Reading receives good news from its latest financial audit

Reading received high praise from a team of auditors who looked at the city’s books from 2020, and that is good news for a city expected to leave financial oversight next year.

Christopher M. Turtell, a partner with Herbein + Company Inc., presented the 2020 audit at City Council’s committee of the whole meeting Monday night.

“There’s been a lot of improvement in the city over the past several years,” Turtell said. “This is probably the cleanest audit summary page the city has had in the last five to 10 years.”

“The biggest takeaway here is the city is continuing to improve its timeliness and accuracy of financial reporting,” he added.

One of the most crucial parts of the audit, Turtell said, was the city’s Community Development Block Grant Program, Highway Planning and Construction and Capitalization grants.

“In the federal awards, we did not have any findings in internal controls or compliance,” he said. “A big step forward for the city.”

There was one finding that has plagued the city for years and that was account reconciliations and material adjustments.

“Certain funds such as the self-insurance fund really weren’t reconciled as timely as we would like it to be,” Turtell said. “(In 2020), overall the city did a better job of presenting us reconciliation on key accounts that were presented and didn’t take material adjustments to get there.”

The city’s audit only had that one finding, and for the first time since 2011 pension reporting and grant administration were not among the findings.

City Finance Director Jamar L. Kelly asked why the audit was such an improvement over other years.

“Would it be accurate to attribute all of that to the city’s finance and accounting staff?” Kelly asked.

Turtell said a majority of the credit goes to that department.

“Consistency in positions in the finance department makes a big difference,” he said.

Turtell also credited the community development and public works staff and how they managed federal funds.

“A lot of it had to do with making sure reports were filed timely and they were filed properly,” Turtell said.

Council was happy to see the city has turned things around.

“This has been a long journey for quite a few of us on council,” said Councilwoman Marcia Goodman-Hinnershitz. “Starting out years ago with the very painful process of knowing the city wasn’t meeting its requirements. We need to be appreciative of the work that goes on behind the scenes.”

Council President Jeffrey S. Waltman Sr. commended everyone in the administration.

“It’s certainly helpful that the internal staff got their hands around this and the accuracy of the numbers,” he said. “There were times we weren’t even sure if the numbers we were looking at were accurate. We’re at a much better place.”

The audit

The city did see about a $2.9 million drop in revenues in 2020 because of the COVID-19 pandemic, Turtell said.

Despite the pandemic, the city managed to end the year with a $2.4 million surplus, he said. Many of the savings came from not being able to do capital projects and not having all personnel positions filled, Turtell said.

“The city did a nice job of tightening its belt and making sure there wasn’t any unnecessary spending going on,” he said.

Turtell did point out that the city still has a lot of money in its liquid fuels account and capital project account.

Liquid fuels are monies from the state that can only be used for road projects such as paving. The city had $6.3 million in the account at the end of 2020.

Mayor Eddie Moran announced a two-year, $10 million street improvement plan in April that would use liquid fuel funds.

The city also ended 2020 with $16.8 million in capital project funds for projects such as building a new fire station or fixing City Hall’s HVAC system.

The city has been told in the past that it needed to spend more of its capital project money and it had started to do that until the pandemic hit.

“I know the city has been working really hard to spend down that liquid fuels and federal project balances in a consistent planned way,” Turtell said. “But we do have a pretty nice reserve here in capital projects. I don’t think in my history here at the city, looking at a capital project balance, that the city ever had that much at least set aside for capital projects that wasn’t debt related. It’s good to have that flexibility for capital projects.”

Source: Berkshire mont