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County audit shows same issues

The Ohio Auditor’s Office has released Lawrence County’s financial audit for the year 2008.

A spokesman for the auditor’s office said while county finances show some improvement, Lawrence County officials still have work left to do to put the county on better financial footing.

“There are issues that remain unresolved,” spokesman Steve Faulkner said. “It is apparent Lawrence County is progressing toward getting better but it is our hope county officials will take a look at the issues that remain outstanding and review our recommendations for improvement to avoid these issues from occurring in the future.”

County officials said, for the most part, they are pleased with the audit.

“On the whole I’d say it was a good audit,” Commissioner Doug Malone said. “One thing we’re never really happy with is the cost of the audit. It’s about $40,000.”

The report said the county depends heavily on property and sales taxes as well as intergovernmental monies (grants, state aid) to pay its bills, and this presents a problem.

“Since the property tax receipts do not grow at the same level as inflation and sales tax receipts are dependent upon the economy, the county will be faced with significant challenges over the next several years to contain costs and ultimately determine what options are available to the county to increase financial resources,” auditors said.

The state auditors took the county to task for its unpaid bills. The audit noted that at the end of last year, the county had $500,000 in outstanding debts. Approximately $300,000 of those outstanding bills have since been paid, county officials said recently.

“We’re concerned, obviously, about the unpaid bills and we are working on them. This is not a problem that can be quickly remedied,” Commissioner Jason Stephens said.

Some of the issues raised in this audit have been raised in previous ones. The audit noted that Lawrence County does not use the generally accepted accounting principles (GAAP) and uses the cash basis of accounting as its method of bookkeeping. State officials noted that the county could be fined for not using GAAP. Stephens said switching accounting systems would cost the county approximately $60,000 a year in conversions fees.

Commissioner Les Boggs said he would prefer switching accounting systems because the GAAP, also known as the accrual system, even though it would mean an additional cost.

With cash basis accounting, unpaid debts are not accounted for the same way as they are in the GAAP method. In the accrual system, those debts must be paid at the end of the year or the budget is not balanced.

Boggs said using the accrual system would force the county to pay its debts by the end of the year and would not allow debts to be carried over into a new year and new budget as is the case right now.

He said if the county continues to use the cash basis of accounting, he would like to set aside an amount in the new budget to pay any debts carried over from the previous year and subtract that amount from the new budget, thus allotting money to deal with the county’s debt issue.

“I think this is a good way to do it if we’re going to stay on the cash basis,” Boggs said. “Just make a line item.”

Other issues raised include the timeliness of using some grant monies— some require the county to use “drawdown funds” within a specific time period.