County ended ‘14 with smaller suplus than commissioners budgeted

Grady County ended 2014 with a surplus of $398,000, which was less than the $478,000 surplus county commissioners had budgeted for last year and nowhere near the million-dollar surplus Grady County Administrator Carlos Tobar had projected for last fall.
Grady County commissioners met with the county’s auditor, Tom Carmichael of Carr, Riggs & Ingram, LLC, Tuesday night to review a draft of the county’s 2014 audit.
The county’s actual revenues for the year came in at $11,454,000 which was significantly less than the $11,880,000 commissioners had budgeted to collect and less than the $11,619,000 collected in 2013.
However, commissioners kept expenditures at $11,187,00, which was less than the $11,435,000 they had budgeted to spend last year.
The surplus was bumped up by $131,000 in “other” revenue, which Carmichael said was primarily from debt proceeds.
The 2014 surplus increased the county’s fund balance to $10,784,000, which is up from $10,386,000 at the end of 2013.
Carmichael suggested commissioners do more to increase the fund balance over the next several years since it takes nearly $1 million per month to operate the county.
“The fund balance is a snap shot in December. It’s not static. That money’s not just sitting there,” Carmichael said.
The auditor said a truer picture of the county’s reserves would be in September or October rather than at the year’s end when 90 to 95 percent of the county’s revenue is collected. “That fund balance has to carry you through the entire year,” Carmichael said.
He estimated that a financial analysis in September or October would reveal the fund balance to be “knocking on the door of $2 million or less.”
Revenues were off due to a $306,000 negative variance in the collection of property taxes. The county only collected $7,268,000 in 2014, but commissioners budgeted to collect $7,574,000. The auditor said the county could only recognize revenue collected within 60 days of the year’s end and he said the bulk of the decreased revenue would be collected in 2015.
After months of Tobar warning about decreased sales tax collections, the county actually ended up collecting more in Local Option Sales Taxes than commissioners budgeted to collect by $53,000.
The reason overall expenses came in below budget, according to the auditor, was due to the fact that the commissioners had budgeted money for future vehicle replacements. Carmichael said that expense could not be recognized until the actual purchase is made.
That accounted for the majority of a $236,000 decrease in expenses over budgeted general government expenditures of $4,098,000.
During 2014, $853,000 was transferred out of the general fund into the Tired Creek Lake project fund. According to Carmichael, when the proceeds from the 2015 revenue bond were deposited in early 2015 that money was repaid to the general fund.
Carmichael also reported that the county’s long-term debt was reduced by approximately $1 million in 2014. Total debt as of Dec. 31, 2014 was $15,045,000 down from $16,047,000 in 2013.
The auditor said the final version of the audited financial statements will include a detailed report on internal control and compliance matters. Carmichael said segregation of duties, fund balances, bank reconciliations, property tax receivables, accounts payable reconciliations, interfund activity, recording of journal entries, and the auto-balancing of funds in the county’s accounting software would be addressed in the final report.
Commission Vice Chairman Charles Norton asked Carmichael if any of the findings would require the county to submit a corrective action plan to the state. The auditor said he did not believe any of the findings would rise to that level.
“In laymen’s terms are we ok financially or are we off?’ Chairman LaFaye Copeland asked.
“You’ve definitely made improvements on the financial side,” Carmichael said, but he recommended building the fund balance to the $12 million level.
As part of a transition this year, with the resignation of former accounting manager Connie Blackman, the county administrator had been making journal entries, which is a role Tobar should not be involved in, according to the auditor.
The auditor said that part of the final audit report will outline how there should be a clear trail on journal entries of who is recording them and who has approved them.
Tobar said he is no longer making journal entries, but said he was reviewing the journal entries made by new accounting manager Donna Johnson, who is the third accounting manager to work for the county during Tobar’s tenure.
“Since Donna Johnson has been the accounting manager, we have paid our bills on time and she has, for four consecutive months, reconciled the bank accounts prior to the end of the month. The goal is to be reconciled by the second meeting of the month,” Tobar said this week while discussing the audit.
Tobar said it was not a surprise that the audit “would not be pretty.”
“Our accounting has not been what it should have been. Bank accounts not reconciled in a timely manner, deposits went to the wrong account, restricted funds mixed with general fund, CSI accounts did not have their own checking accounts,” Tobar said.
For months last year, commissioners pressed for bank reconciliations to be brought up-to-date. County commissioners and Tobar did not know the extent of the problem with the county’s financial record keeping until auditors were brought in late last year to assist in preparing a financial report to be submitted as part of the 2015 revenue bond issuance by the county and the Grady County Lake Authority.
Tobar said this week some of the “clean up” that has been done was for problems dating back to 2013, but neither he nor the commissioners identified the problems prior to the auditors being engaged to help bring the records up to date prior to the issuance of the $10 million in revenue bonds to complete the Tired Creek Lake project and reimburse the general fund.
Carmichael said Tuesday night the final report would be completed and submitted to the state prior to the June 30 deadline.

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