October 3, 2011: City Council Business Meeting
Old Business: Public Hearings
Item 2: Audit Report--- Bret Norman, Audit Manager with Moore Stephens and Tiller, LLC (MST) handed the official finalized copy of the “procedural” Audit Report over to the city. Councilman Tony Powell asked Norman to affirm the findings in the audit letter and on page four of the report, that during the period investigated, 2006-2010, that there were no written controls over the monitoring of city transactions, city assets, city compliance, procedures for bidding contracts were noted, and there were no written controls over supplies or equipment. Rex Millsaps was the mayor and presiding officer for the city council during the time investigated.
Regarding expenditures Powell asked for and received Norman’s confirmation that spending controls made during this period were “all verbal” and varied from one department to another. In the Electric Department there were no internal policies over inventory controls---inventory was not tracked upon arrival, while in use and in some instances materials, purchased by the city, was delivered directly to the contractor. There were no accounting procedures that city inventory delivered to a jobsite was actually used on that project.
Powell set the stage by stating that the council asked MST to conduct this audit shortly after getting elected as a . He said the audit was conducted over the past four years to determine “if there were some financial inadequacies." Citing that he had campaign on the issues of “financial clarity and transparency”, the audit was called for to ensure that the new city council started off with a “clean slate”. Powell said the audit shows that some procedures need to be put in place that will make sure financial accounting, responsibilities and controls occur.
In tracking expenditures over $100,000 and specifically citing the Collins Hill/Collins Industrial Way Project, Powell said, the amount at issue is $184,000. There was no record of approval by the city council for this project. Noting that in emergency situations, such as flooding, actions can be taken without council’s approval, but this project was not applicable nor met the criteria to be deemed an emergency.
So MST concluded and Powell pointed out that $184,000 of taxpayers’ money was spent on private property.
Inadequate record keeping, by the city, on a Hodge Construction Company project prevented MST from properly tracking the discrepancy in the council’s approved amount of $1,204,000, but $1,353,000 was spent---leaving $149,000 unaccounted for, but spent.
Over the investigated four year period, under Millsaps administration, the city spent $807,000 on department heads authorization alone with Hodge Construction Company, seemingly without mayor and council approval. Powell said the way that this was done was if expenditures were beneath the $40,000 threshold that requires council’s approval, department heads could spend say up to $50,000,000 on one project, as long as it was done in increments below the $40,000 threshold.
With regards to the construction of the , it was reported that $7.7 million was spent, but MST determined that $10,047,000 was actually spent. In the report MST itemized the $3,000,000 difference. Norman noted that the Police Department was the only department that provided such detailed records.
The Forest Hill Paving and Curbing Project had an original bid of $137,000 that was approved by council, but this project had $379,000 of change orders that was never approved by the council.
MST was also asked to look at the penalties levied against the Gas Department in 2010 in the amounts of $22,500, $1,395,000 and $1,770,000. Powell said while the city did not have to pay all of these penalties that the $22,500 pre-dated the others. In speaking with the Public Service Commission, it was brought to MST’s attention that the $22,500 fine was a pre-curser of things to come by way of the larger fines. Norman said the PSC in accessing the $22,500 fine was giving the city a “warning that was not heeded”.
Powell said that a department head was able to pay the $22,500 penalty without notifying the council that the city had been penalized. This department head was able to get the penalty reduced to an amount that falls beneath the amount requiring council’s approval. He then paid the fine and kept it, allegedly, hushed from the council.
MST recommended the city set up project files with a project summary sheet showing every milestone and approvals associated with that project. This would enable, said Norman, the mayor, council and staff the ability to review the status of a project at any point and know exactly where that project is financially and by timeline.
The council approved the motion made by Powell to accept the final version of the Audit Report from MST in a 4-0 vote. Powell’s motion also included releasing the report to the public.
In a separate motion also made by Powell, the council approved, 4-0, hiring MST and to authorizing City Manager Bob Baroni to start the process of devising and implementing an action plan for “fixing the accounting issues” as identified in the Audit Report.
Councilwoman Katie Hart Smith added to the motion that these issues be addressed in “order of priority”.
III. Public Comment
Rex Millsaps---During his allotted two minutes, Millsaps used this time to accuse the council of not being transparent and for breaking the law on thirteen different occasions by, improperly convening the Business and, or Work Session in moving into Executive Session. Citing Georgia law O.C.G.A 50-14-04, he said is very specific on procedures to close the meeting.
He said a year ago he was criticized by some that now sit on the council for not being transparent because the budget, while he was mayor, was adopted in Special Call meetings.
“On August 17, 2011 Millsaps said, “this council approved the FY 2011-2012 Budget in a Special Call meeting, shame on you.”
Millsaps said he wanted to address the issues raised in the Audit Report, but could not because earlier in the day his request for a copy of the report was denied by Mayor Judy Jordan Johnson. Johnson later said she denied this request because the final version had not been voted on for approval by the council.
Countering that response after the meeting adjourned, Millsaps said public money was spent on the audit therefore it did not require a vote for its release.
The former mayor struck a blow by saying “on all of those occasions at least two city attorneys were present”. And that he had brought these violations to the attention of the City Attorney, Lee Thompson, Jr. Millsaps said he didn’t know if these violations had occurred due to an “ignorance of the law or just a total disregard of the law”.
“I would suggest to you (the council) that you seek wiser counsel on these issues,” said Millsaps. “If you are going to preach transparency, you should abide by transparency.”
Mayor Johnson took responsibility for these alleged violations by claiming “ignorance of the law”.
This caused Councilman Powell to jump in “as a point of order” to defend City Attorney Thompson. Powell said he was accustomed to being spoken to “harshly” by Millsaps.
“But in a public meeting I will not allow Lee Thompson’s name to be besmirched by anybody,” said Powell while shaking his finger in Millsaps direction. “He has done yeoman work just catching up on the mess that was left (by the Millsaps administration). I will not tolerate that he is a good man.”
After hearing the last item on the agenda, the council moved into Executive Session.