the spending, to slow the spending down with a more rigid goal in the budget. Basically they tried to keep the budget tight, with little room for error.

“But the costs keep escalating in spite of what we do to the budget,” Perkins said. “So even though you come short of your projected budget, we have been able to manage and maintain a strong cash position.”

The city’s audit is generally expected in late February or March, but several factors pushed the audit back.

The arrival of the state-mandated change to the Gatsby 34 procedure delayed the audit, even though the city had been warned of its arrival years in advance. Also the finance department experienced extreme turnover before current finance director Cynthia Mitchell arrived

“Procedures that should have been done, that were recommended by us, were not implemented,’ Long said.

The report details several of the mistakes that were made that prolonged the process.

“On numerous occasions we encountered inconsistencies in the financial statements that required 90 adjusting journal entries to correct the books,” the report states. “Additionally, it was noted that transactions were processed into the accounting system without proper management approval.”

Long pointed also to receipts that sat around three or four weeks before being deposited, City Council meeting minutes that did not reflect the council’s approval of certain expenditures and lack of communication between offices.

“It’s extremely difficult. The people up here have one set of numbers, the people downstairs have another set of numbers,” Long said. “You’ve got to find out which numbers are correct.”

The report also states that numerous accounts receivable on the general fund financial statements were not correctly presented and required adjustments to ending balances.

Bank reconciliations were not done for several accounts during the year.

“Preparation of monthly bank reconciliations in a timely manner is a fundamental step in assuring that the City has accurate accounting records and complete interim financial statements,” the report states.

The report further adds that bank reconciliations that were prepared were generally incomplete.

“The financial position you just heard it was 2002-2003 before I took this position,” Mitchell told the council. “Every month I let you know we are in a very good cash position. Our expenses are on target. Our revenue is over expenses. Some of the findings that they have had in prior years, we’re working real hard to change anything we could in our department.”

As evidence the city’s finances have turned the corner, Mitchell said the city is currently $855,000 in revenue collected over expenses for the current fiscal year.

When asked for some of the reasons for the shortfall, Long was able to rattle off several things that cost the city money that were not on the budget.

“We had certain expenditures that weren’t budgeted for,” he said.

“We had two legal expenses that we weren’t prepared for, the Friends of Forrest. You start adding all those figures up then when we go back to main financial statements, that got consolidated.”

He also cited back pay for police and fire department workers as well as a street cave-in.

Perkins also pointed out that national economy struggled as well, hurting the city’s actual revenues.

The city’s budgeted to actual revenues was $214,325 under in the general fund. That combined with unexpected expenses contributed to the shortfall, according to the mayor.

“The costs continued to escalate, healthcare costs, our legal costs,” Perkins said. “You’ve got $140,000 where we decided to go ahead and buy a fire truck.

You’ve got that fair labor standards act from prior years where we weren’t paying firemen and policemen right, we had to go back and correct that, that was $100,000.

We had a couple of cave-ins that cost over $100,000.

It doesn’t take long.

That’s basically what happened, we were budgeting really tight.

There was no margin for error.”

Spending in public safety and public services also exceeded budget, contributing to the general fund’s overrun.

Public safety was $241,219 actual over budgeted expenditures while public service as $361,682.

Both councilman James Durry and Council President George Evans said they needed to sit down and study the numbers before they could offer comment.

“There’s a lot of questions that need to be answered,” Evans said. “Based on the report itself, it looks good, these figures are in concrete.

I would really love to sit down and look at it.”

“It’s really hard to come in on it at this time,” Durry said.