HOOVER, Alabama (WBRC) – Hoover Mayor Frank Brocato believes the city is “in the best position to do a better job in the future” after completing a forensic financial audit.
The review was conducted by an outside auditor after errors were identified in the city’s 2022 annual audit by Hoover’s chief financial officer Jennifer Cornett.
“When the audit revealed gaps, we engaged a world-renowned firm (Kroll) to address the issues and implement steps to secure the city’s future,” Brocato said.
The review also examined the city’s financial books and records, which went beyond the scope of the annual audit, and found numerous deficiencies, including incorrect payroll tax forms, errors in budgets and the deletion of files from the former chief financial officer’s computer.
“Every point highlighted in the Kroll report has either already been corrected or is being actively addressed,” Brocato said.
John Slavek, managing director of Kroll’s Forensic Investigations and Intelligence, said the problems were the result of a “perfect storm” of factors that left the department understaffed and some employees “neither equipped nor trained for the tasks assigned to them.”
The review found no evidence of fraud or financial misconduct by Hoover employees.
“Despite the challenges identified, Hoover remains in strong financial position,” Brocato said. “I am pleased with the steps we are taking to address these deficiencies, and I have confidence in our determined leadership team. With this independent review as a benchmark, we will continue to provide the accuracy and transparency our taxpayers expect and deserve.”
According to the City of Hoover, the in-depth review identified the following problems, among others:
- Errors in the quarterly federal tax returns of the city’s employers: These errors, dating back to 2020, resulted in the city being hit with penalties and interest. Hoover is working closely with the IRS to resolve these issues.
- Errors in financial records: The auditing firm required 76 year-end corrections before signing the 2022 audit report.
- Delays in bank account reconciliation: Delays in reconciliation affected the accuracy of the City’s preliminary financial records.
- Errors in the presentation of the public budget: Cash balances were overstated on several occasions.
- Deleted financial files: 58 Excel files, 38 Word documents and two PowerPoint presentations were deleted from the former CFO’s computer. Unfortunately, these files could not be recovered.
- Missing audit “permanent file”: This file, which normally contains important documents such as legal documents and tax information, was not found.
- Lack of written policies and procedures: There was a lack of documentation to ensure transparency, accuracy and consistency of financial processes and data retention.
For more information, including the full forensic accounting audit and analysis, visit the City of Hoover website.
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