City Council

City of Hopewell Pro j e c t Ma n age ment O ff i c e a nd A c co u nt i ng Re me di at i o n S e r v i c es October 12, 2023 Our Time Together Today 1 Introductions 2 Objective 3 Current State 4 Progress 5 Personnel and Capabilities 6 Findings & Next Steps 2 Who’s Here Today Robert C. Bobb Jack Reagan RBG President & CEO UHY Managing Director 3 Objective To transparently present the current financial landscape of Hopewell by highlighting the challenges identified, showcasing progress made to date, and outlining actionable strategies for future financial recovery and transformation. Understanding, Addressing, & Surpassing Our Challenges 4 Hopewell Current State Commonwealth of Virginia concerns: • Last Audit with an unmodified opinion FY 2014. • Last Annual Comprehensive Financial Report & Federal Single Audit issued was FY 2019. • Auditor of Public Accounts unable to evaluate the financial vitality of the city. Unmodified Disclaimer Disclaimer Opinion of Opinion of Opinion 2014 2016 2018 2020 2022 2015 2017 2019 2021 2023 Disclaimer Disclaimer Last Annual of Opinion Comprehensive No Financial Reports of Opinion Financial Report "A city's financial transparency is its lifeline. It's time to heal and strengthen ours." 5 Progress at a Glance WHAT HAVE BEEN DONE WHAT IS NEXT 1. Current State Assessment. Five (5) key areas moving forward • Finalizing Financial Walkthroughs and Control 1. Personnel: Shoring up personnel and culture with Narratives. skill gap training, organization change management, • Tracking 2015-2019 Audit Findings for Remediation. and new leadership resources. • Identification of 93 Additional Issues for Remediation 2. Audit Preparation: Initiating financial statement and Across All Departments within People, Process, and single audit reconciliations. Technology. 3. System Configuration and Training: Updating the 2. Assessment of Personnel. MUNIS Financial System to become a reliable 3. Industry Partner Collaboration. End-to-End Solution and Consolidating Timekeeping. 4. Briefings with the State Auditor’s Office and the 4. Industry Partner Resolution: Resolving the Commonwealth’s Secretary of Finance. Wastewater Renewal Commission and Industry Partner Concerns. 5. Assessment of the MUNIS Financial System and Proposal of Recommended Roadmap. 5. Standards, Policies, and Procedures: Documenting Standard Operating Procedures and Process Flows 6. Collaboration with External Auditor Robinson, Farmer, Within and Between Departments. and Cox. Personnel and Capabilities Personnel and Capabilities Financial Department • Leadership skill gap identified. • Plan for backfilling with an experienced Chief Assistant City Manager Financial Officer. Polihire • Robert Half - Resource Replacement. Budget Recruiting Director Treasurer Department Progress • Strengthening Treasurer’s Department with Permanent embedded resources. CFO 8 Audit Preparation Draft financial statements. Draft single audit reporting package. Strengthen Industry + City Wastewater relationship Treatment CARES Act & Ensure strict adherence to federal Plant & Beacon ARPA and state guidelines when Reconciliations Theater Compliance utilizing relief funds for Coronavirus Reconciliations Aid, Relief, and Economic Security (CARES) And American Rescue Plan Act (ARPA) . Assess ERP Implement Munis System system alignment. ERP System Financial Configured, School Financial Train staff on Management Statements Implement timely school Utilized & financial statement protocols. ERP usage. Controlled Considerations Done Effectively For Action Implement ERP Establish strong internal internal controls. controls for school finances. City Financial Statements And Ensure comprehensive reconciliation processes Establish and address root causes for Single Audit are in place for financial data. past financial discrepancies. Reporting Package Implement a framework to ensure accurate Complete & and timely financial reporting. Accurate 10 Financial Statements Timeline • Timeline for finalizing previous financial statements for auditing. • Once ready for auditing, it will be forwarded Robinson, Farmer, Cox Associates, who has indicated a 45-day timeframe to complete both the Financial statement and Single Audit. • The first audit will take longer, as the team will be remediating the prior books from FY2019, so that the City can obtain an unmodified opinion for FY 2020. FY 2020 a.FY 2021 a.FY 2022 a.FY2023 Dec. 16, 2023 b. February 28, 2024 b.March 31, 2024 b.May 17, 2024 11 Financial Statements Roadmap FY2020 12/01/23 12/01/23 12/15/23 P.S. The same steps Assist with monthly Draft basic financial Transition 2020 SA reconciliations of statements (MD&A, and FSA to External will be taken for various enterprise financial statements, Auditors. next years financial funds of the city. notes to financial statements, RSI, statements. Notes to RSI). 1 2 3 4 5 6 7 12/18/23- 12/15/23 02/16/24 10/20/23 12/01/23 Draft Schedule of Audit Support to Discern completion Optimize city expenditures of External Auditors of reconciliations technology for data federal awards through completion. and reporting. (Single Audit). System Configuration and Training M U N I S Syste m L i m i ta t i o n s C h a l l e n ge s w i t h T i m e ke e p i n g Syste m s System Purpose What is the MUNIS ERP Impact of Inefficient Use Our Goal System? • Audit Complications: One of the primary • Optimize the system's usage to • MUNIS stands for Municipal reasons for not achieving a clean audit in the rectify past issues and pave the Information Systems. past has been the suboptimal configuration way for consistent clean audits • It's an Enterprise Resource and utilization of the MUNIS system. in the future. Planning (ERP) solution • Financial Discrepancies: Errors in the system • Optimize city processes and designed to handle a city's core can lead to financial discrepancies, affecting enhance transparency and financial functions. budgeting, reporting, and decision-making. efficiency. System Assessment Obstacles Identified Impact on the City • Inconsistent Reconciliation & Reporting. • Financial Credibility & Trust. • Inconsistent Control Structure, Policies & • Operational Inefficiencies. Procedures. • Budgetary & Funding Issues. • Unclear Roles. • Potential Financial Risks. • Mismatched Records. • Communication Issues. • Stalled Decision Making. • Segregation of Duties and Improperly Setup. • Decreased Morale & Productivity. MUNIS was poorly implemented at the outset, with no parallel operation, leaving well-meaning and frustrated employees at agencies to do their own workarounds. System Assessment The Fix The Process • Update/create Enterprise Resource Planning (ERP) • Collaborate with consulting teams to refine System related policies and procedures. ERP policies and ensure staff • Enhance ERP security, workflow rules, and separation comprehension. of duties. • Work with ERP Stakeholders to adjust • Implement unused Tyler modules for optimized utility. security and workflow protocols. • Streamline bank reconciliations & General Ledger. • Create a communication plan for best • Redefine Chart of Accounts for improved reporting. practices and workflow enhancement. • Address past audit concerns in the ERP. • Support the ERP IT team during system updates and modifications. • Enhance training for officials and department users through Tyler PACE and other relevant programs. A key going forward is one reporting system  aligned with consistent, trained, and enforced policies & procedures in every department  an effective tool for auditable financials. System Assessment – Future State Complete reconciliation and work with City team to understand proper policies and procedures in conjunction with the ERP system. Ensure accuracy of chart of accounts (COA) and reporting. Confirm users are following proper policies and procedures. Proper process and timing of reconciliation. Reconcile FY 2021 and FY 2022 by June 2024 on Munis System . Follow best practices for cleaner data and reporting. Submit local, state, and federal reporting in a timely manner. Complete FY 2023 and FY 2024 reconciliation, submit financial statements on time, and complete clean fiscal audits. Timekeeping System Inconsistencies Not all departments use the Employee Self Service (ESS) system for timekeeping: • Some use standalone systems, and others manually input hours. • Police and Water Renewal use their own systems and must import data into Munis. • There’s ambiguity with systems like Executime used by Recreation and Public Works, as it's unclear if they are in use. POLICE DEPARTMENT WATER RENEWAL FIRE DEPARTMENT Use TimeForce (cloud base Manually Time Records outside system) for their timekeeper. Uses SwipeClock (cloud base of Munis System. Lack of SOC Report. system) for their timekeeper. Should investigate automating Fire Department timekeeping. Lack of data verification from Time Force to Munis 18 Industr y Par tner Resolution Hopewell Water Renewal Commission • For the City of Hopewell to thrive, it is imperative that we maintain a good relationship with our industry partners. Strengthened Operational Collaborative Partnership Excellence Workforce for Mutual and Development Growth Transparency 20 Hopewell Water Renewal Commission Industry's Primary Concerns Addressed to the City Reconciliations Status • Ensure up-to-date operational & capital reconciliations. • Prioritize timely updates. Wastewater Facility Maintenance • Recognize the criticality of consistent maintenance. • Understand and mitigate the impact on industries. • Engage with the industry for both ongoing and urgent concerns. Capital Projects Oversight • Ensure past projects are approved, funds utilized, and reviewed. • Seek additional funding only after reviewing past projects, unless facing emergencies. 21 Hopewell Water Renewal Commission The foundation of the city's growth and progress lies with maintaining strong relationships with industries. The effective operation of the wastewater treatment plant directly Impacts the success and sustainability of the community. Collaborate and train residents for industry roles. Strengthen community through collaborative employment. 22 Standards, Policies & Procedures  Culture of Ownership & Accountability Missing ISSUES REMEDIATIONS 1 Gap in role clarity and adaptability Enhance and update policies and procedures. Optimize the MUNIS System. among employees. Leadership development. Inconsistent application of policies 2 Document walkthroughs. and procedures; culture permits Establish process flows. deviations without consequences. Training on updated policies and procedures. 3 Insufficient coordination between Map business and data flow. departments. Re-educate teams accordingly. Inadequate follow-up on known 4 Use of data analysis to look at each detailed account issues; system of record doesn't and fill in gaps to reconcile cleanly. reflect remediation. Conclusion Process Future State • Accurate reconciliation with team • Preparation of audit books Current State ensuring they can support a understanding. • Precise chart of accounts & reporting. disclaimer of opinion. • Delays in clean audits • Update/Create Standard Policies • Users adhere to policies & & financial & Procedures procedures. statements. • Coordination with consulting • Timely reconciliation process. • Need for ERP system teams for ERP policy adjustments. • Adoption of best practices for data & optimization. • Schedule ERP training using Tyler reporting. PACE. • Prompt reporting submissions to • Address ERP security & separation local, state, and federal entities. of duties. • Clean fiscal audits for past years. • Establish communication plan for optimal workflow. • Ability to produce financial statements that are accurate and 25 timely. Thank you