Daleville city, water board get good audit report

A good audit report has been received by both the city of Daleville and the Daleville Water Board.

Both entities were commended by Carr, Riggs and Ingram Certified Public Accountant Brian Free at their respective meetings June 15.

Free congratulated both the city and water board for the fact that their net pension assets were funded. “We have a net pension asset of $1.2 million and I want to congratulate the city on that because most of our cities are struggling with these pension liabilities now days and you, through the end of last year, are fully funded,” Free told the Daleville City Council. “That’s a good thing.”

The water board has a net pension asset of $293,000. “That is really good,” he told the water board members. “Most of our governments in the state who participate in the Retirement Systems of Alabama have pretty significant liabilities on their books related to pensions. So the city and water board need to be commended for that.”

Free said that at the end of the fiscal year, which ended Sept. 30, 2020, the city had total assets for the General Fund of $2.7 million. Total assets for the debt services and other non-major funds totaled $1.26 million. “You have an unassigned fund balance of $2 million which represents funds available going into the next fiscal year that are available for discretionary use by the council,” he said.

Free noted that the revenues for the General Fund are $3.9 million for the year. Of that amount, $2.6 million is tax revenue, he said. Total governmental funds revenue is $4.3 million.

“For the year, we had revenues over expenditures that were not budgeted of $345,000 so that represents an increase in the city’s net position that we did not anticipate for the year,” he added. “Overall the city is in good financial condition.”

Free said that the water board’s total assets as of Sept. 30, 2020, the end of the fiscal year, are $9.6 million for water and sewer. “At the end of the year we have working capital, which is current assets in excess of current liabilities, of $1.9 million. This is a good indicator of what we have available in funds to operate with in the next year.

“We also have an unrestricted net position of $2.7 million,” Free added. “This is approximately two times our annual operating expenses and that is a good reserve and a good indicator of financial strength.

“Our operating revenues are $1.4 million and our expenses are $1.2 million which gave us an operating income of $248,000 for the year,” he said. “And we were able to provide an operating transfer to the city of $80,000 to help subsidize their operations.”

In the written report to the city, Free defined the term “deficiency in internal control” as a situation which prohibits “management or employees, in the normal course of performing their assigned functions, to prevent or detect and correct misstatements on a timely basis.”

A “material weakness” is defined as a “deficiency or a combination of deficiencies in internal control such that there is a reasonable possibility that a material misstatement of the entity’s financial statements will not be prevented or detected and corrected on a timely basis.”

A “significant deficiency” is a “deficiency or a combination of deficiencies in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance.

“As the result of our audit, we issued an unqualified opinion which is the highest level of assurance we can provide and we had no findings, material weakness or significant deficiencies from the audit,” said Free, a partner at CRI. “I congratulate (Daleville City and Water Board Clerk) Angelia (Filmore) and her staff on a job well done.”