The City of Dillon recently received their audit report from Smith Brooks of Kenneth Cobb & Company, P.C., Certified Public Accountants.
The audit covers the fiscal year ended June 30, 2012. The city received an unqualified opinion, which is the best opinion that one can receive.
Some of the highlights from the audit include the following:
—The assets of the city exceeded its liabilities as fiscal year ending June 30, 2012 by $36 million (net assets). Of this amount, $6.7 million may be used to meet the city’s ongoing obligations to citizens and creditors.
—As of the close of the current fiscal year, the city’s governmental funds reported combined ending fund balances of $4.0 million, an increase of $326,000 in comparison with the prior year. Approximately 67 percent of this total or $2.6 million is unassigned fund balance.
—The city’s total bonded debt decreased by $1.4 million during the current fiscal year. There was no new debt issued during the year.
—The largest portion of the city’s net assets $25.7 million reflects its investment in fixed assets such as land, buildings, equipment, and infrastructure (road, bridges, and other immovable assets), less any related debt used to acquire those assets that is still outstanding. The city uses these fixed assets to provide services to citizens; consequentially, these assets are not available for future spending.
—The city’s net assets increased by $887,000. Approximately 17 percent of the city’s total revenue came from taxes, while 9 percent resulted from grants and contributions ( including state and federal aid). Charges for various goods and services provided 65 percent of the total revenues. The city’s expenses cover a range of services. The largest expenses were for public safety and water and sewer.
—Governmental activities: Total revenues did not change compared to the prior year. Total expenses increased $166,000 compared to the prior year. This increase was spread over all activities. The city still showed an increase in net assets of approximately $459,000.
—Business-type activities: Total revenues increased $32,000 compared to the prior year.
This increase was due mostly to other revenues. Total expenses decreased $11,000. The city had an increase in net assets of approximately $428,000.
—The fund balance of the city’s general fund increased by $187,000 during the current fiscal year. This is a 7.6 percent increase over the prior year fund balance.
—Fixed Assets: The city’s investment in fixed assets for its governmental and business-type activities as of June 30, 2012, amounts to $56.3 million, less accumulated depreciation of $24.6 million, leaving a net book value of $31.7 million. This investment in fixed assets includes land, buildings, improvements, equipment, and infrastructure. Infrastructure assets are items that are normally immovable and of value only to the city, such as roads, bridges, drainage systems and similar items.
—Debt Activity: The City of Dillon’s total debt decreased by $1.4 million during the current year.
Notes
The following notes of interest were some of those that were included in the audit report:
—Contingencies: According to the city’s attorney, there are three actions currently in progress against the city. It is the attorney’s opinion that these actions will not have any adverse effects on the city.
—Subsequent Events: The city is not aware of any subsequent events occurring after the city’s year end that would have a material effect on the financial statements.
—Related Parties: During the year, the city paid Dillon Internal Medicine, with whom Dr. Phil Wallace is affiliated, $9,232 in medical fees, and Braddy Insurance Agency, with whom Councilman John Braddy is affiliated, $797 for insurance.
—Major Customers: Approximately 41 percent of the Water and Sewer Enterprise Fund’s sales revenue is generated by sewer sales to Perdue Farms, Inc.
—Mutual Aid Agreement: Effective Sept. 1, 2002, the city has entered into an agreement to provide Dillon County with mutual aid fire service when requested. Dillon County will pay the City $500 a month for 120 months.
—Post Employment Benefits: Effective March 9, 2009, Mayor and City Council adopted Resolution 01-09. This resolution states that the city will no longer offer retirees any health insurance coverage. There was one retiree who was grandfathered in under the City’s old Resolution 3-00. This retiree reached his Medicare eligible age in October 2011 and at that time his health insurance benefits paid by the city ended.
Findings
The following is the schedule of findings and responses included in the report:
SIGNIFICANT
DEFICIENCY
#2012-1: Preparation of annual financial statements and disclosures (initially reported on 12/31/07)
Condition: The City does not prepare its annual financial statements or note disclosures. The city’s staff works with the auditor in preparation and subsequently reviews and approves the financial statements and not disclosures before issuance.
Response: The city accepts this condition and will continue to concentrate on the review and approval process. The finance director continues to work on learning how to prepare the financial statements.
#2012-2: Inadequate segregation of duties (initially reported on 12/31/07)
Condition: Due to small staff size, the city does not have complete segregation of duties.
Response: Mayor, Council, and Management will continue to use supervisory reviews of financial statements and budget reports and when cost beneficial will segregate duties.
#2012-3: Purchasing goods and services (initially reported 10/29/10)
Condition: During the disbursement testing the following instances were noted: 1 instance of no purchase orders; 7 instances of no bids being taken; and 5 instances of no documentation being provided as support for checks written. There were 164 items tested.
Response: The City Manager and Finance Director will stress how important it is to follow purchase order procedures to all department heads.
Additional
Information
Any additional information about the audit may be obtained from the City of Dillon.
