- Independent auditors find excellent management of Nephi city’s finances
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By Myrna Trauntvein
Times-News Correspondent
Independent auditors for Nephi City reported only four current year findings in their management letter.
That represents excellent management of the city’s finances, said Jon Haderlie with Larson & Company, certified Public Accountants.
“All in all, the staff here do a good job,” said Haderlie.
Haderlie and Russell Olsen attended a Nephi City Council meeting to make the report.
The General Fund (the primary operating fund) had an increase in its fund balance from 2006 to 2007 of $30,987.
“The total net asset of Nephi City increased by $3,328,998 to $34,023, 207,” Haderlie said.
Governmental net assets increased by $2,378,495 and the business-type net assets increased by $950,503.
Nephi’s basic financial statements comprise three components: government-wide financial statements, fund financial statements and notes to the financial statements.
The statement of net assets presents information on all of the city’s assets and liabilities, with the difference between the two reported as net assets. Over time, he said, increases or decreases in net assets may serve as a useful indicator of whether the financial position of the city is improving or deteriorating.
“The statement of activities presents information showing how the city’s net assets changed during the fiscal year reported,” Haderlie said.
All changes are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of related cash flows.
“As noted earlier, net assets may serve over time as a useful indicator of a government’s financial position,” said Haderlie. “In the case of Nephi City, assets exceed liabilities by $34,018,476.”
By far, the largest portion of Nephi’s assets at $25,582,226, reflects its investment in capital assets such as land, buildings, infrastructure assets and machinery and equipment less any related debt used to acquire those assets that is still outstanding.
“The city uses these capital assets to provide services to citizens; consequently, these assets are not available for future spending,” he said.
“Although the city’s investment in its capital assets is reported net of related debt, it should be noted that the resources needed to repay this debt must be provided from other sources, since the capital assets themselves cannot be used to liquidate these liabilities.”
The one spot where the city did take a point, was the finding, earlier reported, concerning the golf course fund.
“During the fiscal year there were allegations of misappropriations of assets in the golf course fund,” said Haderlie.
The city has taken corrective measures. There is a new golf pro at the course and the former pro is facing charges in Fourth District Court.
In addition, controls over cash and revenues in the golf course fund have been improved.
Another finding was that management did not post year end adjusting entries but, the auditor, with oversight from management, proposed adjusting entries to adjust necessary accounts, funds and financial statements.
City management does not draft the city’s basic financial stataments and related footnotes. The auditor, with oversight from management, drafts the financial statements and footnotes. Management then reviews, approves and accepts responsibility for the financial statements.
“Management should work both independently and with the auditors to receive the training that will enable them to draft the financial statements and related footnotes,” said Haderlie.
“You haven’t done anything wrong,” he said. “We get the information from Blair Painter and we are doing the work. Blair and Randy McKnight (city administrator) can do this work. They are certainly capable.”
However, this was not an issue the state auditor’s office would ever bother either the city or the independent auditor about, he said.
The final finding was that the state requires the filing of a form concerning the tax rate summary. The form includes a column entitled “budgeted revenue.”
The amounts in that column should be the same as the revenue amounts in the city’s adopted budget.
During a state compliance audit test, it was found that the amounts were not the same.
“I get tired of this finding,” said Haderlie. “Cities do not always get the information they need in time to make this happen. I suggest you write your Congressman about this issue.”
The findings are all being addressed, said Blair Painter, city recorder.
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