The City of Loris is years behind in completing required audits which are mandated by the state.
As a result, funding the city should be receiving from the state is being withheld, according to documents obtained by the Loris Scene.
The last audit that was completed for the city was in 2013. After that is when things became problematic because much of the needed documentation for the 2014 audit has been shredded, City Administrator Damon Kempski confirmed when asked about the audit situation.
Because the audits for the past four years have not been completed, the state is withholding $15,000 per quarter Loris would normally receive to provide services.
That financial penalty began in the first quarter of 2018 as the state was giving the city time to come into compliance.
According to state law, municipalities “shall provide for an independent annual audit of all financial records and transactions of the municipality and any agency funded in whole by municipal funds.”
The law allows for the withholding of 10-percent of state money a municipality would receive until the audits are complete. In this case, 10-percent equates to $15,000 per quarter.
Currently, according to a list compiled by the South Carolina State Treasurer’s Office, Loris is the only municipality in Horry County that is delinquent in providing audit information.
The audits for 2014 and beyond have been talked about and promised for a long time.
During a meeting in Sept. 2017, Mayor Henry Nichols said the city’s audit firm required the city to hire an accountant.
Kempski said the accountants and auditor are having to conduct a forensic-type audit because of the missing shredded documents.
When asked who was responsible for the shredding of the documents, he said he could not say. He said he was out of work for 16 days with pneumonia when the shredding took place.
“I never authorized anything like that,” Kempski said.
Kempski said he could not say much more because of the possibility of legal action against him if he divulges too much information.
“I was told by the (South Carolina) Municipal Association I may not be covered by them if I do (talk about it),” he said.
He did say it is his understanding no elected official authorized any documents be destroyed.
“I am not aware of anyone authorizing the action,” Kempski said.
Kempski was asked who the person was who put the papers in the shredder.
“I was out with pneumonia. I cannot answer that,” he said. “It is my understanding a company was called in and basically 3,200 pounds of documents were destroyed.”
Kempski said after he returned to work from his sickness, he was told the documents were destroyed because it was paperwork the city was no longer required to maintain. He said he was told the documents were scanned and digitized before they were shredded.
“That wasn’t the case though because we have a substantial amount of information we do not have,” he said.
Kempski said because of the missing documents, the accounting firm and auditor are having to “go through and recreate things because the documentation that was there to do so, is not. It has been a much longer process.”
All the needed documents for the audits for 2015 – 2018 are accounted for because, Kempski added, current city clerk Kenya Wright has kept thorough records.
“It looks like we are going to have to slam a bunch of them once this speed bump is out of the way,” Kempski said about getting audits for the years 2015-18 completed once the 2014 audit is finalized.
Kempski said he is hoping the 2014 audit will soon be complete.
“It is something that has been looming. I want it off my plate,” he said.