FINANCIAL REPORTING MEETING: Directors Lance Hines (middle) and Virgil Miller (right) meet with city financial staff. Mary Hennigan

Little Rock Directors Lance Hines and Virgil Miller met with members from the city’s financial department Thursday morning to discuss potential changes to the financial reporting process. The directors raised concerns about a 20-year-old ordinance and the level of manual entry work that is done by employees, rather than with a streamlined system.

The aged ordinance outlines financial reporting requirements, including timelines for monthly and quarterly reports to the Board of Directors, a process for relaying the information to the public, formatting requirements for reports and payroll-specific closing dates.

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Chief Financial Officer Sara Lenehan said that the city has not been in compliance with the ordinance at least since she started in 2004. She said that some aspects of the ordinance are followed, but other regulations are not met as described. Director of Finance Anita Worley and Kasha Gansky, a comptroller — which oversees specific aspects of the financial process — were also present Thursday.

The group discussed what potential changes could be made to the ordinance to make financial reporting more efficient and transparent. Lenehan suggested that the city keep its books open for a longer period to account for trailing payroll. The existing ordinance calls for the closure on the 15th business day of the month, but she said that is too soon to encompass previous revenue.

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Hines and Miller agreed with an option that Lenehan presented to provide the city Board of Directors with a more timely monthly financial report with estimates, rather than one that comes later and is more accurate. Lenehan said that the latter was previously suggested, but Hines said that he preferred the timely report “knowing that there could be adjustments in it.” Hines also said he was also concerned that money would be shifted around from month to month if left open for too long.

Miller raised concerns several times Thursday about how much manual labor the finance staff was doing. In conjunction with functions from the city’s dated enterprise resource planning (ERP) software, Lenehan said that Microsoft Excel and Word programs were used heavily to produce reports. The staff manually enters things into spreadsheets, which then produces outputs from prepared formulas.

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“It appears to me that all this manual work is just cumbersome,” Miller said. “It takes a long time, and it can be fraught with error.”

Lenehan said that the city began using the ERP system, called Infor,  in 2007, and the system has only been updated a few times. She said that internal conversations about a new system have been going on for a while, but actually transitioning to a new system can take two or three years.

There are some functions of the ERP system that are not utilized, “but it was also designed for a business,” Lenehan said. “It’s being utilized for a government — as most of them are. There are just some square pegs that don’t fit in round holes.”

Along the same lines of inefficiency, Lenehan said that the city has struggled to fill personnel positions. She said that there is a lot of pulling on the same high-level people to complete multiple jobs. Lenehan will retire in June 2023.

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“We had finally filled the senior accountant position to do all of our data and revenue reporting, and he was here six months, got hired away $20,000 more for a university down the road,” Lenehan said. “It is very difficult to find quality staff.”

She said that attempts to reach out for professional services through requests for proposals were unsuccessful, too.

The next steps of the process for change include Hines and Miller coordinating with City Attorney Tom Carpenter for a drafted resolution or ordinance. 

In other news, the group also talked about Mayor Frank Scott Jr.’s commitment to transparency through an open checkbook system. Still in the early stages of planning, the group agreed that it would be best to include monthly invoices with properly redacted information. This, too, would require a lot of time from city staff.