NATCHEZ — The City of Natchez’s 2014-2015 fiscal year draft audit indicates the city overspent its budget by approximately $1 million.

The draft audit was presented Tuesday to aldermen.

In addition to the city’s overspending, auditor Deanne Tanksley with the Gillon Group outlined basic governmental accounting practices that were not followed during a previous senior accountant’s time at the city. The audit had three findings related to internal control matters.

The central issue, and one that was also present in the city’s 2013-2014 audit, is the lack of attention to proper fund accounting, Tanksley said, and is mostly related to transfers of funds between accounts and interfund loans and how they were accounted.

When money is transferred between accounts, records must show the money leaving one account and entering another.

“Money was just moved willy nilly all over the place,” Tanksley said.

Qualified opinions were issued on several areas of the city’s finances, including the general fund.

The qualified opinions, Tanksley said, relate to the transfers and interfund activity.

While Tanksley said she discussed with the former senior accountant the ways in which interfund loans and transfers should be accounted, it “obviously wasn’t taken to heart.”

Former city clerk Wendy McClain and other staff recently tracked interfund loans and transfers on a spreadsheet. Tanksley said that would be a good starting point for the city to track which funds were loaning money to other funds, and anything prior to that should be written off as a transfer.

“And just wipe your slate clean,” she said.

Timely bank reconciliations continued to be an issue for the city in the 2014-15 year, though they improved from the 2013-14 year, Tanksley said. Bank reconciliations should be completed monthly, she said.

“I know they have been working hard on them in 2016 … so I do see that it is improving,” Tanksley said.

Despite overspending its budget, the city is not facing a deficit, Tanksley said, because the citywide fund balance is approximately $3 million.

The 2013-14 audit showed a surplus of approximately $1.5 million.

At least 10 pages of footnotes were added to the audit to comply with a new accounting rule passed down by the Governmental Accounting Standards Board (GASB) regarding accounting and financial reporting by state and local governments for pensions.

Basically, the city has to now reflect its $22 million in liability for the Public Employees Retirement System (PERS) in its audit. The reporting of that liability makes the city’s finances appear to have “grossly negative net assets,” Tanksley said.

The PERS liability shown in the reports is basically what the city would be on the hook for if all employees retired immediately.

Additionally, a required municipal questionnaire was not submitted to the auditor.

Ward 1 Alderwoman Joyce Arceneaux-Mathis said she recalled the questionnaire was filled out incorrectly by a former city clerk, so the board did not sign it. Tanksley recommended in the future, the board vote to correct the questionnaire so it can be submitted,

Overall, Tanksley said, 2014-2015 was not good fiscal year for the city.

“I don’t think I’m up here telling you anything you weren’t expecting,” she said. “This was not a good year; I don’t know if anybody expected it to be … a big ball of sunshine.”

Tanksley said, however, the city “can absolutely get back to doing things the way they should be done.”

In the past three of four years, Tanksley said, the process from writing checks using a unified system, or an accounts payable clearing fund, was changed to writing checks out of each individual account.

“I’m just here to tell you, it’s not working,” she said. “Every opportunity to make mistakes has been made simply because one person … did not understand what she was doing and thought she was going to make it better, and she inevitably created more and more problems. It can be very simply undone.”

Ward 6 Alderman Dan Dillard made a motion the city return to the previous system, which passed unanimously.

The audit was due June 30, and Tanksley said once the city adopts the final audit it would be sent to the state.

At the request of Arceneaux-Mathis, the aldermen will meet with Tanksley to review the final draft of the audit and the previous year’s audit to catch up the new aldermen at an upcoming work session.