Coun­cil pleased with Town of La Plata au­dit re­port

Maryland Independent - - Front Page - By TIF­FANY WAT­SON twat­son@somd­news.com

On Jan. 24, the La Plata Town Coun­cil had an op- por­tu­nity to dis­cuss and give feed­back con­cern­ing the com­pleted Fis­cal Year 2015-2016 Town of La Plata au­dit re­port. Cohn- Reznick LLP au­di­tors Dan Ken­ney and Shan­non En- gle­hart high­lighted their find­ings in a pre­sen­ta­tion shown dur­ing the coun- cil’s busi­ness meet­ing.

“This is an an­nual event for us. We are re­quired by law to have the fi­nances of the town au­dited by an in­de­pen­dent au­di­tor. That task was com­pleted in De­cem­ber and this is the chance for the au­di­tors to come and present the re- sults of that au­dit. This is the sixth year that we’ve had the same au­dit firm con­duct­ing the au­dit,” said town Trea­surer Robert Oliphant.

“I know how much ef- fort goes into these re­ports and I com­mend [the au­di­tors] on the work they have done,” said Mayor Roy G. Hale.

The au­di­tors ex­am­ined the town’s fi­nan­cial state­ments of gov­ern­men­tal ac­tiv­i­ties, the busi­ness-type ac­tiv­i­ties, each ma­jor fund, the ag­gre­gate re­main­ing

fund in­for­ma­tion and the bud­getary com­par­i­son for the Gen­eral Fund for the fis­cal year end­ing on June 30, 2016.

Ken­ney and En­gle­hart went through each sec­tion of the re­port: the au­di­tor’s opin­ion, the au­di­tor’s in- ter­nal con­trol re­port, the State­ment on Au­dit­ing Stan­dards 114 let­ter, pre- sen­ta­tion of fi­nan­cial state­ments, fi­nan­cial high­lights and fu­ture con­sid­er­a­tion.

“In In­ter­nal Con­trol, we noted no ma­te­rial weak- nesses or sig­nif­i­cant de- fi­cien­cies in the in­ter­nal con­trol struc­ture over the Town of La Plata from the pre­vi­ous year un­til June 30, 2016. In com­pli­ance of other mat­ters, it in­di­cates that the re­sults of our test dis­close no in­stances of non-com­pli­ance to be re- ported,” Ken­ney said.

Ken­ney dis­cussed a sum­mary of the ac­count­ing prac­tices in­cluded in the SAS 114 let­ter. He said this year the town adopted GASB State­ment No. 72 (Gov­ern­men­tal Ac­count- ing Stan­dards Board) — in­vest­ments mea­sured at fair value — and those were recorded. The town also adopted GASB State- ment No. 79, ac­count­ing and fi­nan­cial re­port­ing for cer­tain ex­ter­nal in­vest- ment pools and pool par­tic­i­pants.

“In the pre­vi­ous year [the town] adopted GASB State­ment No. 68 — ac- count­ing and fi­nan­cial re­port­ing for pen­sions — and that was a sig­nif­i­cant es­ti­mate [in­cluded in the au­dit] as well,” Ken­ney said.

En­gle­heart pre­sented the fi­nan­cial high­lights and graphs that show the re­port’s com­par­isons to pre­vi­ous years.

“The Net Po­si­tion has in­creased over FY 2016, due to the rev­enue and ex­penses,” En­gle­hart said. “Changes in Capital As­sets — the main fac­tors that con­trib­uted to these val­ues are about $2 mil­lion of de­pre­ci­a­tion and then about $893,000 of Capital As­sets were pur­chased dur­ing the year. That mainly con­sisted of soft- ware, po­lice ve­hi­cles, con- struc­tions on bike trails, side­walks and roads.”

She added that the change in long term debt this year de­creased by about $2.5 mil­lion due to the town’s bonds be­ing paid off.

“The Net Pen­sion Lia- bil­ity in to­tal shows an es- ti­mated $300,000 in­crease from last year,” En­gle­hart said.

Dur­ing the pre­sen­ta­tion, the au­di­tors stated that the GFOA (Gov­ern­ment Fi­nance Of­fi­cers As­soci- ation) rec­om­mends that “gen­eral-pur­pose gov­ern- ments,” re­gard­less of size, main­tain an unas­signed fund bal­ance in their gen- eral fund for a min­i­mum of two months (of reg­u­lar gen­eral fund op­er­at­ing rev­enues or reg­u­lar gen- eral fund op­er­at­ing ex­pen- di­tures).

“GFOA rec­om­menda- tions for the unas­signed fund bal­ance amount is no less than two months. The town’s bal­ance is 10 months, so it’s well over the two months and higher than rec­om­mended,” En­gle­hart said.

The au­dit re­port also states that the town’s fi­nan­cial state­ments and all sup­ple­men­tary in­for­ma­tion are pre­sented and stated fairly in all ma­te­rial re­spects. It is also is in com­pli­ance with cer­tain pro­vi­sions of laws, reg­u­la­tions, con­tracts, grant agree­ments and other mat­ters re­quired by Gov­ern­ment Au­dit­ing Stan­dards.

“I think that the dis­cus­sion and analysis is ex­cep­tional and I com­mend them on their work. It prob­a­bly goes be­yond what it is min­i­mally rec­om­mended,” said Coun­cil­man Joseph Nor­ris (Ward IV). “If any­body who’s in­ter­ested in what is go­ing on with the town and they do not have to have

a fi­nan­cial back­ground to un­der­stand it, I think it does an out­stand­ing job with giv­ing a pic­ture of what is go­ing on with the fi­nances of the town.”

“[The au­dit re­port] ex­plains the terms, it ex­plains each of the ac­counts, you can trace it to the fi­nan­cial state­ments ... and com­pare the num­bers over time to show trends. We had a slight lapse in en­ter­prise funds, but I know over­all we still did re­ally well and as [the au­di­tors] pointed out, our reserves are pretty strong so we are still headed in the right di­rec­tion,” Hale said.

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