Austell’s city government has been in violation of state law for three of the past four years, according to government audits.
The audits, obtained by the MDJ through an open records request, detail numerous other deficiencies with the city’s finances.
The mandatory annual audits were performed by Snellville accountant James Whitaker.
Whitaker found that “Various departmental expenditures materially exceeded their corresponding appropriations during the fiscal year ending June 30, 2015.
“The State of Georgia, Department of Audits, has determined that expenditures which have exceeded the corresponding appropriations at the department level is a violation of state law,” he added.
Whitaker’s reports for the fiscal years ending in June 2017 and 2018 have similar findings.
Austell Finance Director Denise Soesbee said the discrepancies between the money going out and the money going in have to do with grant money the city received and when that money was spent.
“A lot of these grants are for capital projects, so it depends a lot on when the construction starts and things like that, so it’s mostly a timing issue as to when we spend the money,” she said. “So no, we wouldn’t be penalized or anything for that. It was just basically we spent more of that grant in that fiscal year than we did in the next fiscal year, so it’s mostly a timing issue.”
Soesbee also said the city has taken steps to keep on the right side of the law.
“We are communicating much better with the other departments to see what grants they do get awarded and keeping tabs on that and it’s all going through one person, so it’s not going through five different people,” she said. “We’ve tried to streamline that process so we can account for it and budget for it.”
Of all the deficiencies found in the four audits, Soesbee said one caused a loss of taxpayer money.
For at least the past four years, the city’s sanitation contractor has been charging the city for more customers than the city is billing. As a result, money from the city’s general fund has been transferred to subsidize the sanitation fund at an average rate of $90,000 per year.
In addition, she said the city has kept sanitation rates low by taking on the cost of overhead. In effect, city taxpayer money was going toward lowering monthly garbage bills.
Soesbee said the cost to taxpayers was a total of nearly $146,000 for those years.
“We had a lot of properties that were vacant and the department wasn’t notifying the vendor in a timely manner. … When a property becomes vacant, we get notified through the water department and everything because they want to turn their water off and change it to somebody else’s name,” she said. “But what these properties did, they were just completely vacant. When nobody else comes in to turn it on, it just kind of hangs out there.”
Soesbee added that she does not expect to see this item again on the city’s upcoming audit.
“We’ve since gotten a lot of those vacant properties off, so now it should be streamlined pretty good,” she said. “It is typical for garbage services to be run at a loss, just not that big of a loss. We don’t like that.”
In his report, Whitaker recommended examining the rates Austell residents are charged for trash services and potentially adjusting them to come closer to breaking even.
Soesbee said that may happen as the city works on its upcoming budget.
“We’re going to have to look at the rates we’re charging,” she said. “We’ve compared them with other jurisdictions, and they are very low. So we’re going to have to look at those rates, we’re going to try to keep them the same and maybe increase them just a little bit to get some of those overhead costs taken care of.”
Whitaker reported the city was not properly recording significant balance sheet items such as property taxes and stormwater fees, which means “Errors or fraud could occur and not be detected in a timely manner by employees in the normal performance of their duties.”
Whitaker also said city accounting personnel were not properly trained, leading to errors and bounced checks.
“As of June 30, 2016, the city had overpaid its water supplier by approximately $180,000 and the City’s operating bank balance was a negative $117,000 and as of June 30, 2018, the operating bank balance was a negative $112,000, which led to bank charges for returned checks,” the report reads.
Soesbee said the city paid about $500 in bank charges.
In fiscal year 2016, the city did not record a contribution receivable from a corporation that provided the city with a written promise to give. As a result, the general fund’s balance sheet under-reported assets by $250,000.
The city had problems for years creating the right type and number of bank accounts for SPLOST projects, and the city failed to bill a significant sewer customer $104,000 for the month of September 2016, according to the audits.
Soesbee said the largest contributor to these problems has been the switch to a new accounting computer system, but turnover in various departments has also been an issue.
“At the beginning of 2016, kind of the biggest change was that computer system,” she said. “We switched the entire accounting system. It had all the antiquated parts for utility billing and all that. The accounting system was an uphill battle. … The other problems we’ve had to overcome is just the coding and new employees in other departments coding things and trying to get things where they belong on the general ledger correctly, that’s another problem. The system is what’s driving most of this.”
She said department members have been punished for some of the problems in the audits.
“I’ve had to let a couple people go in the (accounts payable) position and payroll position … Yes, we have had turnover on that. But now we have a good, stable employee that is working out really well.”