Title
Discussion of City of Hudson’s 2011 Audit Report.
Executive Summary: The City received an unqualified (ie. clean) audit report and had no material weaknesses or non-compliance. As a result, we received the Auditor of State Award. City staff has prepared comments in response to the immaterial items noted in the auditor’s report.
Body
Legislative History
N/A
Purpose & Explanation
The City is required to have our financial statements audited every year. For 2011, the State Auditor’s office completed our audit. For the previous 9 years, a private CPA firm performed the audit. The State Auditor’s office performs their audits with a greater emphasis on compliance and generally reports every issue they find regardless of significance or materiality. Here is a summary of their compliance comments from the Management Letter and our response.
1. ORC 5705.41(D) - this requires the fiscal officer to certify availability of funds prior to any contract or order to expend funds. This is typically accomplished through the use of purchase orders or if done after the fact, through a “then and now” certificate. The auditors noted 4 of 52 expenditures they tested did not comply with this requirement. The items they cited were either insurance related expenditures or utility expenditures. The City has never certified these types of expenditures prior to expending the funds. In recent years the auditor’s office apparently started requiring these to be certified so we will do so going forward.
2. ORC 5705.36 - requires us to exclude reserve balance accounts form our certification to the county of all sources available for expenditure. For 10+ years we have included our Emergency Reserve Fund balance in the certification to the county as we are permitted to expend the funds with the approval of City Council. The county has never told us to exclude the balance and to us it is more transparent to anyone looking at our balances to include it. Because it is required to be excluded, we will do so going forward.
3. ORC 135.12(B) - requires City Council approve public depositories. We have always had depository agreements with our banks but will bring forth legislation asking City Council to approve the designated depositories.
4. ORC 5705.14 - requires no transfer of from one fund to another shall be made unless it meets one of the exceptions in the ORC. Although approved by City Council, the City transferred $100,000 from the Parks Fund to the Golf Course Fund which is not one of the exceptions listed in the ORC. In the future, any financial support from the Parks Fund shall be made by reducing the Parks’ income tax revenue by the amount approved by City Council and posted to the Golf Course Fund rather than posting it as a transfer.
Timing Considerations
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Fiscal Impact
N/A
Recommendation
Suggested Action
There is no required Council action.
Submitted by,
Jeff Knoblauch, Finance Director