A closer look at the town audit

At their regular meeting on Dec. 19, Thermopolis Town Council approved the audit of the financial statements for the fiscal year ending June 30, 2017, with much appreciation for the time and work Koerwitz, Michel, Wright and Associates put into preparing it.

Among the financial highlights listed in the audit, the assets of the town exceeded the liabilities at June 30 by $27,705,536 (net position), compared to $27,233,636 in 2016. Of this, $6,806,518 (unrestricted) may be used to meet the government’s ongoing obligations to citizens and creditors.

The total assets are $32,247,973, including current and other assets of $10,269,407 and capital assets of $21,978,566.

Current and other liabilities total $2,665,813, and long-term liabilities total $2,288,803, for a total $4,954,616 in liabilities. There were also $463,324 in deferred outflows and $51,145 in deferred inflows, resulting in the over $27 million in assets over liabilities.

The town governmental funds reported total balances of $8,116,298. Of this, $6,482,475 (unrestricted fund balances) may be used to meet the general government’s spending requirements.

There was a $129,789 decrease in net assets of governmental activities, so the governmental fund balances were $8,246,087 at the start of the fiscal year. The assets actually showed an increase of $161,481 prior to $291,270 in transfers.

Total governmental expenses decreased by $123,478 compared to the prior year and revenue decreased by $127,242. The largest decrease in revenue was from sales and one-cent taxes. The downturn in the state’s mineral industry and corresponding decrease in spending is a factor.

At the end of the fiscal year, town government funds reported a combined ending fund balance of $5,950,698, a decrease of $70,167 from the prior year. Of this, $3,019,882 constitutes unassigned fund balance, available for spending at the government’s discretion. The decrease in overall fund balance is due to decreases in taxes and increase in general government expenses.

Transfers to business-type activities increased $30,177 from the prior year. One-time funds from the state are received in the general fund then transferred to the enterprise fund. The state has mandated one-time funds be spent on capital expenditures and the funds were used to match grants to replace water and sewer mains.

As for business-type activities, there was a total balance of $19,589,238. At the start of the fiscal year, there was $18,987,549 in net assets. Revenue for business-type activities was $2,774,500, and expenses were $2,464,081, resulting in a $310,419 increase. Transfers of $291,270, which was one-time funding from the state, brought the total increase in net assets to $601,689. Another key element to the increase was restructured and increased water rates.

During the year, the town’s existing debt decreased by $117,035. The town paid down existing debt and didn’t issue any new debts.

Regarding the General Fund, at the end of the fiscal year the balance was $5,812,430 compared to $5,883,212 in 2016, a decrease of 1.2 percent. Overall, General Fund revenues came in at $66,270 over budget and expenditures were $745,174 less than budget. When other financing uses of $291,270 are taken into account, the net change in the fund balance was -$70,782.

Several budget amendments were presented to the town council during the fiscal year. The majority of these were made to transfer budget amount between line items in a department and account for unanticipated grants.

Taxes had the largest revenue variance from the budget, at $26,257. Public Safety was 11.3 percent below budget and Streets and Alleys/One Cent Projects were 27 percent below budget due to an employee position being reduced from full to part time and once-cent projects being delayed until the 2017-18 fiscal year.

Among the additional findings of the audit was in regard to segregation of duties. According to the finding, the town employs a Clerk/Treasurer and two assistants in the business office. The level of staffing does not include sufficient personnel for adequate segregation of duties. The potential effect of this, as stated in the audit, is an increase in the risk of fraud and undetected errors in financial transactions.

However, in a response letter from the town, it is noted administration has instituted several checks and balances in an effort to mitigate problems associated with the lack of segregation of duties. Further, the mayor and town council review the expenditure detail report and the budget to actual figures on the financial statements.