David Garrett, a financial consultant hired by City Council, created the report in which he alleges Evansville's bank accounts are not fully reconciled. He writes, "Unexplained variances of over $7.4 million were plugged (adjusted, without research as to the nature or origin of the variance), in order to give the public assurance that everything was reconciled; and that the long ordeal of trying to get caught up with delinquent bank reconciliations was finally over."
The council hired Garrett after the State Board of Accounts found Evansville's bank accounts for 2011 were out of balance. The shortcoming was attributed to poor bookkeeping following a bungled exchange of accounting software, where the state said employees weren't properly trained.
City Controller Russ Lloyd, Jr. responded to Garrett's report through a written rebuttal submitted to the council. In the report, Lloyd reassures council members the city's bank accounts are in balance. He writes, "There is no unexplained variance of $7.4 million. That dollar amount represents the cash due to the water and sewer bank accounts after all fund balances were fully reconciled to the bank accounts."
Lloyd denounced Garret's report saying, "The Finance Department staff found errors on every text page, all 12 pages." He also accuses the consultant of having a "clear lack of understanding" of the city's account system and making "erroneous assumptions".
The state's annual audit of the city's finances is currently underway. Lloyd says he sent the state his reply to Garrett after learning Councilman John Friend, D-5th Ward, provided the State Board of Accounts with Garret's report. In the conclusion of his report, Lloyd calls Garrett's timing unfortunate because it comes at a time when the city is working to achieve a "clean opinion" from the state.
Friend tells Eyewitness News it's important for the state to have both reports so officials can issue an opinion on the matter. "We're gonna be going out and borrowing a lot of money and if we lose our credit rating over this it will cost us even more money," said Friend.
While Garrett and the Winnecke administration continue to go head-to-head over the city's finances, both sides agree state officials' findings will be taken as fact. The State Board of Accounts is expected to release findings from the 2012 annual audit in about two weeks.