The Town of Littleton, in Halifax County, faced financial scrutiny at last week’s Local Government Commission meeting.
The town, which has a population of 550, hasn’t submitted an audit since 2021, which, according to Denise Canada, director of the State and Local Government Finance Division and secretary of the Local Government Commission (LGC), makes it further behind on submitting an annual audit than any other local government unit in the state.
As a result, it has raised issues with the LGC about whether the town has financial transparency, can manage public funds, and can operate water and sewer systems, especially with $15 million in appropriations from the General Assembly and $8 million in grants.
After the last audit was submitted, the town’s former auditor informed them they would no longer be offering their services to the town. That led them to engage with a third-party accountant, who found that there were several unreported journal entries that were not recorded in the accounting system, which itself didn’t reconcile with the utility billing system.
The town also faced other challenges, including the loss of its long-term financial officer. A new financial officer was brought in but didn’t have training in the accounting software. Part-time staff have also been trying to provide day-to-day services, including managing the water and sewer billing system and utilities.
The third-party accountant prepared a 2021 trial balance and provided it to the new auditor the town recently hired, who has a history of assisting units that are behind. The auditor told the LGC that the audit was substantially done and just needed a few more adjustments.
Additionally, the town’s water and sewer system’s licensed operator left in 2021 and engaged with the Roanoke Rapids Sanitary District to provide the service, initially for a six-month contract, but is still providing it. Talks with Halifax County to provide the service have currently stalled.
Littleton Mayor Heidi Hogan said the town seems to have been dealing with a downward spiral of communication issues with their former auditor, bookkeeper, and accountant, receiving no callbacks, and that they didn’t want to be disruptive or annoy them in their communication.
She was asked why she did not respond to the LGC to appear at this meeting, to which Hogan replied she thought she just had to show up.
State Treasurer Brad Briner, who oversees the LGC, also asked why no one showed up for a hearing last September about withholding sales tax from the town, to which Hogan replied that she was unaware of the hearing.
“I hear you that you have the stack of communications you have made and you have continued to try to reach out,” Canada said. “But ultimately we’re talking about five years, and it’s your responsibility as the mayor and for your governing board to find a way forward rather than to continue to rely on folks you have contracted on the outside that are not getting the job done. We’re not even talking about two years late or three years late. But if this were a six-month delay, I think that would be more understandable. Ultimately, if you’re going to run a town, you have to run the town. I’m just so concerned that you cannot run it.”
“I would suggest that in the future, also call your elected state auditor, call your elected treasurer, or call your elected state representative, or your elected state senator, or call the nice people over here at the LGC before you get five years behind and say, hey, can you give us some help,” said State Auditor Dave Boliek, who is a member of the LGC. “Because at the very least, we’d ask the fantastic people at the League of Municipalities to come give you a hand because they’ve got some resources that can come in and help. Madam Secretary of State [Elaine Marshall] would have reached out to you, returned your call, and helped in a New York minute. Just because we’re the state auditor and we got a certain job, that doesn’t mean we won’t help you. We’re elected officials, and we’re glad to help.”
He went on to say that without currently audited financial statements and with the appropriation of tens of millions of dollars, there is very little confidence that the money is being directed appropriately.
The LGC issued a formal warning notice, requiring the Fiscal Year 2021 audit to be completed by their next meeting on May 15. The town must also employ a full-time finance officer by April 30 or provide evidence to the secretary that they have made significant progress in either hiring the finance officer or making alternative arrangements to ensure that the finance officer duties are being fulfilled.