The N.C. Local Government Commission (LGC) on Aug. 3 unanimously passed a resolution requiring the Town of Wilkesboro to hire additional help in submitting delinquent financial audit reports for 2019 and 2020.

The resolution requires that the town “hire additional outside entity or entities, within 30 days of (Aug. 3), to assist the town in preparing its books and financial statements for audit.”

It further compels the town to “take whatever steps need to be taken to complete the outstanding audits as soon as possible.”

The town must present the “expected and realistic timeline for completion of the 2019 and 2020 audits, as well as the 2021 audit which will be due Oct. 21” at the LGC’s next meeting on Sept. 14.

Failure to comply with the resolution “may result in the enforcement of North Carolina G.S. 159-181©, under which the (LGC) may assume control of the Town’s financial affairs.”

During the LGC’s meeting Aug. 3, held remotely via Zoom, State Auditor Beth Wood asked LGC Secretary Sharon Edmundson to define the issues that led to Wilkesboro’s delinquent audits.

“There were issues with their books not being ready in 2018,” she said. The town submitted its 2018 audit on Dec. 1, 2020, more than two years after its due date, according to the LGC, which has fiscal responsibility oversight of local governments.

Wilkesboro hired Lexington-based Rives & Associates LLP to conduct its 2017 and 2018 audits, but the firm was late in delivering the 2018 audit to the town.

The N.C. Board of Certified Accountant Examiners issued a press release in March 2020 saying it had suspended the certified public accountant certificate of Leon L. Rives II, owner of Rives & Associates.

The press release said the action was related to a lawsuit that accused Rives of acting fraudulently and breaching his fiduciary duty as an officer in Steel Tube Inc. The suit also accused Rives & Associates of acting negligently in preparing Steel Tube’s tax returns.

A jury ruled against Rives and Rives & Associates and ordered that he and the company pay $2.2 million.

Last September, the town hired an accounting firm new to them, Atlanta, Ga.-based Mauldin & Jenkins, to conduct audits for the 2019 and 2020 fiscal years for $25,000 annually.

Bob Urness, Wilkesboro’s director of finance and assistant town manager, told Wood on Tuesday during the meeting, “I can assure you nothing nefarious is going on. (Mauldin & Jenkins) is very close to finishing 2019, with only some finer pieces left.”

Urness added, “We’re picking up the pieces from a misstep a while back” that affected the 2018 audit. “I’m happy to comply and will comply” with the resolution.

Wood advised Urness to “hire somebody doing nothing but the books until the books get caught up.”

Urness said he would come back on Sept. 14 with a “roadmap for compliance. By then 2019 will be done and we’ll have a CPA (certified public accountant) picked for getting us over that hump.”

He explained in an interview on Aug. 2, “From my perspective, the town is in the process of completing these (audit) reports to bring itself into compliance and will continue to do so.”

Urness said he appreciates the LGC and the role it plays in municipal finances. “I believe that we have the same goals in mind and look forward to putting the issue behind us. The town remains in strong financial position and will take the measures necessary and prescribed to comply with these reports.”

He added that the town hired an additional staff person, Kimberly White, to perform general duties in the finance department.

The LGC issued a notice of warning to the town in November 2020 for not submitting annual financial audit reports for 2018 and 2019.

State statutes require that each local government and public authority be audited annually and that a copy of the audit report be submitted to the LGC secretary as soon as possible after the end of the fiscal year.

Audit reports for counties and municipalities are typically due by Oct. 31 under terms of local government contracts with auditors. The LGC offers a one-month grace period, after which a report is considered late.

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