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HomeMy WebLinkAboutAuditor's Comments December 31, 1970 VILLAGE OF OAK PARK HEIGHTS AUDITOR'S COMMENTS YEAR ENDED DECEMBER 31, 1970 JOHNSON DE LA HUNT & CO. CERTIFIED PUBLIC ACCOUNTANTS NORTH ST. PAUL, MINNESOTA 55109 PHONE 777 -1337 2534 E. 7TH AVENUE To the Honorable Mayor and Members of the Village Council Village of Oak Park Heights Route #1 Stillwater, Minnesota We have examined the financial statements of the various funds of the VILLAGE OF OAK PARK HEIGHTS, MINNESOTA, for the year ended December 31, 1970. The examination, a limited general audit, was made in accordance with generally accepted auditing standards and accordingly included such tests of the accounting records and such other auditing procedures as we considered necessary in the circum- stances. In our opinion, the accompanying balance sheets and related statements of revenues, expenditures, and surplus present fairly the financial position of the various funds of the VILLAGE OF OAK PARK HEIGHTS, MINNESOTA, on December 31, 1970, and the results of their operations for the year ended in conformity with generally accepted governmental accounting principles. ?�h�& A, &4 le w JOHNSON DE LA HUNT & CO. Certified Public Accountants Date field work completed April 2, 1971 Date report signed April 23, 1971 Village of Oak Park Heights Report COMMENTS r"1 T,e scope of the audit report pertains primarily to the year ended December 31, ]_x)70. However, to ascertain accurate January 1, 1 cash balances for the Improvement Fund, Debt Service Fund, Water Operating Fund and Sewer Operating Fund required an analysis of the utility bank account to its beginning in 167. The village maintains two checking accounts, a general account (General Fund) and a utility account (Debt Service Fund, Improvement Fund, Utility Fund). The village General Fund transactions are re- corded in a cash receipts and disbursements journal. No attempt is made to separate the receipts and /or disbursements as reflected by t: - ie utility bank account into proper fund classifications. As the utility bank account includes Debt Service Fund and Improvement Fund !� cash transactions it is pertinent the village institute an accounting s /stem to ensure the proper recording of utility bank account receipts and disbursements by funds, whereby the actual cash balance in the Debt Service, Improvement, Water Operating, and Sewer Operating Funds is known at all times. Tax and assessment collections from the county auditor are de- posited intact to the general account bank depository. During 1970 three general account transfers to utility account for debt service were made as follows: January, 1970 $ 16,7b4.y4 February, 1970 35,633.67 August, 1970 56,158.87 Total General Account Transfer to Utility Account $110,577.68 Village of Oak Park Heights Report, cont. It was determined the transfers represented: Transfer 1969 Assessments from county deposited into General Account $ 16,784.94 Transfer 1970 Assessments from county deposited into General Account 14,929.95 Transfer 1970 Debt Service Property tax deposited into General Fund 28,337.28 Permanent General Fund transfer to Debt Service Fund 50,525.41 Total $110,577.68 It is recommended receipts from the county auditor for debt service be immediately receipted into the utility account and recorded as Debt Service Fund receipt. The permanent transfer was made without council resolution as required. It is recommended interfund transfers be specifically authorized by council resolution. Investment transactions were often accomplished through bank memorandum without the transactions being recorded in the village records. It is recommended all investment purchases be made through the issuance of village vouchers and all investment sales be receipted and recorded. A summary statement of investment transactions is provided in Schedule 10.1. Exhibit 14 Security For Deposits indicates the Cosmopolitan State Bank of Stillwater had not provided collateral other than the $15,000.00 F.I.D.C. guaranty against financial loss as of December 31, 1970. State statute requires the collateral be at least 10% more than the ma::imum deposit authorized by the council. As the cash and investment deposit with the Cosmopolitan State Bank at December 31, 1970 was /'1 Village of Oak Park Heights Report, Cont. $193,175.46, the collateral is inadequate. The bank and village treasurer have been notified of the deficiency; the bank indicated additional collateral will be pledged by the end of March, 1971. Council approval of the Collateral provided is required by state statute. A summary statement of receipts and disbursements of all funds is presented in Exhibit 11. The cash, treasurers' balance of $93,159.13 was confirmed by the village depositories as of December 31, 1970. A combined balance sheet of all funds (condensed form) as of December 31, 1970 is presented in Exhibit 10 and discloses the financial condition of the village at that date. Individual fund balance sheets and financial statements contained in this report are enumerated in the preceding table of contents. A discussion of individual fund balance sheets follows. GENERAL FUND The General Fund Balance Sheet is Exhibit 1. CASH, TREASURERS' BALANCE $ 66,783.67 INVESTMENTS = 5_000 The cash in depository and investments were confirmed by the de- pository as of December 31, 1970. Security for deposits in the amount of $100,000.00 assigned as collateral for cash in depository by the First National Bank of Stillwater is shown in Exhibit 14. This is in addition to the $15,000.00 F.I.D.C. guaranty. DUE FROM COUNTY AUDITOR $ 58,005.73 The due from county auditor represents 1970 general revenue tax collection by county and due to the village at December 31, 1970. Village of Oak Park Heights Report General Fund, cont. DELINQUENT TAXES RECEIVABLE $ 3,016.73 RESERVE FOR UNCOLLECTIBLE TAXES ( $ 3 .016.73) The delinquent taxes were taken from the county auditor's records. DUE FROM OTHER FUNDS __6, 1 __ 6 b 71 .4 7 Due from: Water Operating Fund $ 481.25 Sewer Operating Fund 235.70 Improvement Fund 6,154.52 Total $ 6,871.47 The Schedule of Interfund Transfers, Schedule 10.2, gives a de- tailed explanation of the Due From Other Funds. Council resolution is required to effect the transfers. ACCOUNTS PAYABLE $ 6,061.84 The accounts payable comprised of current charges. Confirmation was not required from the creditors but we examined creditors' state- ments as of December 31, 1970 and scanned the January through March, iL,71 cash disbursement vouchers for entries relating to 1970 purchases. All liabilities disclosed by our examination are included in the accounts payable. ACCOUNTS PAYABLE DUE TO OTHER GOVERNMENTAL AGENCIES �_ 1,749. The account represents payroll withholdings unremitted and village portion of PERA and FICA payable at December 31, 1970 as follows: Federal tax withheld $ 860.56 State tax withheld 275.90 PERA withheld 113.69 PERA village portion 211.07 FICA withheld 144.80 FICA village portion 143.48 Total_ 1 17 4 9.50 Village of Oak Park Heights Report General Fund, Cont. ACCOUNT PAYABLE DUE TO EMPLOYEES HOSPITALIZATION PREMIUMS $ 17.04 DUE TO OTHER FUNDS $ 2,599.54 Due to: Improvement Fund $ 2,395.00 Water Operating Fund 204.54 Total $ 2,599.54 The Schedule of Interfund Transfers, Schedule 10.2 gives a de- tailed explanation of the Due to Other Funds. Council resolution is required to affect the transfers. FUND BALANCE $126,232.95 Schedule 2.1 Comparison Budget to Actual Expenditures shows the s� budget was underspent by $48,067.15 during 1970, a factor in the large fund balance. The fund balance indicated the General Fund has monies available for capital improvements. Additional comments can be found under the Improvement Funds, Exhibit S. DEBT SERVICE FUND G.O. BONDS OF 1967 AND 1968 The balance sheet of the debt service fund is presented in Exhibit 3 and reflects the financial position of the village debt service obligation. To finance capital improvements the village sold two bond issues, a September 1, 1967 issue (GO Bonds of 1967) for $900,000.00; a March 1, 1966 issue (GO Bonds of 1968) for $500,000.00, a grand total of Village of Oak Park Heights Report Debt Service Fund, cont. $1,400,000.00. Assessments for all improvements have been certified with the exception of 1969 Water and Sewer Extensions and 1968 Street Improvement. The amount to be provided for debt retirement is $240,876.08. A major portion of this provision will come from future interest on deferred special assessments. A summary of the remaining bond and interest requirements over future provisions at December 31, 1970 are as follows: Remaining requirements: Bond principal $1,375,000.00 Future interest on bonds 1,049,335.00 Total $2,424,335.0- Remaining provisions: Cash on hand $ 34,203.20 Investments 166,800.00 Tax levies, net 1,637,990.00 Special assessments 307,512.64 Future interest on special assessments, estimated 231,651.62 2,378,157.46 Amount to be provided $ 46,177.54 The estimated future interest on special assessments is a maxi- mum figure based on a calculation whereby there would be no pre- payments on deferred special assessments. Changes in the cash position, addition of assessments for 1969 Water and Sewer Extensions and 1968 Street Improvement and interest receivable should be reviewed at the end of 1971 to determine if the fund can meet its future bond and interest maturities. r� Village of Oak Park Heights Report Improvement Fund IMPROVEMENT FUND Considerable difficulty was encountered in classifying expendi- tures to the proper improvement project as the village has not adopted a procedure whereby a project number is assigned to each improvement undertaken by the village. It is recommended a numerical system be utilized by the village. The $1,400,000.00 bonds sold in September, 1967 and March, 1968 were to finance the following improvements: Sewage Disposal Plant Deep Well, Pump No. 1 and Elevated Water Storage Tank 1967 Water Mains and Sanitary Sewer Lines Municipal Building Subsequent improvements authorized were: 1968 Water Mains and Sanitary Sewer 1969 Water Mains and Sanitary Sewer Outfall Sewer 1968 Storm Sewer 1968 Street Improvement 1970 Street Improvement All projects with the exception of the 1970 Street Improvement have been completed by December 31, 1970. The village attorney, Lawson, Kelly, Ranum and Raleigh confirmed by letter the following pending litigation at December 31, 1970: 1) A damage suit for taking some property for road by John Ogren against the Village of Oak Park Heights i the amount of $20,000.00 (1970 Street Improvement). 2) A damage suit for alterations to filling stati n by Mobil. Oil Company against the Village of Oak Park He' hts in the amount of $20,000.00 (1970 Street Improvement). oc Village of Oak Park Heights Report Improvement Fund, cont. `f 3) A damage suit for laying sewer lines upon property without authorization by Richardson Albertson against the Village of Oak Park Heights in the amount of $4,500.00 (1967 Sani- tary Sewer). The village treasurer indicated all litigation was concluded in January and February, 1971. The Improvement Fund Balance Sheet, Exhibit 5 shows a fund balance deficit of $12,598.53 at December 31, 1970. The 1970 Street Project Construction in progress will increase the fund balance deficit. Additional financing of the Improvement Fund will be required during 1971. As noted under General Fund Exhibit 1 Comments, the fund balance of the General Fund is substantial and it is recommended the council authorize permanent transfer to the Improvement Fund for the 1970 Street Project. #01N It is recommended the council define the method of financing each project at the time the improvement is authorized. UTILITY FUND The combined balance sheet of the utility department funds is presented in Exhibit 7 and reflects the financial position of the two operating funds. CASH, CLERK'S BALANCE 1_0�_745_._1 4 PETTY CASH $ 5000 The cash on hand was counted and that on deposit was confirmed by the depository as of December 31, 1_970. Village of Oak Park Heights Report Utility Fund, cont. ACCOUNTS RECEIVABLE $ 8,301.25 Negative forms confirmation requests, which require replies only where there are differences between the statement and the customer's records were mailed with 100% of the customers' utility billings as of December 31, 1970. No significate differences were found. We recommend the clerk of Oak Park Heights review all accounts receivable 90 days or older to determine collectibility and certify any uncollectible accounts each year to the county auditor for collection. DUE FROM OTHER FUNDS $ 204.54 Due from: General Fund $ 204.54 The Schedule of Interfund Transfers, Schedule 10.2, gives a detailed explanation of the Due From Other Funds. Council resolu- tion is required to effect the transfers. FIXED ASSETS (less depreciation) �_ 569,_243.68 Fixed assets details are disclosed in Schedule 7.1. All assets are recorded on a cost basis. ACCOUNTS PAYABLE $ 863.87 The above accounts are comprised of current charges. Confirmations were not required from creditors but their statements were examined in conjunction with our review of the claims paid in January Lhr.ough March 1971. All liabilities disclosed by our examination are included in the accounts payable. n 10 Village of Oak Park Heights Report Utility Fund, cont. ACCOUNTS PAYABLE DUE TO SALES USE TAX The account represents Minnesota sales tax charged on water billings and unpaid as of December 31, 1970. DUE TO OTHER FUNDS $ 716.95 Due to: General Fund $ 716.95 The Schedule of Interfund Transfers, Schedule 10.2, gives a de- tailed explanation of the Due to Other Funds. Council resolution is required to effect the transfers. DIETER DEPOSITS $ 15,182.80 A review of the meter deposits advanced by utility customers substantiated the balance in the above account as of December 31, 1970. FUND BALANCE, UNAPPROPRIATED $ 2,404.46 Water Operating Fund $ (4,478.40) Sewer Operating Fund 6,882.86 Total $ 2,404.46 The water operating fund had a fund deficit of $4,478.40 at year end. GENERAL FIXED ASSETS A statement of the general fixed assets is contained in Exhibit 9. As this is a sole record of the detailed assets, a copy should be kept in the permanent files of the Village. Village of Oak Park Heights Report General Comments GENERAL COMMENTS We recommend the village record all cash receipts and disburse- ments to the funds as set up in this report. Should the village de- sire, we will be pleased to assist in setting up a system to meet its - requirements. Respectfully submitted, ?A--..) /k A Aq v & JOI - LNSON DE LA HUNT & CO. Certified Public Accountants