After earlier worries, auditors give county clean fiscal reportDec 27, 2012 By Eric Blom, Staff Writer
An independent audit of Fremont County's financial statement and policies found few problems.
In the language of accounting, county officials said, nothing wrong is as good as it gets.
Brandon Blair, a manager in the accounting firm Decoria, Maichel & Teague which audited the county's books, presented the audit report to Fremont County Commissioners at their Dec. 18 meeting.
Blair said his company found nothing to make it question the validity of the county's financial statement for last fiscal year, July 1, 2011, to June 30, 2012.
"We were able to express a clean, unqualified opinion," Blair said.
"It doesn't get any better than their report for us," deputy county treasurer Jim Massman said.
Finding the statements have all the number rights is a positive change. In the prior year, auditors had to "qualify" their opinion because they could not be sure the amount of a liability reported in the county's financial report was correct.
The liability was the closure and post closure costs for county landfills.
This year, the county provided more information than two years ago, the auditors were satisfied the county's cost estimate was correct, and the auditors revised their opinion of the prior year's statements to "unqualified."
Besides testing the accuracy of the county's financial statement, the auditors looked for problems with the county's internal controls on how it handles money.
Their job was not to form an overall opinion of those controls, but the auditors would be required to report any major problems it uncovers.
"We did not identify any material weaknesses or significant deficiencies," Blair told the commission. "That's a significant improvement. Last year we did find some significant deficiencies."
Similarly, the auditors looked to see if Fremont County complied with state law in its financial dealings.
Again, they were only responsible for reporting problems they discovered, and again, the audit did not find the county significantly failed to comply with financial laws.
The county was also required to have an audit of its use of federal award money.
In its report, the auditing firm also reported it found the county complied with regulations regarding how the county spends federal dollars.
Two years ago, auditors found significant problems with Fremont County management of federal money, and the county was listed as a "high-risk" county. Its status will change to low-risk after another year of clean reports.
Roads department over budget
Among the good news was some negative findings. The auditors found that the Transportation Department exceeded its $4.2 million roads and bridges budget by $568,247.
Massman said three factors caused Transportation to go over budget, but added that the department did not act irresponsibly.
The first issue was that the department did not keep track of materials it used from its inventory until the end of the year, Massman said. Materials used count as expenditures, and the department did not know that total cost until after the fiscal year ended. At that point, the budget could be adjusted.
Second, officials last fiscal year discovered a $320,000 road expense from two years ago that was not counted on that year's financial statements.
Rather than go back and change the statements, they counted the expense in the past year's, Massman said.
Finally, the Transportation Department incurred a larger encumbrance that it expected from one contract. An encumbrance is an obligation to pay for work that has not occurred, and encumbrances are counted against a department's budget.
The contract at issue was signed in February but was for work that would happen over two years. Even though the department would pay for the work over two years, the total cost of the contract had to count against the budget of the year in which it was signed.
"The department head didn't realize that would be counted entirely against the current year," Massman said.
In the meeting, Massman mentioned efforts to avoid the same problems again.
He said the Transportation Department is planning to make monthly or quarterly reports on its inventory so it can keep better track of it. He also said that several people, including the auditors, missed the expenditure from two years ago that had to be added to last year's expenditures.
Blair also noted county museums do not record their collections as assets. Such a policy is appropriate only if the museums use proceeds from sales of its items to buy more objects for their collections, Blair said.
Auditors found Fremont County museums follow that rule, but he county does not have a formalized policy in place, Blair said. He suggested the county adopt such a rule.