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County seeks new accounting firm
By Francesca Olsen
Hudson-Catskill Newspapers
The implications of $9 million in uncollectable funds at the Department of Social Services, budgeted as accounts receivable over the course of at least 10 years may be great, but it is not expected to drain the county’s general fund, and the county is still expected to finish ahead of budget for 2009, said Board of Supervisors Chairman Art Baer, R-Hillsdale, Thursday.
An external audit by the county’s accounting firm of federal and state reimbursement revenues at DSS recently determined that $9 million in accounts receivables will be uncollectable by the county; Baer said this will cause the county to write off the receivables, reducing its fund balance accordingly.
The accounting practice that resulted in the uncollectable funds was in place for at least 10 years; it was stopped in 2008 after an internal financial review and external audit by the county’s accounting firm, Pattison, Koskey, Howe and Bucci, CPAs, P.C.
Programs provided to county residents by DSS are mostly jointly funded by state and federal agencies. The county, Baer said, pays up front for the programs and then asks the appropriate agency for reimbursement. The expected reimbursement numbers are recorded in the budget as anticipated funds.
Program reimbursement generally has a cap, usually 25 to 50 percent, but to demonstrate the county’s need for additional funds, DSS submitted for 100 percent reimbursement, and 100 percent reimbursement was recorded in yearly DSS budgets as anticipated funds, though no programs ever received 100 percent reimbursement from any state or federal agencies.
“Because DSS was growing so rapidly, the amount being required in excess of the cap was growing larger and larger,” Baer said. “It was an unacceptable accounting practice. We never lost the money, because we never had the money.
“The department felt by putting all this forward, they could demonstrate a greater need and make a better case for full reimbursement...it created a false sense of the financial statement.”
So the county didn’t lose $9 million from its budget or general fund — the numbers were simply not accurate. Baer said it’s still a serious mistake because “it gives the implication to people who want to buy our bonds that the financial statements of the county look more attractive than they actually are.”
“We accept the responsibility that this accounting practice was not correct,” he said. “We also believe our accounting firm should have identified this as an improper practice years ago.”
Baer said he still expects the county’s fund balance to be between $11-12 million by the end of next year, and that bonding for capital projects, like renovations to the county courthouse, will still be possible in 2010.
At the end of 2008, Columbia County’s general fund had $15 million.
“We have to improve our internal control and internal accounting management,” Baer said. The county’s never had a controller, or an internal audit.
Baer said the county would be looking for a new external accounting firm due to the oversight. “While we accept the fact that the county was implicitly accountable for these receivables, our independent accounting/auditing firm should have identified this previously.”
He said $4 million will be taken from the county’s general fund to balance next year’s budget. He hopes to only have to use $1 million, then use the other $3 million to write off the uncollectable recievables.
“This has brought to light the county’s need to update itself in the area of internal audit,” Baer said. “We feel badly about the relationship with Pattison, Koskey, Howe and Bucci...we feel that in the public interest, we don’t have a choice but to seek other services.”
To reach reporter Francesca Olsen call 518-828-1616, ext. 2272, or e-mail folsen@registerstar.com.
An external audit by the county’s accounting firm of federal and state reimbursement revenues at DSS recently determined that $9 million in accounts receivables will be uncollectable by the county; Baer said this will cause the county to write off the receivables, reducing its fund balance accordingly.
The accounting practice that resulted in the uncollectable funds was in place for at least 10 years; it was stopped in 2008 after an internal financial review and external audit by the county’s accounting firm, Pattison, Koskey, Howe and Bucci, CPAs, P.C.
Programs provided to county residents by DSS are mostly jointly funded by state and federal agencies. The county, Baer said, pays up front for the programs and then asks the appropriate agency for reimbursement. The expected reimbursement numbers are recorded in the budget as anticipated funds.
Program reimbursement generally has a cap, usually 25 to 50 percent, but to demonstrate the county’s need for additional funds, DSS submitted for 100 percent reimbursement, and 100 percent reimbursement was recorded in yearly DSS budgets as anticipated funds, though no programs ever received 100 percent reimbursement from any state or federal agencies.
“Because DSS was growing so rapidly, the amount being required in excess of the cap was growing larger and larger,” Baer said. “It was an unacceptable accounting practice. We never lost the money, because we never had the money.
“The department felt by putting all this forward, they could demonstrate a greater need and make a better case for full reimbursement...it created a false sense of the financial statement.”
So the county didn’t lose $9 million from its budget or general fund — the numbers were simply not accurate. Baer said it’s still a serious mistake because “it gives the implication to people who want to buy our bonds that the financial statements of the county look more attractive than they actually are.”
“We accept the responsibility that this accounting practice was not correct,” he said. “We also believe our accounting firm should have identified this as an improper practice years ago.”
Baer said he still expects the county’s fund balance to be between $11-12 million by the end of next year, and that bonding for capital projects, like renovations to the county courthouse, will still be possible in 2010.
At the end of 2008, Columbia County’s general fund had $15 million.
“We have to improve our internal control and internal accounting management,” Baer said. The county’s never had a controller, or an internal audit.
Baer said the county would be looking for a new external accounting firm due to the oversight. “While we accept the fact that the county was implicitly accountable for these receivables, our independent accounting/auditing firm should have identified this previously.”
He said $4 million will be taken from the county’s general fund to balance next year’s budget. He hopes to only have to use $1 million, then use the other $3 million to write off the uncollectable recievables.
“This has brought to light the county’s need to update itself in the area of internal audit,” Baer said. “We feel badly about the relationship with Pattison, Koskey, Howe and Bucci...we feel that in the public interest, we don’t have a choice but to seek other services.”
To reach reporter Francesca Olsen call 518-828-1616, ext. 2272, or e-mail folsen@registerstar.com.
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The following are comments from the readers. In no way do they represent the view of registerstar.com.
stonepound wrote on Oct 17, 2009 1:14 AM:
" It very well sounds like the Columbia County Republicans are doing to Columbia county as the California republicans did to California. They have absolutely no clue how much money they have and they just keep spending. Soon they will be giving out IOU's. "
15thurman wrote on Oct 22, 2009 9:04 AM:
" are you kidding me"we feel bad about losing P.K.R&B" give me a break. ( million dollars is missing and we take responcability.Since Art Baer has been in office, the county has wasted more of our money <Taconic Hills, Pine Haven, County Industrial park, ECT: "
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OV Observer wrote on Oct 16, 2009 11:28 AM: