Addison Township officials received good news at a July 27 special meeting when auditors Plante & Moran, PLLC, presented a positive final audit report for the fiscal year ending March 31, 2004.
‘It’s a very good report,? said Les Pulver, a representative with Plante & Moran, ‘the best you can get.?
According to the audit report, the township brought into the general fund total revenues of $1,075,282 and spent $1,301,416 in expenditures. When compared with 2003, the overall revenues were down approximately $55,000. The only areas increasing in revenue from 2003 included earned interest, up from $32,000 to $44,942, and permits and licenses, up from $130,000 to $159,493.
The largest cause of the township’s decreased revenues was a 21 percent reduction in state shared revenue over the past two years. In 2002, the township received $570,079. In 2004, the township received $450,821, a decrease of almost $120,000 over the time span.
In addition to this, the report shows that township officials have been dealing with increases in cost in both public safety, from $190,473 in 2002 to $200,041 in 2004, and public works, from $81,927 to $113,141. However, the township has worked to balance the budget by decreasing general government expenditures, from $840,727 in 2002 to $777,879 in 2004, and dipping into the fund balance.
‘Looking at these funds combined, (police, fire, general and park acquisition) the fund balance decreased only approximately $96,805 from March 31, 2003 to March 31, 2004,? states the letter of recommendation from Plante & Moran.
‘You have reduced the fund balance slightly,? confirmed Monika Lesinski, who presented the final audit results at the special board meeting, ‘but it has been maintained in the safe zone recommended.?
Also, the township did not spend fund balance monies on general government expenditures. According to the report: ‘This decrease is approximately equal to the additional payment made on the installment contract related to the Park Acquisition Fund activity.?
The township used $96,805 of the fund balance, in combination with their regular loan payment, to pay off the remaining $202,599 on the acquisition of the Watershed Park. The township board voted to payoff the park acquisition after learning their earned interest was not covering the interest charged on the loan.
‘Really, it was a smart financial decision to trade it off,? said Pulver. ‘When taking that sum out, you operated the township at a virtual break even for the year.?
Plante & Moran commended the township in several areas of improvement – the biggest being the implementation of new fund accounting software.
‘I think we’ve made some giant steps forward,? said Pulver. ‘The new computer system is up and running, and the township’s accounting records have been greatly improved.?
‘We would like to commend the township on incorporating all funds within the new software, improving cash disbursement system and completing timely bank reconciliations,? the letter of recommendation states.
Also, after completing an extensive review of the township’s internal controls, Plante & Moran noted that there was no material fraud to be found, and no possible areas of material fraud could be found.
Despite a positive report that shows township expenditures being maintained with revenues, Plante & Moran did present several recommendations for improving the township’s financial planning and recording:
n Take financial planning one step further with the use of a five year model.
n Be conservative in estimating state shared revenues. Plante & Moran recommends budgeting at least 5 percent less than the previous fiscal year.
n Begin to reconcile and settle interfund activity in a more timeline manner. The audit does state that due to the implementation of the new software system, this is simply a recommendation for the next step to take in that process. At the time of the audit presentation, Pulver reported that township officials had already begun implementing this process.
n Consider depositing in the bank and reconciling cash receipts on a more frequent basis.
n Consider adopting the cash register module contained within the new accounting software to track cash receipts.
n And finally, keep not of the additional time, cost and effort associated with the implementation of the new GASB 34 reporting model. When asked during the special meeting where the township is for implementing GASB 34, Supervisor Bob Koski responded that the township has ‘just barely begun that.?
Pulver commented that many municipalities are waiting for final GASB 34 implementation until their 2005 audits. However, he did emphasize a point from the letter of recommendation: ‘given the magnitude of the project, the demands on your staff will be substantial and will require outside assistance.?
‘You can begin this at any point,? explained Pulver, ‘but you will probably need help.?
This is the third year that Plante & Moran has completed the audit for Addison Township. Les Pulver said he has been privileged to watch the township move forward in their accounting and processing practices.
‘This township management team has really taken steps to tighten up on the controls, and that has been extremely positive,? he concluded.