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- Nephi City received a 'clean report' from the annual audit of the financial statements
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By Myrna Trauntvein
Times-News Correspondent
Besides a few housekeeping chores, such as a review of claims, Nephi City Council had as its single agenda item the presentation of the annual audit report.
Russell Olsen, from Larson and Rosenberger, Certified Public Accountants, presented the audit report for Nephi City for the year ending June 30, 2010.
"There were the days when we went through the numbers with you council members and the public," said Olsen.
That was no longer the case, he said. Now the auditor leaves the perusal of the document to the council for other meetings and for consideration as each council member reads the audit report on his own.
"Nephi City received what we call a 'clean report' in that the financial statements present fairly, in all material respects, the respective financial position of the government activities, the business-type activities, each major fund, and the aggregate remaining fund information of Nephi City Corporation, as of June 30, 2010," said Olsen.
The respective changes in financial position and cash flows and the budgetary comparison for the general fund for the year ended in conformity with accounting principles generally accepted in the US.
Audit reports provide a comprehensive look at an entity's accounting procedures and financial health over a year. Some sections of the report are easy to decipher, while others contain technical terms and symbols that are not in layman's terms.
"The management letter (written by city management) is not audited," said Olsen. "It is often the only part of the audit that is written in plain English."
"I would like to compliment Randy McKnight, your city administrator, and Blair Painter, your city clerk/recorder, for the fine job they do each year."
Mayor Mark Jones said that he and the council did appreciate the fine work the two did and knew they "owe them a great deal."
He said the city council appreciated the great management the two provided.
"An audit is to show that everything was done properly financial-wise and management wise," said Jones. "We hire an independent auditor who has nothing to do with the city."
The basic financial statements cover how much money the city has in bank accounts, its activities, revenues and expenses. This record has a detailed breakdown of all types of expenses including equipment purchases, property transactions and investments. In the city's case, all revenue sources, whether it's tax dollars, licensing fees, charges for products, or services and rents are specified.
Nephi listed total assets of $35,670,905 which included cash and cash equivalents, joint venture investment, receivables from utilities, restricted cash and advances from other funds.
Also included were capital assets (net of accumulated depreciation): land (not depreciated), buildings and improvements, equipment, infrastructure (not depreciated) and inventory.
There are also liabilities of $1,865,748 which include accounts payable, accrued interest payable, customer utility deposits, deferred revenue (mineral lease), compensated absences and advances to other funds. Also included are non-current liabilities due within one year ($325,00) and due in more than one year ($140,967).
The net assets section indicates what is owned, what is owed and what is left over.
Capital assets used in governmental activities are not financial resources and are not reported in the funds. Long-term liabilities, including bonds payable, are not due and payable in the current period and are not reported in the funds.
Under operating expenses, the city lists $708,353 in employee salaries and $365,165 in employee benefits.
The footnotes are, often, where liabilities hide. Footnotes or notes for the Nephi basic financial statements discuss the requirement that the city must contribute a percentage of covered salary of 11.66 percent to the local government and 23.34 percent for public safety system.
The city's employees also participate in a 401(k) plan and a supplemental retirement plan.
The city is a member of the Juab Rural Development Agency and the Utah Municipal Power Agency (UMPA).
It has also participated in the issuance of a variable rate industrial development revenue bond for the purpose of constructing a privately operated manufacturing company but it is not obligated in any manner for repayment of the bonds.
"We sound like a broken record, year after year, when we point out that there needs to be more internal control," said Olsen. "We realize that you do not have the resources to hire enough people to make it possible."
Internal control is defined as a process, effected by a city's management, designed to provide reasonable assurance regarding the achievement of objectives in effectiveness and efficiency of operations; reliability of financial reporting; and compliance with laws and regulations.
"It makes us, as auditors, much more content when council members all look at the financial statements each month," said Olsen. "That would deter someone who might commit fraud."
This act assures that the recorded accountability for assets is compared with the existing assets (e.g. bank reconciliations) at reasonable intervals and appropriate action is taken with respect to any differences.
When looking at the records of the past five years, he said, the city's cash level has remained steady despite the financial decline of the country. |
