MARCO ISLAND — The Marco Island Audit Advisory Committee met Tuesday with only four days remaining for the city to submit its Comprehensive Annual Financial Report (CAFR) to qualify for the Certificate of Achievement for Excellence in Financial Reporting. The city closed its books on Sept. 30 for its 2011 fiscal year.
The certificate is given by the U.S. Government Finance Officers Association, an impartial panel of judges that will determine if the city’s CAFR meets the highest standards of financial auditing and reporting. Deadline for postmarked or e-mailed submissions is no later than six months after the city’s fiscal year ends.
Although some questions remained unanswered at Tuesday’s meeting, the city’s audit was 99-percent complete for the committee’s review. Tuesday, as part of its work, city management presented the committee and public with an overview of audit highlights.
At the end of fiscal year 2011, the city reported a combined ending fund balance of $17.1 million. That balance was an increase of $1.7 million over 2010’s year end. Included in the 2011 amount is $10.7 million of committed funds and $6.4 million of undesignated money; however, $4.3 million of the unassigned balance has been reserved for emergencies.
Unrestricted net assets for the city’s utilities increased, too, from $34.6 million in 2010 to $43.3 million in 2011. The city’s total net assets exceeded its liabilities by $184.4 million at 2011’s fiscal close.
Based on the 2011 audit, Patricia Bliss, city finance director, reported the financial condition of the city was strong.
At Tuesday’s meeting, the committee reviewed changes made to the CAFR to comply with the Government Accounting Standards Board Statement No. 54 requiring new definitions and names for fund allocations. The new reporting did not change the overall outcome of the audit but did require money be declared in different sections of the report.
In 2010, capital project funds balances were moved to the general fund at the end of the fiscal year; and then just a day later, were returned to capital projects at the beginning of 2011’s fiscal year. Under GASB54 requirements, funds remained where assigned and were not moved at the end of the 2011’s fiscal year.
The change made year-over-year comparisons less straightforward. The committee asked auditors to make sure footnotes on the report reflected the move to GASB54 as a new accounting procedure.
Committee members also asked why the audit was coming down to the reporting wire while changes and documentation were still being addressed.
The auditors said things went faster in the beginning because they were asked to make fewer journal entries – described as just a handful – as compared to last year’s audit that required hundreds of entries after year-end close. But some items, including paperwork for work in progress and tracking sewer district accounts, bogged down the process.
In their final recommendations, auditors asked the city to consider upgrading its software to allow on-line CAFR reporting that would streamline overview. They recommended the city purchase a related module that could track the city’s 17 sewer districts.
Auditors will cite three deficiencies in the 2011 CAFR that need to be corrected. The first recommendation requires a control process be put in place to immediately eliminate passwords from all programs and all systems upon termination of employees.
The second will ask the city to keep a better eye on tracking retainage payable amounts by developing a closeout checklist. Retainage is a category of future payables for projects that have been contracted withholding a final payment percentage until work is completed to the city’s satisfaction.
The final recommendation will address journal entries for capital assets. Auditors found a $750,000 work in progress that should have been moved by the end of fiscal year 2011 to fixed assets.
Auditors agreed that the process showed significant improvements over the prior year. The 2011 audit is the third in a row conducted by Mayer Hoffman McCann, P.C., an independent and certified auditing firm.
The committee plans to make its formal presentation of audit results to Marco Island’s City Council at its regularly scheduled meeting at 5:30 p.m., May 21, in the Community Room, 50 Bald Eagle Drive.