2012-11-15 / Front Page

Audit detailed for city

‘Clean’ report highlights city’s ability to maintain fund balance

MANISTIQUE – The city of Manistique received a “clean” audit report during their regular meeting Tuesday. Among positive notes from the auditor was the city’s fund balance, which hovers at approximately $546,000.

According to Ray LaMarche, CPA for Anderson, Tackman and Company, the city had no major discrepancies in their 2011-12 fiscal year audit report and received a “clean opinion”.

“That’s what you’re looking for, it’s a good thing,” he said.

Despite the current state of the economy, the city was able to add approximately $59,000 to its fund balance. This brought the fund to a total of $546,022.

“Right now, you’re general fund is doing quite well,” he said. “Given the state of everything, the fact that you were able to increase your fund balance is pretty good.”

LaMarche noted a question he often encounters while auditing municipalities is what constitutes a “good” fund balance.

“Ten years ago, I think you could say 10-20 percent would be pretty comfortable,” he said. “This day in age, I don’t even know if I could give you a range.”

He added Manistique has what appears to be a sufficient fund balance, though unknowns such as health care costs, the tax base, and MERS (Municipal Employees’ Retirement System) contributions threaten this. Unpredictable increases from MERS are, in particular, difficult to deal with, LaMarche said.

“When the bill comes, you have to pay it – that’s the law,” he explained. “So how do you budget for something like that? It’s hard, if your budget is already tight on an annual basis. So to have that fund balance sitting there might be what it’s going to take to get through the next few years.”

While the city increased its fund balance, LaMarche pointed out the Downtown Development Authority was hit with a decrease. The DDA’s fund balance shrunk by $51,734 during the fiscal year.

“Obviously, part of the DDA issue is the whole paper mill (bankruptcy),” he said. “Based on our calculation, I think it was 37 percent … they represent of the DDA’s tax capture. Given their debt load and their payment requirements, it’s significant.”

Despite the fact Manistique Papers, now known as FutureMark Manistique, is participating in a payment plan for taxes owed prior to their bankruptcy, LaMarche noted the DDA would still see a sustained drop in tax capture from the company.

While the waste water utility experienced a drop in net assets, LaMarche said this would change as grant money filtered into the fund. Local and major funds saw increases to the funds, while the ambulance service added $26,773 to its net assets.

Beside the individual funds, LaMarche suggested the city begin documenting internal controls to track the actions of personnel and know the duties of each employee.

“If it’s in writing, it’s easier to analyze yourself,” he said. “Do a risk assessment. Is there any risk with our process?”

According to City Manager Sheila Aldrich, the city would not have been able to secure a positive audit without the help of its staff.

“I want to thank the city staff for getting us through another year,” she said. “Every single one of your departments … has been downsized … and they continue to do more with less.”

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