During the Henderson City Council Workshop held on January 28, 2008, council members received information on the audit of the 2006-2007 fiscal year.
The audit was conducted by Thompson, Price, Scott, Adams, & Co. This is the first time the firm has conducted an audit of Henderson’s finances.
The document, which is required by law to be approved by the state’s Local Government Commission, received that approval Monday morning. It will be presented for formal approval by the council during its next regular meeting.
Auditor Gregory Adams presented to members first. Working from a summary document presented to council members, Adams announced that the city had a cash balance of $7,233,636 in all funds as of June 30, 2007, representing a net increase of $390,000 over the previous year.
Adams informed members that fund balance had increased to $3,356,749 by the end of the 2006-2007 fiscal year. At the beginning of that fiscal year, the fund balance was $2,966,619.
The unrestricted portion of the fund balance was $1,232,149. This is the portion of the fund balance that may be spent on any city need. Other portions of fund balance may only be spent in designated ways.
The minimum required by state law is approximately $1,400,000, or 8% of the total budget. Henderson’s current balance is 9.35% of the budget.
Auditor Brian Scott told members that his firm had issued an unqualified audit. An unqualified audit is the best audit that can be received.
Scott then went on to discuss issues his firm recommended that the city address.
His first recommendation was that there should be better communication between the finance office and the various departments. He said that it would help improve internal controls.
Scott also told members that they should consider requiring a deposit for water service to avoid providing services without compensation.
Noting approximately $200,000 in bad debts for water, sewer, and sanitation, Scott told the council to consider using the debt set-off program for utility charge-offs.
Scott said that the program has a 2-4% return.
Council member Mike Rainey asked if the city has considered using an outside collection agency to recover the losses. Finance Director Sandra Wilkerson replied that it has been discussed but never implemented.
The last recommendation made by Scott was to review each employee’s status with the city to determine how that employee relates to the definition of a city employee. He said that the auditors had uncovered one instance of an employee who may not be able to participate in the state employee retirement system.