photo by: Mike Yoder
Amid recurring accounting issues in recent years, City of Lawrence leaders will soon be considering a budget adjustment that includes an addition of around $ 4.7 million for a new financial software system.
As part of its Tuesday meeting, the City of Lawrence Commission will consider the third quarter 2021 budget change, which would result in a net increase of approximately $ 5.7 million and includes the spending of some grant funds. The most significant component of the budget adjustment is an addition of around $ 4.72 million for new financial software, which city officials say is needed to address accounting issues that were identified during external audits of the city’s finances in recent years.
As with the 2018 and 2019 audit reports, the recently completed 2020 report found that the city had a ‘lack of internal controls over financial reporting’, meaning that the city’s processes for tracking its cash flow, assets and and its liabilities weren’t reliable enough to ensure the city had accurate financial records, as Journal-World reported. Auditors had to make significant adjustments to the city’s books each year before approving them as accurate and ultimately giving the city an “unmodified opinion” or unequivocal audit, according to documents the city provided to the city. Journal-World.
Auditors cited errors in record keeping, turnover in the city’s finance department, and problems with the city’s financial accounting system as contributing to the problems. For example, the system requires city staff to make workarounds that auditors say open the city to risk. The city issued a request for proposals in November 2020 for the new software system, and commissioners received vendor presentations and an overview of expected costs at their meeting last week.
The city’s new enterprise resource planning system will include financial management elements such as general ledger, accounts payable, accounts receivable, purchasing, grant management, capital projects and management. of the budget, according to the project plans provided to the committee. The system will also include human resource elements, such as benefits and payroll, and community development elements, such as land use, planning and code enforcement. Consultants from BerryDunn led the city through the proposal process, which included 13 potential suppliers.
The financing plan for the new system has both upfront and ongoing costs, and it includes a 2021 budget review of $ 4.717 million to pay for data migration, one-time implementation costs, and subscription fees. the first year for the new system, according to a note from city staff to the commission. The note states that temporary notes in the amount of $ 3.917 million will be issued and repaid over a period of seven years, and the remaining $ 800,000 will be paid with the available cash already reserved for the project. Current subscription fees and reimbursement fees are included in the city’s 2022 budget and will be included in future budgets.
The project plan includes several expected benefits of the new system, including improved data access and stronger reporting; reduce the current reliance on manual workarounds and third-party systems; and provide enhanced training resources for frequent and occasional users of the system.
Due to financial uncertainty in 2020 linked to the coronavirus pandemic, the commission adopted a “reserved budget” for 2021 and planned to make quarterly adjustments. The committee has already discussed other adjustments included in the third quarter budget amendment, such as additional spending for the Burroughs Creek Splash Park project. The note states that the $ 5.7 million change will be offset by unforeseen income, previous year’s fund balance and / or savings seen throughout the year.
The Town of Lawrence Commission will meet virtually at 5:45 p.m. Tuesday, and some staff will be in place at Town Hall, 6 E. Sixth St. The public can attend the meeting in person at the hotel. town hall or participate virtually by following the instructions included in the committee’s meeting agenda, which is available on the town’s website, lawrenceks.org.