Macomb County Financial Audits Delayed Due to Software Conversion – Macomb Daily

Two audits of Macomb County finances have been delayed, largely because of the transition to a new computer system. The delays will likely force officials to hire additional finance staff through the end of the year.

The county’s 2023 annual audit report of finances and accounts is long overdue for June 30 and likely won’t be completed by the auditor, UHY Advisors, until September, county Finance Director Steven Smigiel told the Finance, Audit and Budget Committee at its Monday meeting in the temporary board room at the county administration building in Mount Clemens.

In addition, the “one-time audit” of federal spending in 2022 is being delayed even further for similar reasons.

“We are working as hard as we can,” Smigiel told the 13-member committee of the whole. “We are not happy with the situation, but it is what it is.”

Smigiel’s statements sparked minimal discussion among board members.

Commissioner Harold Haugh of Roseville noted, “We’ve invested a significant amount of money” in new financial software but made no decisions on the delays.

Smigiel said employees were delayed in providing data to UHY because they were learning “complicated” new financial software from Workday Inc., which also provides software to the county’s human resources and labor relations departments. The county switched from its previous financial software provider, One Solution, to Workday and Alight Solutions LLC in 2022 under a seven-year, $10.4 million contract. One Solution had been providing the software for about 20 years.

“Implementing a system the size and sophistication of Workday is a large undertaking and required significant resources,” Smigiel said in a two-page letter to management dated Aug. 9. “Data conversion was a challenge because new and different charting accounts were implemented, which made it difficult to reconcile data coming into Workday with One Solution. We discovered that some data was not being transferred correctly or not at all.”

The data conversion was complicated by the fact that Workday took over from OneSoluiton on Oct. 1, 2023, “which is not the start of the county’s fiscal year starting Jan. 1,” he said.

Representatives from Workday Inc. and Alight Solutions LLC attend a meeting of the Government Oversight Committee of the Macomb County Board of Commissioners in March 2022. PHOTO FROM THE MACOMB DAILY ARCHIVES

Smigiel told the board: “It’s difficult, to say the least.”

He described problems with “bank transfers” and other specific issues.

“A lot of that has been smoothed out,” he said, but added that there are still some hurdles. “We’re learning as we go. … There’s a learning curve.”

In a letter to the board dated 9 August, he stated that UHY representatives believed they could complete their work and submit the audit report by 30 September.

“Most of the report cannot be prepared until the concentration account is agreed upon, because it applies to virtually every fund in the county,” Smigiel wrote.

As defined by the Federal Financial Institutions Examination Council, a concentration account “is established to facilitate the processing and settlement of multiple or single customer transactions with a bank, typically on the same day.”

According to the latest entry in the schedule shared by Smigiel, as of 5 August: “UHY still awaiting bank reconciliations and major fund audit programmes.”

The county has a relatively new auditor after switching from Plante Moran to UHY in 2022, which will provide audit services for five years, from 2023 to 2027, for $851,000, a deal significantly lower than that offered by Plante Moran, which had been the auditor for several years.

Smigiel said the system should be improved over last year by next year. He added that the county initially received a one-month extension from the state to complete the audit, but failed to keep it.

The main implication of the delay is that the state could temporarily withhold a payment of $3.6 million in state revenue sharing funds that it sends to the county every other month. But Smigiel says in the letter that he expects the county to receive its August revenue sharing payment because of a 30-day “grace period” from the extended July 31 deadline. The next scheduled payment in October will not be delayed if the report is received by Sept. 30. But even if the payment is temporarily withheld, the state will not reduce or eliminate it, he said.

The biggest impact will likely come from Smigiel asking the board to approve his hiring of temporary staff and/or entering into a contract with a firm that will help him complete bank reconciliations on time this year so that the audit doesn’t happen too late next year, he said.

The board typically begins hearings on the next year’s budget in early October, and the document is adopted in late November, giving County Executive Mark Hackel time to veto it if necessary and allowing for a second vote.

Smigiel said he will propose additional hiring to the board next month after Macomb Parish Commissioner Joe Sabatini asked him questions about staffing.

The county also was very late in approving a “single audit” of compliance with the terms of the 2022 federal grants. The deadline was last fall, so the county was almost a year late.

But Smigiel said he expects the audit to be completed early next month and said it will have no consequences. He said if it is delayed until 2025, it could impact the county’s ability to obtain grants.

Originally published: August 14, 2024 at 5:17 AM