Warwick’s Audit History Doesn’t Excuse Present Delay

WARWICK, R.I. — One of the most important financial tools for any organization is an annual audit, which provides a detailed look at the income and spending in a given year.

At the moment, Warwick officials are lacking this critical information about the fiscal year that ended June 30, 2018 — nearly a year ago.

In an interview with WPRI 12, Mayor Joseph Solomon blamed the delay on Blum Shapiro, the auditing firm that is reviewing the city’s books for the second year in a row. 

[Solomon’s attempts to blame others for the city’s current problems are nothing new.]

As a result, the city has requested multiple extensions from the state auditor general and the state Department of Revenue to go beyond the Dec. 31 deadline set by state law, with the new deadline being July 23, 2019.

In a June 6 letter to city and school officials, Department of Revenue Director Mark Furcolo and Auditor General Dennis Hoyle note that the lack of a finished audit “impacts the reliability of projections for fiscal years 2019 and 2020.”

The TV station quoted an anonymous City Hall spokesperson as saying that “Warwick has filed its audit late every year since 2007, but (the spokesperson) was unable to say whether it had ever been unfinished this late in any of those years.”

Reached by email for comment, former Mayor Scott Avedisian wrote: “It is true that audits were routinely late, but never this late.”

As it happens, all 11 audits performed in Warwick since 2007 are posted online by the city, and a WarwickPost review of those documents show that only one audit has been filed later than May 1, and none after June 1.

Putting a date on audits

Before looking at the city’s audits dating back to 2007, it’s important to review how they’re structured and how to tell when they were filed.

At the start of every audit is a “letter of transmittal,” which is essentially a cover letter to the city council, the mayor, and the residents of the city from the finance director.

These letters state that the audit was conducted under Generally Accepted Accounting Principles, or GAAP; explain the following sections of the audit; and confirm that an additional audit of federal grants is included. From there, the audit goes into detail about the city’s operations and finances.

Each transmittal letter also includes the date on which it was formally provided to the city and, by extension, the auditor general and department of revenue.

As a result, the date on the transmittal letter shows when the audit was considered complete and appropriate for public release.

What the data shows

Here’s what a review of each city audit’s letter of transmittal found, with a note of how many days after the Dec. 31 deadline each was filed:

• Fiscal 2007 Audit: Dated Dec. 31, 2007 (on time)
• Fiscal 2008 Audit: Dated Jan. 28, 2009 (28 days after deadline)
• Fiscal 2009 Audit: Dated Feb. 3, 2010 (34 days after deadline)
• Fiscal 2010 Audit: Dated March 22, 2011 (81 days after deadline)
• Fiscal 2011 Audit: Dated March 30, 2012 (90 days after deadline)
• Fiscal 2012 Audit: Dated Jan. 31, 2013 (31 days after deadline)
• Fiscal 2013 Audit: Dated Jan. 31, 2014 (31 days after deadline)
• Fiscal 2014 Audit: Dated March 31, 2015 (91 days after deadline)
• Fiscal 2015 Audit: Dated March 31, 2016 (91 days after deadline)
• Fiscal 2016 Audit: Dated May 1, 2017 (121 days after deadline)
• Fiscal 2017 Audit: Dated March 14, 2018 (73 days after deadline)

Past delays don’t excuse current issues

After a review of all city audits since 2007, the final tally is: One audit on time; four audits filed within 35 days of the deadline; five filed between 70 and 91 days; and one filed more than 120 days late.

On average, the city filed its audits 61 days after the deadline set by state law.

By comparison, if the city meets the new deadline of July 23, the FY18 audit will be 204 days late — a full 143 days longer than the average, and the longest delay in filing an audit, by more than 80 days, since 2007.

As we’ve documented here before, Solomon hasn’t shown a great deal of financial management skill as mayor, and the continued tardiness of this critical piece of fiscal information is one glaring example.

Conclusion: None of the prior delays in filing annual audits excuse the fact that the FY18 audit is going to be more than six months late. Trying to shift attention to the city’s past audit filings doesn’t diminish the seriousness of the delay in finishing the FY18 audit, nor does it help improve the perception of Mayor Solomon’s poor management of the city’s finances.

Editor’s note: This commentary was edited after first publication to add former Mayor Avedisian’s comment, and to note Blum Shaprio being the city’s auditing firm for the FY17 audit.