- Annual audit shows Mona City to be in good condition
By Myrna Trauntvein
Mona City received the annual audit and financial report and learned that the budget was in good condition and that the council, and the city's business director, had made mostly wise decisions.
Greg Ogden, CPA, met with council members to discuss the annual financial report for the year ending June 30, 2012.
Ogden began by complimenting the city's finance director, Everd Squire, and the mayor and city council, for implementing wise accounting practices and for doing an excellent job in overseeing the city's finances.
"Some of the financial highlights, which come from management's discussion and analysis, is that the total net assets for the city as a whole increased by $5,219,825; the total unrestricted net assets for the city as a whole increased by $3,244,945; total net assets for governmental activities decreased by $12,508; and total net assets for business-type activities increased by $5,232,334," Ogden said.
The city received, during the past year, major state assistance programs from the state in "C" Road Funds from the Department of Transportation, Liquor Law Enforcement (Utah State Tax Commission), Water Quality Board Loan (Department of Environmental Quality).
Government-wide financial statements are designed to provide readers with a board overview of the city's finances in a manner similar to a private-sector business, he said.
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.
"The statement of activities presents information showing how the city's net assets changed during the fiscal year reported," he said.
Both of the government-wide financial statements distinguish functions of the city that are principally supported by taxes and intergovernmental revenues from other functions that are intended to recover all or a significant portion of their costs through user fees and charged.
"These are the business-type activities, such as the water and sewer departments," he said.
In the governmental activities, the city had total assets of $4,224,623; in the business-type activities, the city had a total of $17,366,814.
The current liabilities shown for governmental activities are $131,014 and in business-type activities were liabilities were $8,008,416.
"Net assets may serve over time as a useful indicator of financial position," Ogden said."Total assets exceeded total liabilities at the close of the year by $17,366,463 which represents an increase of $3,244,945 from the previous year. This change is equivalent to the net income for the year, in private-sector terms."
"Total unrestricted net assets at the end of the year amount to $959,443, which represents an increase of $3,244,945 from the previous year," he said.
Unrestricted net assets are those available to finance day-to-day operations without constraints established by debt covenants, enabling legislation or other legal requirements.
He said that change in capital assets are the result of the difference, in the current year, of the cost of acquisition of capital assets and any depreciation charges on capital assets.
"Change in long-term debt is the difference in the amount of debt issued and that which has been paid during the year," he said.
Net operating income for the year in the water fund was $45,433 compared to the previous year amount of $28,525.
The natural gas fund net operating income for the year was $134,983 compared to the previous year amount of $152,810.
The sewer fund net operating loss for the year was $48,185, compared to the previous year's loss of $17,810.
"Depreciation expense of $93,755 was the primary reason for this year's loss," said Ogden. "The change in net assets (net income) was $5,067, 750, compared to the previous year's amount of $4,469,449."
Capital contributions of $4,955,145 were received during the year. The amount restricted for construction is $108,230 and unrestricted net assets amount to a deficit of $294,987.
Ogden began his report by going over the management letter and noted matters regarding compliance with requirements of the state code and the city's internal control over financial reporting.
"The one item worth mentioning," said Ogden, "is the city's unrestricted general fund balance."
The state, he said, requires cities to maintain an unrestricted general fund balance that is between 5 and 18 percent of the next year's budgeted general fund revenues.
"On June 30, 2012, the city had a balance of $67,409 in the unassigned general fund balance," he said. "This balance amounted to 19 percent of the next year's budgeted general funds. It was $4,175 too high."
He said that he recommended that the city transfer money from the general fund to the capital project fund in an amount sufficient to make the unassigned general fund balance meet the state requirement.
"The unassigned general fund balance should be between $17,565 and $63,234 to meet the requirement," said Ogden.
Everd Squire, city financial director, said the city works with Pelorus Methods, an innovative, comprehensive governmental accounting system designed specifically for municipalities, service districts and other local governments. Pelorus provides a more efficient and effective approach to budgeting and planning, recording transactions, analysis of information, and reporting results.
"We will work with Pelorus to adjust this amount to meet the requirements," said Squire. "We will work to be sure it is right for next year."