State Auditor Glen Gainer says more and more municipalities are refusing to pay his office for financial audits that are required by state law.
“The problem we do have is the entities not paying for their audits,” Gainer said. “And at some point we’re going to have to start doing some withholding of other public funds flowing through those entities.”
State law requires Gainer to audit each municipality in West Virginia once every three years. He says the law caps the cost at $4,000 for Class III and Class IV cities. He says the bills are just being ignored.
“We’re getting into a position where we’re not collecting enough revenue in order to support the audit requirements. We can underwrite and survive on the audit (fees) but this uncollected or bad debt is something that is really beginning to take a toll,” Gainer told the committee.
The debt is listed at about $1 million. Gainer says most of that is because many municipalities haven’t paid.
“By far the largest amount of our uncollected debt is coming from our municipal section,” Gainer said.
Gainer also updated the committee on his office’s fraud unit that began in 2010. Gainer says just last year the unit uncovered $1.6 million in fraud. He says there have been a number of convictions connected with people stealing public money. Gainer says the fraud unit has a difficult job trying to uncover the crimes.
“The ($1.6 million) is a very low, low number,” Gainer said. “That’s what we were able to document to reconstruct those records. Trust me, they burn, shred and destroy everything they can destroy. You have to do a lot of subpoenas to try and recreate those records.”