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State official says Spring Lake making strides in correcting financial missteps

Fund balance growing, expenses being checked, town board told


SPRING LAKE — Revenue is on track and expenditures are being closely monitored, according to a financial report presented to the Spring Lake Board of Aldermen on Monday.

David Erwin, the town’s finance officer and accounting and financial management adviser for the N.C. Department of the State Treasurer, said that property tax revenue is the “cash high of the year.”

“The property tax will balance out, but everything is looking really good. You have good balances in the bank, and it’s a big plus. All funds are strong. There is a big change in stability,” said Erwin.

The town’s financial management was taken over in October 2021 by the N.C. Local Government Commission amid concerns about budget deficits, fiscal disarray and possible missing money.

Erwin attributed the positive report to the audit fieldwork done by contracted financial staffers and daily reconciliations of finances.

“The bank activity is reviewed daily, every morning, and tied to the general ledger. We caught two deposits that the bank didn’t give credit for last week. It was caught in the daily reconciliation and addressed immediately,” said Erwin.

Erwin said another example of progress was researching a $20,000 bill from the N.C. Department of Information Technology and proving that the town had not used its services since April 2020.

“The town stopped using that service when they switched to Verizon, and that is the sort of thing that we are catching,” said Erwin.

He cited another example of receiving more than $200,000 from the city of Fayetteville after his staff reviewed an interlocal agreement on the annexation of Fort Bragg and Pope Army Air Field.

“We are looking at contracts to make sure the town is receiving what they are supposed to receive. We discovered that the town had not received compensation since 2020,” said Erwin.

He said the internal controls, including assigning two people to review accounts payable and purchase orders; validating vendors; instituting purchase order procedures for maximum budget control; and better documentation, were among the steps taken to rebuild financial accountability.

Alderwoman Sona Cooper asked if it was possible to do an accurate audit for the past several years and was met with a resounding “no” from Erwin.

“The audits should have been validated every year; 2020 was fraught with errors. It’s been constant cleanup,” said Erwin.

The board voted in January to file a complaint with the North Carolina Board of Certified Public Accountant Examiners about its previous auditors, S. Preston Douglas and Associates of Lumberton.

The town had contracted with that accounting firm to audit financial statements since 2015.

Erwin said the accounting services provided to the town since July 2021, when the Local Government Commission first intervened, were from four staff members with years of experience.

“You have seasoned governmental staff, which is what you have needed to unwind the past five or six years. When staff started in July 2021, the town of Spring Lake’s financial foundation was broken. We have rebuilt it to a solid foundation,” said Erwin.

He said the normal workflow has included reconciling checks, validating deposits, validating purchase orders and maintaining a robust pre-audit process, among other procedures.

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The town’s general fund balance of $1.7 million in January 2020 has grown to $8.1 million, Erwin said.

“This is a huge turnaround. The leaks have been plugged, there is budget discipline and the revenues are coming in. You are rebuilding your general fund,” said Erwin.

Mayor Kia Anthony thanked Erwin and said the financial staff’s work will not be in vain as the town will continue its commitment to the budget process.

“Seeing what can be done in two years is phenomenal,” said Anthony.

Erwin also outlined budget development sessions with dates for a manager review at the end of March and department reviews at the end of April. A budget retreat is planned for May.

The final public hearing is expected to be at 7 p.m. June 13 during the board’s regular meeting.

Also Monday, the board went into executive session for one hour, citing issues of attorney-client privilege and personnel. It returned to open session announcing no action.

Anthony said before the board went into closed session that it has narrowed the search for the permanent town manager.

“I think it will be a unanimous vote this time,” said Anthony.

The board is also trying to hire a finance director and an accounts payable technician. The job descriptions are on the town website, www.townofspringlake.com.  

In other news, the Spring Lake Police Department is hosting a Cops and Conversations night at 6 p.m. May 25 in the Grady Howard Conference Room of the Spring Lake Municipal Complex. Residents and business owners are invited.

“It’s important to show up, communicate with the cops and learn the trends,” said Alderman Raul Palacios.  

The board also approved partnering with Sustainable Sandhills to pursue a grant from the U.S. Environmental Protection Agency to monitor air quality in two areas of Spring Lake, including a residential area near a high-traffic zone off N.C. 210.

Spring Lake, Board of Aldermen, finances