During its meeting last week, Washington’s City Council acted to correct minor bookkeeping matters associated with several funds.

The council adopted a budget-ordinance amendment for special reserve, reserve and internal service funds as a result of an audit-report presentation Jan. 11.  In that presentation to the council, Crystal Roberts, a certified public accountant with Martin Starnes & Associates, noted there are no significant deficiencies or material weakness in internal control with the city’s finances. Roberts, upon questioning by Councilman Doug Mercer who noticed the report made references to violations of the state’s General Statutes, acknowledged the city might be in violation of state law regarding the handling of three funds. The report specified the city’s water reserve fund, sewer reserve fund and CDBG program income fund as possibly being in violation of the law.

The newly adopted budgets for the funds total $41,414, just a fraction of the city’s $14.5 million general fund (day-to-day operations).

“This is actually a cleanup ordinance. … This puts us in good standing, if we adopt the information here. … The auditor specified certain things we needed to do. This cleans that up,” said City Manager Bobby Roberson.

Councilman Doug Mercer asked Matt Rauschenbach, the city’s chief financial officer, if he had discussed the amendment with Roberts and is she is satisfied with it.

“I have. I have reviewed it with the (Local Government Commission) as well. … It’s a technical interpretation. It has no fiscal or financial impact. In essence, what it does is it emulates with the ordinance what happens naturally when you close the books at the end of the (fiscal) year,” he said.

Mercer said he wanted to make sure the city was in sound position regarding those funds.

“Everything’s good,” Rauschenbach said.

The Local Government Commission oversees the finances of local governments in North Carolina.

Washington wasn’t alone in possibly being in violation of state law. At the Jan., 11 meeting, Roberts said the state in recent months informed her company that some of its other local governments were not adopting budgets for specific funds.

 

BACKGROUND:

In response to an audit report’s reference to possible violation of state law regarding the handling of several funds, Washington’s City Council could take action to remedy the problem.

During its meeting Monday, the council is scheduled to consider adopting a budget-ordinance amendment for special reserve, reserve and internal service funds, according to the council’s tentative agenda. Matt is expected to discuss the proposed amendment with the mayor and council members.

During her presentation of the city’s audit report for fiscal year 2015, Crystal Roberts, a certified public accountant with Martin Starnes & Associates, noted there are no significant deficiencies or material weakness in internal control with the city’s finances. Roberts, upon questioning by Councilman Doug Mercer who noticed the report made references to violations of the state’s General Statutes, acknowledged the city might be in violation of state law regarding the handling of three funds. At the council’s Jan. 11 meeting, Roberts said she was awaiting word from the state’s Local Government Commission on that issue, which has been a matter of debate and different interpretations of the law. The Local Government Commission oversees the finances of local governments in North Carolina.

“Past practice for these funds has been to adopt a budget when there were planned expenditures, not for revenue only,” Rauschenbach wrote in recent memorandum to the mayor and council members. “Revised interpretation of NC G.S. 159-13 (a) suggests the adoption of a budget when there is only estimated revenue and no planned expenditure. As such, budgets are being established for these funds with the appropriation of reserve for future expenditures utilized to offset the expected revenue and balance the funds.”