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Overdue audit of Elizabeth City's books shows deficiencies in financial oversight

Main Street in Elizabeth City's historic downtown district
Tyler Newman
Wikimedia / Creative Commons
Main Street in Elizabeth City's historic downtown district

An independent auditor has submitted one of two overdue financial reports for Elizabeth City, N.C., whose finances have drawn concern from the North Carolina Treasurer’s Office.

State Treasurer Dale Folwell sent the city council a letter last month, saying he was troubled Elizabeth City was two years behind on its audits, was not efficiently collecting utility bills, and had not submitted various other financial reports.

The firm PBMares completed the city’s audit for the 2020-2021 fiscal year and submitted it to the state Monday.

It lists 13 deficiencies in financial oversight for that year.

They include the failure to properly document a repayment to the U.S. Coast Guard of more than $500,000 after the city overcharged them for utilities over the course of nearly two years. The audit says the city also spent nearly $1.5 million more than what was allocated in that year’s budget.

In his letter to the city dated March 14, Folwell said Elizabeth City’s leaders should request that the state take over their finances.

Elizabeth City Mayor Kirk Rivers says he inherited some of the city's financial concerns when he was sworn in last year, but insisted the city's books are now in order.

"This council has set the course. Policies have been set in place and now we just have to let those policies go," Rivers told WUNC. "By no means would I ask the state treasurer to take over the city of Elizabeth City."

Folwell told WUNC that Rivers should take more accountability.

“This is his city. This is his administration. And he has a responsibility to the citizens of that community — who have been through enough — to bring the highest levels of transparency, governance and competency possible,” Folwell said.

In a city council meeting Monday night, City Manager Montre Freeman said he expects PBMares to complete the other overdue audit by June.

"We estimate a four to six-week time period to have fiscal year '22 complete, and then we'll be pushing to have 2023 complete. So the goal is to have all of those things done in less than 10 months," Freeman said.

The state treasurer's office oversees the Local Government Commission. That board can take control of a city's finances by force if the city defaults on its debt or board members determine it will default if its financial policies remain in place.

It’s not yet clear when the Local Government Commission will publicly discuss Elizabeth City’s audit. Its next meeting is scheduled for May 2.

Meanwhile, PBMares is expected to formally present the audit to the city council Tuesday evening.

Will Michaels is WUNC's Weekend Host and Reporter.
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