Town assets exceed its liabilities
Published 8:00 am Wednesday, November 8, 2023
Drakes Branch Town Mayor Phillip Jackson said in an interview recently that the town’s financial condition is “pretty good” following the release of the municipality’s latest audit.
“I would like to say we are in excellent condition, but everyone would like to be better off,” Jackson said.
The audit performed by Robinson, Farmer, Cox Associates noted that the assets of the Town exceeded its liabilities at the close of the most recent fiscal year by $3,967,291. Of this amount, $732,237 may be used to meet the Town’s ongoing obligations to citizens and creditors.
In addition, the Town’s total net position increased by $86,289, of which the governmental activities accounted for a $240,513 increase, while business-type activities accounted for a $154,224 decrease.
As of the close of the current fiscal year, the Town’s governmental fund reported an ending fund balance of $547,934, an increase of $265,551 compared to the prior year. $547,934 of this fund balance is available for spending at the Town’s discretion (unassigned fund balance).
At the end of the current fiscal year, the unassigned fund balance for the General Fund was $547,934.
“We are always conscious that this is the citizen’s money, and it is our job to do the best we can to get the best ‘Bang For The Buck,’” Jackson said. “We invest in infrastructure items (e.g., Water meters) that may be costly upfront but will pay dividends in the future and benefit our citizens by allowing us to control water loss, therefore keeping the rates lower. The goal is to have a town that is not only good looking but affordable, and we can only do this by being good stewards of our finances.”
When it comes to developing the town’s budget, economic factors come into play.
According to the audit, the average unemployment rate for Charlotte County on June 30, 2022, was 2.8 percent, less than 4.6 percent as reported in the prior year.
According to the 2020 U.S. Census, the population of Drakes Branch was 580.
These factors were considered in preparing the Town’s budget for the 2023 fiscal year.
This year’s audit and last year’s audit did find two recurring findings.
According to the audit, when it came to internal control over financial reporting, material weakness(es) was identified.
“A key concept of internal controls is the segregation of duties. No one employee should have access to both accounting records and related assets.” The report stated. “The Town did not identify all end-of-year entries that were necessary for the books to be presented in accordance with current reporting standards.”
According to Robinson, Farmer, Cox Associates, a misstatement of the Town’s financial statements would not have been prevented or detected and corrected by the entity’s internal controls over financial reporting.
Auditors suggested the Town should review proposed audit adjustments and consider the same as they close out the books for the 2022-23 fiscal year. “Staff should review all accrual entries and balances against subsidiary ledgers and supporting documentation going
Forward.” Robinson, Farmer, Cox Associates said.
According to town management, due to the Town’s size, personnel and financial resources are unavailable to meet this requirement. However, other controls are in place to mitigate risk.
The audit also found that the Town currently needs more technical knowledge to prepare the financial statements in conformity with accounting principles generally accepted in the U.S.
“Town staff do not have the skill, nor does the Town utilize a third-party consultant, to prepare financial statements free from material misstatement.” Robinson, Farmer, Cox Associates.
Auditors suggested that Town staff obtain additional technical training or use a third-party consultant to prepare the financial statements free of material misstatement.
Town management said the Town has limited resources to meet financial reporting requirements. However, other controls are in place to mitigate associated risks. The Town Clerk provides monthly financial reports for review by the Town Council, which is considered an integral part of the monitoring controls over the Town’s financial records.