FOR R E LEA S E AUGUST 19,2005

AUDIT COMMITTEE GIVES PROGRESS REPORT

The City's new Audit and Finance Committee, meeting since June 2nd, have issued their

first progress report to the Mayor, Council and Community. The report covers four areas

including the 2003-2004 Audit Report, the Budget for the current year (FY 2006), the

upcoming 2004-2005 Audit and the possible need for an Investigative Audit.

In submitting the report, Chairman Mel Stubbings said the committee was very pleased

with the commitment shown by the new City Manager, Mayor and Council. He went on

to say "While some progress has already been made, considerable work remains. We

will comtinue to work with the City to provide community input to see that the

improvements needed are made as soon as possible." The report identifies the need for

better written accounting procedures, more centralized control of sick and annual leave

including the need for time clocks, stronger controls and immediate budget restraint.

In reviewing the audit of 2003-2004 and meeting with city officials and auditors Mike

Kern and Nick DeTello of Kern, Shores and Company, the findings and

recommendations were discussed in detail. In meetings, the auditors discussed problems

and deficiencies found in accounting systems and procedures. Notably the auditors

discussed newer accounting regulations being faced by cities. In the final audit and in

discussions with the Committee, auditors, among other things, recommended that

procedures for tracking leave and time be centralized, that all capital assets such as and

including streets, water and sewer lines, be shown on financials and that better

accounting procedures in general be adopted and implemented.

In reporting about the audit and with stated plans for improvement by City Manager,

Susan Monroe, the report states" The draft Accounting Policies and Procedures will be

presented to the Audit and Finance Committee to review and amend as needed prior to

adoption.. ..The Committee will work with the City to determine how best to meet this

requirement (recording capital assets)." The report identifies that the has City reported

that other findings in the systems area are planned to be addressed with upgrades in

computer systems and interconnection of computers between departments with network

servers and by better utilization of existing software.

In the area of records for annual sick leave and annual leave the city has committed to

centralize record keeping. The Committee Report has a further recommendation

regarding the need for time cards and time clocks. The report says "The Committee

recommends that the City implement a time clock/card system Employees should be

clocking in and out for payroll. With computerization this can be done with Scanned ID

Cards and/or PC's for office workers at individual work-stations. Current manual

tracking allows more error and a time card system will more accurately record actual time

worked..

"The current budget, as adopted, is subject to a review after 90 days, however, it is being

monitored daily by the Committee and City Staff', said Mel Stubbings. The report

identifies that a budget revision is likely, and goes further to recommend that "Since a

budget reduction is imminent, it is recommended that City Departments and the City

Council not obligate itself to any major "non-essential expenditures until budget issues

are resolved."

The report identifies that at the next scheduled meeting of the Committee on September

11, the Committee will be discussing whether there is any identified need for an

Investigative Audit. These type audits are more specific in nature than the annual audit

of financial condition

The Committee Report indicates that the Committee will continue to work with the City

on the 2004-2005 audit and that most of the findings in the 03-04 audit will be included

in the new audit since the changes are being made now. "We want to assure citizens that

the Committee is working hard to increase accountability within city government." Said

Mel Stubbings in conclusion. "We feel a real responsibility to help city government and

the community to get back to a trust and confidence relationship", he added.

Community representatives on the Audit and Finance Committee include Stubbings,

Steve Harrison, Jane Auld, Jim Northcutt and Gene Walker. City representatives include

Donnie Condit, Don Lewis, Buddy Garvin and Susan Monroe.