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Lindsay resolves agency’s audit issues

Lindsay resolves agency’s audit issues

Lindsay’s much maligned Downtown Improvement Project has stretched the City’s financial staff during audits by state and federal agencies in the last year and a half. But after all that stretching, Lindsay is beginning to realign itself with proper policies and procedures according to at least one of those agencies.

At its Jan. 14 meeting, Finance Director Tamara Laken presented the City Council with a letter from Caltrans announcing Lindsay had resolved findings listed in the City’s 2010-2011 Single Audit Report. The letter was in response to two findings related to the Downtown Improvement Project. The first, 2011-SA-01, said the “City lacks adequate controls over expenditures that are charged to federal grants” and “that there was not an adequate review of those expenditures that were charged to federal grants to ensure that they were valid expenditures and being recorded into the City’s general ledger correctly.” Caltrans stated Lindsay implemented new policies and procedures in January 2012 that requires all draw requests be approved by the finance director and established distinct funds where all expenses are reviewed by the finance director for accuracy and proper supporting documentation. Caltrans said the City also provided documentation the new requirements were provided to staff involved with the grant process.

The second finding, 2011-SA-02, said the “City had submitted a reimbursement request with too many employee hours as reimbursable costs,” that “the City’s management did not review reimbursement requests to verify all claimed expenses are eligible for reimbursement,” and “City staff does not reconcile the reimbursement requests to their accounting records.” Caltrans stated Lindsay’s finance staff now maintains accurate records of all reimbursement requests and receivables and reconcile them on a timely basis. The later reported the City submitted documentation to show they are reconciling reimbursement requests with supporting accounting data and cash receipts to the total grant amount. Caltrans went on to state Lindsay provided documentation to show invoices are being reviewed and approved by the finance director.

The Dec. 12 letter was signed by Nancy Shaul, Audit Manager for Caltrans’Audits & Investigations (A&I) Department with the following statement, “Based on this information provided to A&I, at this time we consider Finding [2011-SA-01 and 2011-SA-02] to be resolved.”

After the report, City Councilmember Pam Kimball congratulated Laken on implementing the new policies and procedures and demonstrating compliance to the Caltrans auditors.

“Our administrative staff is committed to being in compliance with all agencies we deal with,” Laken said.

Laken said her staff has been working with every agencies, many of which who are continuing their own audits. In June, City Manager Rich Wilkinson reported the California Department of Housing and Community Development is still auditing Lindsay projects from 2006 to present, California Housing Finance Agency is auditing the city’s use of funds for a senior housing complex and the California Department of Finance has its own deadlines, requirements and information requests regarding the dissolution of the City’s redevelopment agency and the U.S. Department of Interior would be auditing and monitoring its contracts with the City of Lindsay.

After several recent reports that the City of Lindsay may file for bankruptcy, the City’s mid-year budget reports the City is recovering but not yet out of danger.

Overall, Laken reported revenues and expenditures are nearly even. Halfway through the 2012-13 fiscal year, City expenditures total $7.7 million while revenues total $7.2 million. Most of that can be attributed to the City’s unrestricted General Fund which has spent half a million more than revenues.

Overall, the City’s Enterprise Funds (Water, Sewer, Refuse and McDermont) have revenues outpacing expenditures by $160,000. The only exception is the McDermont Field House, which has brought about $278,000 less than it has spent. However, McDermont’s most profitable season happens at the end of the fiscal year with graduation parties in May and June.

Lindsay’s Special Revenue Funds (Wellness Center, Assessment Districts, Land Application and Community Development Grant Projects) are spending 55% more than what they have brought in. For example, the Wellness & Aquatic Center expenditures are $177,077 compared with revenues of only $54,120.

Some of the highlights of the Treasurer’s Report include evidence the system is continuing to balance its budget despite owing nearly $15 million in outstanding debt. Cash balances for the month of December 2012 were $1,221,387.50 with expenditures for the month totaling $1,220,092.

In November, Lindsay avoided a $1.5 million balloon payment by issuing long-term bonds to pay off the principal of the 12.5% interest. The 2009 loan from Mid Valley Financial Services was used to bankroll operations of the McDermont Field House. At the end of October, Lindsay’s cash balances were only $572,000, well short of enough to cover the payment.

McDermont revenues were enough to help the city make its interest-only payments of $15,000 per month.

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