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California to be commended for good audit report

California to be commended for good audit report

October 16th, 2013 in News

The City of California Board of Aldermen accepted the annual audit report after it was presented to the board at the Monday meeting, Oct. 7, by Travis Hundley, representing Gerding, Korte and Chitwood, CPA's. Hundley said it was "clean opinion" with the auditor stating the city "qualified as a low-risk auditee", meaning the city is well-positioned financially.

The city assets exceeded liabilities at the fiscal year, ending March 31, by $25,206,674 net. The city's total net position increased by $1,726,333. Part of the increase was due to the new fire truck purchased with a federal grant and the new storm sewer system. The ratio of current assets to current liabilities was reported at 5.13.

The largest portion of the city's net position, 70 percent, is its investments in capital assets such as land, building, equipment, improvements and construction progress, minus any debt still outstanding on those assets.

The governmental funds combined ending balances were reported at $570,427, of which $511,919 (16 percent of the total general fund expenditures) is "unassigned and available for use within the city's designation and policies." In addition, scheduled payments dropped the city's revenue bond payable by $273,500. The bonded debt of the city is $3,443,700, all for the water/sewer system.

The auditors said that while no material weaknesses were identified, a couple of problems common to small cities were mentioned in the report.

First, common to smaller entities is the fact that a "smaller number of employees perform several accounting duties." All this means is that the Governmental Auditing Standards wants more people on the staff. However, the auditor's recommendation recognizes that California, like a large number of smaller governmental entities, must carefully conserve its resources to hire enough people to segregate duties to the satisfaction of those who set those standards. The auditor's recommendation was "The city should segregate duties whereever possible and implement other controls to compensate for the lack of segregation of duties."

The response of the city was "The City of California is continually trying to balance the needs of each department with the City Budget. The Utility Office will continue to operate with present personnel at this time but is aware of the auditor's recommendation."

Second, the city underspent its budget by $22,809. The revenue side of the budget was not amended to account for some federal and state grants, so that on paper the city overspent its budget by about $650,000.

Hundley said the audit, following the auditing standards, points out the overspending of the budget even though the city did very well. The recommendation is, when something like this happens in the future, that the city council amend the budget.

"Many cities would be envious of California's financial position," Hundley said.

The city plans to post the audit report on its website: