The Anne Arundel County government consistently is misstating its financial records ? which could create budget problems ? and has not placed controls to prevent employees from stealing money, according to an annual audit.
“If someone buys our bond and we tank because we didn?t disclose our financial statements properly, we could be in trouble,” said county Auditor Teresa Sutherland.
Outside auditor Clifton Gunderson LLP discovered Anne Arundel departments are handling financial reporting instead of the Office of Finance and making mistakes, often misstating record by millions of dollars. The audit reviewed data between July 2006and June 2007.
As a result, budget forecasts are inaccurate, which could hurt efforts to borrow money.
Anne Arundel failed to spend a $5 million federal grant in time and had to repay it ? along with $400,000 in interest. Though the county reapplied for the grant and got the money back, the damage was done.
“If you start not following federal government?s procedures, they?re going to start yanking the grants,” said Sutherland, who added that misspending of grants is not new in Anne Arundel.
The county has hired a grants manager, and the finance office will better review other department?s financial statements, said county Controller William Brown.
“The intent was that the departments would take steps themselves to remedy the problem, but now there needs to be an intervention,” he said.
The audit also found:
n $8.8 million in misstated funds from the county?s debt service programs;
n $4.1 million misstated from the solid waste management program;
n $1.6 million misstated from the county?s health insurance fund.
Another major issue is the lack of security controls to prevent employees from stealing money from fees or misappropriating funds.
Several employees have unauthorized access to financial programs, and some employees process an entire financial transaction, leaving little supervision over the process.
“[An employee] could commit an irregularity, and no one would know,” Sutherland said.
The county also audited only 15 of 86 sales tax accounts, giving the county an inaccurate assessment of its sales tax receipts.
Brown said a new position is needed to better handle audits, but said an addition is doubtful given budget constraints.
FITCH GIVES AA AN AA RATING
Anne Arundel received an AA rating Tuesday from the Fitch credit rating agency in New York and is a “good indicator of the county?s financial strength,” officials said.
The rating is the second-highest the county could receive next to a AAA rating. Fitch also gave Anne Arundel a positive outlook for its $896 million in bonds.
The rating is the same level the agency has given the county in past years. Standard and Poor?s, another major credit rating agency, gave the county its first AAA rating last year.
A high rating allows the county to borrow money at a lower interest rate, which means less taxpayer dollars going to paying off debt.
“Their biggest question mark is how we handle the current economic uncertainty,” said County Budget Officer John Hammond.
Fitch attributed its rating to the county?s low debt and confidence in the county?s finance management.
