Town of Calhoun Falls did not prepare budget

The Town of Calhoun Falls is experiencing a “significant financial deficit,” according to a report from a forensic audit.

“Based on the investigative procedures performed, as well as the corresponding findings, the Town expended at least $20,000 for expenditures that were considered waste or abuse of public funds. Due in part to the Town’s mismanagement and degradation of the Town’s internal controls, the Town is experiencing a significant fiscal deficit. As of June 30, 2024, the Town had accounts payable balances in excess of $600,000 while its available cash was less than $300,000. The Town’s perceived overall risk of fraud was assessed as high."

The report found mismanagement in Town government.

“This mismanagement included, but was not necessarily limited to, noncompliance with the Town’s Code of Ordinances, noncompliance with the South Carolina Constitution for budget adoptions, lack of effective management of the Town’s utility system, failure to timely prepare and submit financial statements, inaccurate financial statements, etc.”

Among the other concerns:

• The Town Council did not adopt an annual budget for fiscal years 2023 and 2024 as required by the Town Code and the South Carolina Constitution.

• The Town had a lack of policies and procedures.

• It had a lack of timely financial statements.
  

Among the others were inaccurate posting of credit card purchases, and ineffective management and analysis of utility rates.

In addition, the document found “significant financial impact due to water system leakage and metering issues."

“The Town’s water system has been in a constant state of needing repairs. It is well known within the Town that it has been losing water throughout its system. No water study has been conducted to determine the extent of the water loss. Based on the Town’s utility reports, there was an average water leakage rate of 32% or 62.2 million gallons annually. If this estimated water loss is applied to the utility rate charged by Abbeville Public Utilities, this would represent an average loss of $145,000 per year, or $725,100 during the review period, whether due to leakage or the Town underbilling various utility customers with malfunctioning meters.”

The report recommends that the Town develop a plan for addressing the leaks.

The recommendation is one of 26 recommendations for addressing these issues.

For example, the report states, “The Town issued certain bonus payments to its employees outside of the payroll process. This caused the Town to underreport its wages and payroll taxes for fiscal years 2023 and 2024.”

The effect?

“The Town may not properly withhold payroll taxes and/or pay the required payroll taxes to the respective tax authorities.

The recommendation? The Town should ensure that any bonus payments issued to its employees are processed through its payroll provider.”

A City of Abbeville official gave his reaction to the report.

“I greatly appreciate the state and Rep. Gagnon for taking the time to conduct the audit and deliver this to the public,” said Abbeville City Manager Blake Stone Wednesday.

The City of Abbeville recently took the Town of Calhoun Falls to court because the Town was hundreds of thousands of dollars behind in its payments for City water.