Askewville faces LGC sanctions
RALEIGH – Town of Askewville officials have been directed to get their financial affairs in order or face consequences.
As part of a scheduled meeting of the North Carolina LGC (Local Government Commission) here Oct. 6, that public body discussed an ongoing financial situation with the Town of Askewville. It was noted by the LGC that Askewville officials have failed to submit annual audits for the 2016, 2017, 2018 and 2019 fiscal years.
North Carolina General Statute 159-34 requires each unit of local government and public authority to have its accounts audited each fiscal year and to submit a copy of the audit report to the Secretary of the LGC as soon as possible after the close of the fiscal year (June 30). Annual audit reports for counties and municipalities are typically due by Oct. 31 based on the terms of the local government’s contract with its auditor. The LGC offers units a one-month grace period, after which a report is considered late.
The LGC has twice notified Askewville officials this year – once on Jan. 3 and again on March 3 – regarding the four past due audits, and a recommendation to contract with outside entities, “to ensure fulfillment of certain duties of the [town’s] finance officer and to ensure that the annual audits are completed and filed as required.”
The March 3 notification was an approved resolution that required a response from the town within 30 days that confirmed the successful submission of all overdue audits or that the town had hired adequate assistance to complete and submit the annual audits. As of Oct. 6 there had been no response from Askewville officials.
At Tuesday’s meeting, the LGC adopted an enforcement resolution that requires Askewville officials to hire an outside entity to bring all bank reconciliations current and to prepare its books for audit.
The wording of the latest resolution, a copy of which was obtained by the R-C News-Herald, gives Askewville officials 30 days to hire that outside entity. Furthermore, the resolution requires the town to notify the LGC within 30 days of that hire, to include the name of person or persons under contract to perform those financial tasks and a timeline for the completing the work.
There were three other stipulations within the resolution:
To require the Town to complete and submit to the Secretary of the LGC the town’s annual audit reports as required under N.C.G.S. 159-34(a) for fiscal years 2016, 2017, 2018, 2019, and 2020 no later than 12 months from the date of the resolution; to require the town to open its offices and accounting records to the LGC staff and cooperate with staff as they work to verify that actions required by the resolution have in fact been taken; and to report to the LGC any failure of the town to comply with the requirements in the resolution or with the requirements of Chapter 159 of the General Statutes of North Carolina.
“No one on the LGC likes passing resolutions compelling any of our cities, towns, and counties to do anything,” stated Dale F. Folwell, State Treasurer of North Carolina, speaking to the R-C News-Herald by telephone on Wednesday afternoon.
“But after five years of lacking budgetary and fiscal control, we felt it was time to compel, not ask or suggest, the Town of Askewville to get their books in order,” Folwell continued.
The State Treasurer said Askewville officials were not in attendance at Tuesday’s meeting.
“As people are struggling economically in a COVID world, facing job loss and job insecurity, especially those with low incomes, this town is still going about the business of collecting taxes,” Folwell added. “The citizens of that town, the taxpayers there, have a right to know how their money is being spent.”
Folwell stressed that hiring an outside entity to reconcile the bank statements and prepare all records for the auditor is highly recommended.
“It’s not acceptable for an auditing firm to prepare the books that they will be auditing,” Folwell stated.
The consequences facing Askewville officials for failing to comply with the resolution could result in the LGC assuming control of the town’s financial affairs.
The LGC is part of the State Treasurer’s office. That staff is responsible for fulfilling the obligations of the Commission found in Chapter 159 of the North Carolina General Statutes. Staff provides resources, guidance, and oversight to over 1,300 units of local government subject to the provisions of Chapter 159 on a variety of topics including annual budgets, internal controls, debt management, and pension and OPEB reporting.