Letter: Another Audit Of SC First Steps
A financial audit of S.C. First Steps conducted by Greene, Finney & Horton, LLP of Mauldin, S.C. was released earlier this month. It had no recommendations to add to the hundred or so recommendations from other audits and reports because First Steps managed to dodge accountability by ordering a descriptive audit only. It continually stated that the purpose of the audit was not to offer opinions.
The report also could not audit past fiscal years’ financial records for First Steps because 2013 is the first year First Steps prepared financial statements – so the audit was mostly worthless.
It did make the following statement:
Budgetary accounting principles differ significantly from GAAP [Generally Accepted Accounting Principles] accounting principles. Basis differences arise because the basis of budgeting differs from the GAAP basis used to prepare the statement of revenues, expenditures, and changes in fund balance. In the current year, there are funds that are received by First Steps that are not legally budgeted and therefore, the amounts reported as actual expenditures on the budgetary basis do not agree to the actual expenditures reported in the governmental fund Statement of Revenue, Expenditure, and Changes in Fund Balance and the Statement of Activities. The differences between the budgetary comparison schedules for the General Fund and Other Budgeted Funds as compared to the Statement of Revenues, Expenditures, and Changes in Fund Balance are related strictly to the modified accrual basis of accounting which include accounts receivable and accounts payable as revenues and expenditures in the current year while the budgetary basis would include those amounts in the year that payments were actually received or paid.
In other words the report couldn’t audit past years and what it could examine is so far removed from accepted practices, it couldn’t be processed.
As they have done in response to other reports, First Steps’ leaders Susan DeVenny and Dan Wuori will likely translate this latest audit for board of trustees members – and the fact that First Steps accounting practices differ significantly from generally accepted practices will be ignored.
Evaluation reports and audits do not generate board action. Minutes from First Steps June 20th board meeting – released this week – showed no discussion of the Legislative Audit Council report on First Steps but merely called for emails to Lisa Van Riper, a board member, to hire a paid external evaluator to respond to the LAC recommendations.
“Ms. Van Riper pointed out that a hard copy of the Legislative Audit Council report was available to all Board of Trustees members and she asked each member to take one home, read it, and then email her any material that they believe should be included for further evaluation by the external evaluator. ”
This external evaluator report will not be released until November 2014, at which time, the board will probably not refrain from discussing it again as its members keep kicking the First Steps can down the road.
Amazing … thank you for this excellent recap. What’s truly baffling is that our “Republican” S.C. General Assembly and “Republican” Gov. Nikki Haley both committed more than $26 million toward this failed agency back in June – after the LAC report documented its abject failure and fiscal mismanagement.