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State May Face Sanctions, Penalties Over STAARS Failure

By Bill Britt
Alabama Political Reporter

The Chief Examiner of the State’s Department of Public Examiner has warned Gov. Robert Bentley and Acting Finance Director Bill Newton that the failures of the STARRS accounting program will likely cause the State to be delinquent on its federally-required Comprehensive Annual Financial Report (CAFR).

In a letter dated May 4, Chief Examiner Ron Jones wrote, “As you may be aware, the State has experienced significant issues in implementing the new accounting system, STAARS. These issues have impacted the State’s ability to generate financial statements and to prepare the State’s Comprehensive Annual Financial Report (CAFR).”

SEE LETTER

He also warned, “Please be aware that federal agencies do not currently grant audit extension requests and may issue sanctions or other penalties for failures to submit timely single audit packages. We will make every effort to complete the State-Wide Single Audit as soon as practical after the completion of the State’s CAFR.”

Jones points out that not only were there problems with the system, the failure continues to plague the State with threats of federal fines or sanctions.

“A regular annual report typically presents only basic financial statements about the government. A CAFR, by contrast, presents a wider variety of important information intended to help the reader properly understand the basic statements. A budget is a plan for a future fiscal period, typically a year, primarily showing how tax revenue will be allocated; a CAFR contains the actual results of the prior year’s financial activities,” according to texastransparency.org.

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According to Jones’s letter, “This audit must be completed before the State-wide Single Audit can be completed as required by 0MB Circular A-133. Therefore, these issues have caused delays in the completion of Single Audit for the period October 1, 2014 through September 30, 2015. The required release date for the State-Wide Single Audit is June 30, 2016. We do not believe that it will be possible to meet this deadline due to the current circumstances surrounding the CAFR.”

The State-wide Single Audit is an examination of entities receiving and spending Federal assistance dollars for its operations. These audits provide assurance to the Federal government that these funds are being used properly, according to Wikipedia.

STARRS, a hastily implemented, statewide accounting software, is based on a questionable $47 million contract pushed by Acting Finance Director Bill Newton.

In December 2015, the Alabama Political Reporter first raised the alarm about the troubled system, that has left the State falling behind in its payment obligations since June 2015.

At the time, the Alabama Department of Transportation (ALDOT) alone had approximately 23,000 vendors who have not been paid in a timely fashion.

In an attempt to cover-up the systems failure, Newton ordered agency heads to threaten State personnel not to speak to the media, and report any contact with the media to him immediately, or else.

The a $47-million-dollar software package not only caused a meltdown in the State’s ability to pay its bills in a timely fashion, or properly process inter-agency payments, leaving hundreds of millions of dollars in a software limbo, has raised questions about how the contract was awarded.

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Recently, the Alabama Political Reporter found that Newton has said the $47 million no-bid software package is now going to require more full-time staff at the Department of Finance, according to a presentation made to agency heads in the last few weeks.

The multi-million dollar system, touted as a cost-saving measure, will also need additional outsourced programers, according to the report.

Bentley and Newton have repeatedly defended the program and its no-bid contract, but once again, the STAARS is causing problems for the State.

Bill Britt
Written By

Bill Britt is editor-in-chief at the Alabama Political Reporter and host of The Voice of Alabama Politics. You can email him at [email protected] or follow him on Twitter.

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