Radford Council Briefed on Fiscal Review by State

By DAVID QUESENBERRY

Patriot Publishing 

The Radford City Council received an update from the City Manager about the ongoing review of the City’s finances by the Auditor of Public Accounts in Richmond.

City Manager Todd Meredith told Council that the Auditor of Public Accounts (APA) “is currently evaluating the City of Radford to determine whether or not it meets the criteria for experiencing ‘fiscal distress.’ Should the City meet that criteria he continued, the APA may make recommendations for additional assistance to the City. Such assistance more often than not is in the form of consultants to assist in setting financial policies for the city’s recovery.

Meredith said the decision as to whether or not the City will receive additional assistance rests with the Governor’s office, Executive Branch officials and legislative committees.

“The primary objective of the APA’s review process is to determine whether Radford’s situation meets the state’s criteria for experiencing fiscal distress,” he said. “The process is not meant to be punitive toward the City of Radford. It is not meant for the state to come in and take over the Finance Department.”

The APA process, he continued was meant to help determine whether or not the city may need state assistance in support of its efforts to improve its financial position.

Mayor David Horton said that the City had been going through this process for a number of years.

During the 2022 monitoring cycle, APA noticed that the City was experiencing downward trends and lower fiscal performance for 2020, 2021 and 2022. The City was notified at that time

(2022) of the issues.

The City Manager, Finance Director and other staff took part in a follow-up review process with APA in December of that year using information supplied by the City.

Horton added that at that time it was determined that City Council and management were monitoring the situation and were enacting policies and procedures to improve the city’s finances. As a result, the APA concluded that Radford did not meet the criteria for being in “fiscal distress” and did not make any recommendations for state assistance.

Horton said that his impression was that this process was an “early warning system” to help localities recognize when the needs of the locality could not be met. It was not meant to punish, but as a warning to localities that APA had noticed that things were happening and they could bring recommendations and resources to assist.

At this time Horton said he did not know if resources were available or if the city would make the list as being distressed. He acknowledged that the city had experienced financial issues that affected its provision of services to the citizens.

In a related matter, City Council awarded the contract for forensic audit services to Brown Edwards & Company, L.L.P.

City Manager Meredith said that the City had issued a Request for Proposals (RFP) for forensic audit services and had used the competitive negotiation process as required by the Virginia Public Procurement Act.

In competitive negotiation he said, professional service firms submit bids that do not include pricing. The bids are reviewed and scored based on their ability to complete the work as proposed in the RFP and their qualifications. Meredith said the bids were all ranked and the City entered into negotiations with Brown Edwards resulting in the contract that was presented to Council for consideration.

John Aldridge of Brown Edwards spoke briefly with Council on the scope of the work. They would be focusing on the specific procedures listed in the engagement letter using forensic auditing guidelines. As the audit progressed, Aldridge said if things came up during the audit, the city would be notified. He felt that the City would get a lot of recommendations for things that could be done differently or better. The overall goal he said was to make Radford better going forward and to learn from the audit. At the end of the process a final report would be issued which would list all the things observed in the audit and all the recommendations made for change or improvement.

Aldridge explained to Council that a forensic audit differed from the standard audit for a fiscal year in that it focused on specific areas of financial performance. A standard audit covers a broader scope and expresses an opinion on the correctness of fiscal information on a particular date. A forensic audit he said, focuses on procedures and policies and issues recommendations while also reporting on things found during the process.

For the City’s forensic audit, the engagement letter mentioned by Aldridge, outlines twenty-eight separate procedures examining specific aspects of the city’s financial data. The audit will cover the fiscal years ending on June 30, 2022, 2023 and 2024. The final procedure, an analysis of unassigned fund balance will cover the period from June 30, 2020 to June 30, 2025. A tentative schedule for the audit included with the engagement letter shows work on the audit to be completed in August 2026.