No accounting professional a weakness for many cities

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February 9, 2010

By GINA KINSLOW The Glasgow Daily Times Tue Feb 09, 2010, 11:42 AM CST

EDMONTON — The city of Edmonton is one among several southcentral Kentucky cities that does not have an accounting professional on staff to prepare the city’s financial statements.

The absence of an accounting professional was recently pointed out in the city’s 2009-10 financial audit and defined as a material weakness.

“It’s a new requirement that we are required to report whether they have staff enough to actually prepare the financial statement and do adjustments,” said Freddie Polson, a certified public accountant for Taylor-Polson and Co., which conducted an audit of the city of Edmonton’s financial records for the 2009-10 fiscal year. “If they don’t have someone capable of doing that ... we are just required to report it.”

Having such a person on staff is not considered to be a negative and cities are not cited for it, which is a good thing because it is something many southcentral Kentucky cities cannot afford to do, including the city of Edmonton.

“We don’t have the funds to have a CPA on staff,” said mayor Howard Garrett, adding it is a technicality that the city will get caught on each time its financial records are audited.

Polson said not only will it catch small cities, but larger ones too.

“Anything they would do would be more expensive than the benefits they would receive,” he said. “It’s really not saying what they are doing is not correct. It’s just saying they don’t have the staff to do everything that should be done. In most cases there’s nothing the cities can do.”

The American Institute of Certified Public Accountants, which headquartered in New York, requires its member-accounting firms to report the absence of accounting professionals on city staffs, Polson said.

However, reporting such an issue is not a new requirement.

“This requirement goes back probably as far back as 1989, which is was an auditing standard that requires the auditor to report material weaknesses in internal control,” said Chuck Landes, vice president of professional standards and services for AICPA.

What is fairly new is a requirement of AICPA prohibiting member-accounting firms from verbally making the suggestion. Instead, member-accounting firms must make the suggestion in writing. That policy went into effect in 2006, Landes said.

In years past the cities of Horse Cave and Cave City have also had the suggestion made in their audit reports.

Aside from that one material weakness, the city of Edmonton received a good report from its auditors. Garrett said he was pleased with the report.

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