If the city of Philadelphia’s financial house is in order, they could be caught up on their financial audits sometime in the first half of 2022.
Tom Windham, CPA, of Windham & Lacey, PCCL, spoke at Tuesday’s board meeting. The city has not completed a financial audit since the Fiscal Year 2017. Windham’s firm has been hired to get the city caught up as quickly as possible.
“We have been doing this since 1991,” Windham said. “We like working with small towns. We are familiar with the software you use. We understand how things are supposed to work. We have a staff of 25 people though all don’t do audits. We have a large enough staff.”
The firm has signed a letter of engagement with the city to do the 2018, 2019 and 2020 fiscal year audits.
Windham said his company is currently working with 15 cities, auditing their financial reports. He said this is a busy time of the year but thought they could pick up the work with Philadelphia if everything is in order.
Ward 1 Alderman Justin Clearman asked the obvious question. How long will it take?
“I can’t tell you that because we don’t know,” Windham said. “(City clerk Nikki Walton) has been sending us things but we will have to get your books and see what kind of shape your books are in first.
“Then a lot of things we get from you, we have to confirm through outside sources. Those people will have to go back in their archives. It takes time. And we are sitting here in the middle of our busy season.
“We understand the urgency of where you are at and we will do our best to move it.”
The Fiscal Year 2017, which was prepared for the city by Rhea, Shaw, Griffin and Stuart, LLC, and given to the city April 26, 2019, and recently made public, will be the starting point.
“First, we will make sure it is solid,” Windham said. “We do a little testing to make sure we are starting out with good numbers. From there, what we do is add on to the numbers, or build a picture of the finances.
“We will interview people and will look at the processes. We will test some of the processes to see if what they say is going on, is going on. If we can build a picture in our mind that every is being done well, that eliminates of the future work,” Windham said. “Each year, we look at it to make sure the processes are still in place. Then we can move forward.”
Windham said the hard work is at the beginning. If it all goes well, he said the Fiscal Year 2018 audit could be finished by Nov. 30. He noted that no issues were listed in the FY 2017 audit.
Alderman Jim Fulton asked if the city was in trouble with the state auditor for being so far behind.
“There are towns and cities that are in much worse shape than you are,” Windham said. “The state auditor’s office was given authority 10 years ago where they can hold money out of your sales tax money and go hire their own firm to get it done. They have never done that.
“You will be good but you need (to be current). It is hard to be efficient if you don’t have up-to-date financial information.”
He said it is preferable to have an audit done by the end of the next fiscal year but added that the law is vague.
“There are two reasons you do an audit,” Windham said. “One, it is required. The other is to be able to see where you are financially.”
Windham was asked how much of the audit work would be done on site.
“Last year, COVID-19 caused everyone to re-evaluate how they do work,” Windham said. “So, you know yourself, a lot of people started working at home. The same thing happened in the audit business. As much as we can do electronically, we will do. Also, we want to stay out of your employees’ way. Auditors can be intrusive some times. We will spend some time here.”
Windham introduced his associate, Jessica Dearman, who is a staff accountant at the firm. He said she will be working on the Philadelphia account.
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