Boyne City audit reveals finances in good shape

By Benjamin Gohs

News Editor

bookkeepingA report on Boyne City’s financial position was presented during the Boyne City Commission’s regular Tuesday Oct. 8 meeting.

According to auditing firm Anderson, Tackman & Company, the city finances are in order.

“In our opinion, based on our report and the report of other auditors, the financial statements … present, fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities, the aggregate discretely presented component units, each major fund, and the aggregate remaining fund information of the City of Boyne City … as of April 30, 2013, and the respective changes in financial position and, where applicable, cash flows thereof for the year then ended,” the firm stated in its independent auditor’s report.

According to the report, the city’s primary government assets exceeded its liabilities at the close of the most recent fiscal year by $21,035,720. Of that amount, $5,933,316 is available for use to pay down ongoing obligations to citizens and creditors.

The city’s total net position increased by $1,825,272.

At the end of the current fiscal year, unassigned fund balance for the general fund was $2,052,058, or 92 percent of the total general fund expenditures, not including transfers out.

The city’s total debt—not including the component units’ activities—decreased by $457,000 during the current fiscal year.

According to the report, no significant new debt was issued this year.

“By far, the largest portion of the city’s net position reflects its net investment in capital assets—for example: land, buildings, vehicles, equipment, and infrastructure (like) roads, water and sewer mains, etc.—less any related debt used to acquire those assets that are still outstanding,” Boyne City Manager Michael Cain stated in the Management Discussion and Analysis portion of the report. “The city uses these capital assets to provide services to citizens; consequently, these assets are not available for future spending.”
He further stated, “Although the city’s net investment in its capital assets is reported net of related debt, it should be noted that the resources needed to repay this debt must be provided from other sources, since the capital assets cannot themselves be used to liquidate these liabilities.”

The city’s capital assets include the following:

• Land – $955,470

• Land Improvements – $268,804

• Infrastructure – $5,210,316

• Buildings & Improvements – $13,845,476

• Equipment – $1,002,372

• Furniture & Fixtures – $1,125

“At the end of the current fiscal year, the city had total bonded debt payable outstanding of $6,818,091 which comprises debt backed by the full faith and credit of the city,” Cain stated. “The city has also pledged its full faith and credit to the Downtown Development and Local Development Finance Authority Component Units bonded debt, not, and loan payable debt agreements of $142,924.”

The report further stated, “The city and component units total debt decreased by $551,730 during the current fiscal year, with no new debt issued during the fiscal year.”

The state statute limit on general obligation debt a government may issue is 10 percent of the local unit’s total equalized valuation. The current debt limitation for Boyne City is $18,070,720—an amount significantly greater than the city’s current outstanding general obligation debt.

“Boyne City continues to do well in what appears to be a new national normal,” Cain report stated. “For several years now, growth across the country, and here in Boyne City as well, appears to be slow but steady.”
He added, “While we have not seen a significant major upturn, we continue to slowly crawl out of the deep hole we as a nation were in several years ago.”

Real and personal property in Boyne City had an assessed and equalized value—50 percent of actual value—in 2012 of $180,707,199. The general operating tax rate for 2012 was 15.51 mils.

According to the report, the city is owed approximately $51,127 in uncollectible debts.

The auditing firm made the following recommendations and comments regarding Boyne City’s handling of its finances:

Uniform Chart of Accounts for the prior year

“Currently there are several balance sheet and income statement accounts that are coded incorrectly per the Uniform Chart of Accounts,” the report stated. “It is recommended that the city consult with the Uniform Chart of Accounts for appropriate account numbers for all line items.”

Health benefits

“The city is still using the actuarial method completed in 2007 to project the future accrued actuarial liability for health benefit obligations,” the report stated. “The city should consider updating this actuarial projection of health benefit costs.”

Reporting employer provided health coverage on form W-2

“The Affordable Care Act requires employers to report the cost of coverage under an employer-sponsored group health plan on an employee’s Form W-2 wage and tax statement,” the report stated. “Many employers are eligible for transition relief for tax year 2013 and beyond, until the IRS issues final guidance for this reporting requirement.”

Pension reporting

“The board and management should review the procedures for implementation of … new standards effective in fiscal 2014 and assess the impact on the local unit of government’s financial reporting,” the report stated regarding new substantial changes to the accounting and financial reporting of pensions by units of government.

Trust and agency fund

“During examination of the Trust and Agency Fund, it was noted that there were stale balances in a few accounts that needed to be reconciled,” the report stated. “It is recommended that the city review and possibly remove these balances.”

Payroll

“It was noted during the testing of controls over payroll that two employees were missing Michigan W-4 forms and deduction authorization forms,” the report stated. “We recommend that all of the necessary paperwork be filled out at the beginning and throughout employment and kept in the employee’s file.”

Receipts

“It was noted during the testing of controls over tax receipts that a few tax collections were not remitted within the required 10-day period of collection,” the report stated. “We recommend that tax receipts be remitted in 10 days as required by state statute.”