July 12--MORGANTON, NC -- Foothills Regional Airport is under the gun from the North Carolina Local Government Commission to get its financial audits completed.
Without those audits, the true financial condition of the airport cannot be determined.
But since FBI agents raided the airport on June 5, officials say the auditor has told airport officials he can't complete the needed audits.
The Local Government Commission sent a letter dated May 17 to the airport authority board members, and the city managers of Morganton and Lenoir and the county managers of Burke and Caldwell counties. The letter also was sent to then acting airport manager and finance director Alex Nelson and the airport auditor Roger Bowman.
The letter, which was signed by Sharon Edmundson, director of the fiscal management section of the NC Department of State Treasurer, said the airport authority is late on the audit and financial statements for the fiscal year that ended June 30, 2011. The letter goes on to say the governing body "is responsible for ensuring that audited financial statements are available to the public in a timely manner."
The letter also reminds the members that the airport authority's audit for 2010 was not received until Nov. 4, 2011, more than a year after it was due on Oct. 30, 2010.
"A report received by the board over 12 months after year-end identifies financial and operational problems after it is too late for the board to take an effective action," the letter says.
The airport's annual audits have been on time only twice in the last eight years, said Julia Vail, deputy communications director for the state treasurer's office. The audits were on time for fiscal years 2007 and 2008, Vail said.
Vail said the contracted deadline for audits is Oct. 31 for local governments and public authorities whose fiscal year ends on June 30. "If an audit arrives after mid-December, the department requires that the unit and auditor submit an amended audit contract with an extended due date and an explanation as to why the audit was not completed in a more timely manner," she said.
The department has received all of the airport's audits except the 2010-11 audit, Vail said.
In the letter about the late audit, Edmundson tells board members and officials that information in an audit report is needed by the state General Assembly, as well as state and federal agencies, and that late audits can put funding at risk.
"Due to outstanding invoices from 2010, the 2011 contract was not prepared and submitted to the authority by its auditors," the letter said. "We urge the authority to take the necessary steps to complete the contract so that work can begin on the 2011 audit as soon as possible."
Edmundson then asks for the most current financial statements or bank statements from the authority.
Louis Vinay, attorney for the airport authority and Morganton city attorney, said the airport authority has sent monthly financial statements for March, April and May of 2012 and has provided it's adopted budget for the year.
The letter from the commission was the first inclination the board had that something was amiss, said Wayne Abele, chairman of the airport authority board and Burke County commission chair.
Abele said he's never known the airport was late with any audits until receiving the letter from Edmundson.
"I'm surprised to hear we had some late in the past," Abele said. He said someone connected with the airport may have received a notice of late audits but he never received one until the May 17 letter.
"I thought we were in good shape with the LGC," Abele said Wednesday.
He said when the airport authority received the May letter there was a lot of discussion and the members were very concerned.
Joe Gibbons, vice chairman of the airport authority board and mayor of Lenoir, seemed to back up what Abele said. Gibbons said he's not sure the board ever knew about the late audits.
But the reasons the audits were late were explained away by Nelson, Abele said, when the board questioned why the audit was late after getting the letter from the LGC.
Abele said the board was told the auditor got busy at tax time and couldn't take care of it. That's not a reason Abele would accept with his own business, Abele's Family Restaurant in Morganton, he admitted.
But Nelson told the board he would make sure the audit got done, Abele said, .
A letter was prepared to send to the LGC as an explanation for the late audit but it doesn't appear that letter was sent before FBI agents raided the airport, Vinay said.
Vinay said the letter was based on information from Norman Sherwood, the accountant for the airport, to Nelson. He's not sure who prepared the letter, Vinay said, because Sherwood never signed it. The letter also isn't dated.
Part of the explanation for the late audit was because of having to deal with two separate ledgers, Vinay said. When the airport authority took over as the fixed based operator, a separate ledger was created, Vinay said.
Vinay said by May 17, the auditor indicated he was working on the audit and should have it completed in June. However, he also indicated that he needed more information from Nelson, Vinay said, but he's not sure the auditor ever received the information before the FBI raid.
Now the auditor is saying he can't complete the 2011 audit because of the raid, Vinay said. The Record was unable to reach Bowman Wednesday.
Vinay emphasized that an audit is not to show any kind of fraud or wrongdoing but to show the financial status of an entity based on its financial recordkeeping.
Bowman has done the airport's audits since 2007, Vinay said, but the board is soliciting for an auditor for the 2012 audit. The 2012 audit cannot be done until the 2011 audit is completed, he said.
Gibbons didn't want to comment on the issue, saying members are trying to catch up with what's going on. He said a meeting has been called for Friday to discuss the budget and everything else with the accountant.
Nelson and former airport employee Brad Adkins have been suspended without pay since the FBI raid. The federal investigation involves both Nelson and Adkins and any side businesses. The federal warrants included turning over any records related to Morganton businessman and former chair of and current member of the airport authority board Randy Hullette, Hullette Aviation, Burkemont Service Center in Morganton, RANMAC Inc., Jeffrey Rose, Grady Rose Tree Service, Jimmy "Ron" Gilbert, Gilbert Grading and Construction, Simon Roofing and Parton Lumber.
The FBI has yet to charge anyone in the case.
Copyright 2012 - The News Herald, Morganton, N.C.
