The City of Ava was awarded a clean audit by KPM CPAs and Advisors of Springfield, Mo., Tuesday evening during the city council meeting. Jennifer Schatzer, CPA Audit Manager with KPM, presented the audit information, noting the city’s business-type activities and major funds for the year ending June 30, 2018, were in compliance with current government auditing standards. However, in the report, Schatzer advised the firm had identified a certain deficiency in internal control over financial reporting which was deemed a material weakness. Schatzer recommended city officials periodically conduct a review of internal control operations as a safeguard over city assets. To strengthen their position, she suggested the city consider conducting regular review of all procedures, such as cash management, computer information systems, mail distribution, purchasing procedures and more.
Schatzer announced the Governmental Accounting Standards Board (GASB) has issued new pronouncements that will likely affect the City in future years. GASB Statement No. 83 now establishes criteria for the accounting and financial reporting of asset retirement obligations (ARO). An ARO is a legal obligation associated with the retirement of a tangible fixed asset, such as the disposal, sale or decommissioning of electric poles, sewage treatment plants, or fuel storage tanks.
In referring to the implementation of GASB Statement No. 87, Schatzer called it the ‘big one’ for the City as this new rule puts all leases, including operating leases, on the balance sheet for accounting purposes. GASB No. 87 establishes a single model for lease accounting, and requires that every item is accounted for.
According to the report, GASB No. 83 becomes effective December 31, 2019, and No. 87 on December 31, 2020. The auditing firm encouraged the city to begin compliance with both rules prior to the established deadline dates.
During the year, the audit noted the City transferred $650,568 from the electric fund and $103,400 from the water sewer fund, with both amounts transferred into the general fund for use. Schatzer noted the electric fund transfer was a large amount that has decreased the unrestricted cash to zero, taking away the City’s ability to make similar transfers next year. The accounting firm did recommend the City consider decreasing transfer amounts to the general fund, or spend time to re-evaluate electrical and sewer rates and reassess whether or not the current rate structure is sufficient to replenish funds and ensure self-sufficiency. She also recommended the City take a guarded approach to expenditures next year.
Treasurer Peggy Porter advised the city has not transferred monies from the electrical fund since July 2018. She said she is presently reviewing utility rates and other options, which may be options for relief. Porter said she is also looking at different methods for sharing the financial responsibility between all three enterprise funds, which would entail using the combined water and sewer fund, the electric fund and the sanitation fund as transfer sources.
Schatzer advised she was not concerned about the issue as the City of Ava has always been diligent about implementing pro-active measures to correct problems or issues.
The report noted several material misstatements were detected during the audit, but the missteps were quickly corrected by management. Schatzer advised the misstatements were trivial and basically occurred because the process was unfamiliar, and the issue will get better as familiarity and time allows.
Schatzer acknowledged decreases in the water/sewer and sanitation fund expense category, noting sound decreases in both funds which was good.
The financial statements and audit report may be viewed at City Hall.
Councilmen revised two ordinances Tuesday evening by voting to adopt Ordinance No. 1042 which expands the unlawful use of weapons as defined in the weapons section in the city code book. The new ordinance makes it unlawful to shoot or discharge the following within the city limits of the city: BB gun, paintball or air gun that shoots pebbles, bullets, slug, arrow, or any other hard substance by means of a sling, crossbow, rubber band or bow. The ordinance also states it is unlawful to use any weapon that can shoot a projectile, by means of air, spring or hand.
Council adopted Ordinance No. 1043, which changes the financial processes for handling municipal court fees, fines and costs. According to Mayor David Norman, the change in procedure is being mandated by state statute, and the city must comply with the new law. Under the new rules, the municipal court records will be kept and recorded online by the municipal court clerk, and the State of Missouri will monitor account activity. The municipal court bank account must now be separate from all other city accounts, and only the municipal court clerk will have access for writing checks and overseeing use of court funds. Councilmen voted 4-0 to adopt the new rules and procedures.
Mayor Norman reported remodeling upgrades to the Ava Fire Station were completed this week. He noted several more improvements are scheduled for the building, with new flooring planned for installation sometime this winter, and painting of the building exterior to the south, this coming summer.
Norman advised the city is working toward installing wayfaring signs near the highway intersections on the edges or entry to town. The signs will be used to direct travelers to specific areas, such as the Ava Cemetery, downtown business district, school, etc. Norman said the signs are 24×36-inches or 36×48-inches, and cost approximately $160 each. He said the present plan calls for six signs, but before proceeding, the City must fill out the proper documentation and present the forms to the regional MoDOT official in Willow Springs, who will then apply for the signage through the Jefferson City office. MoDOT will also determine where the signs will be allowed.
Tom Roberts, chair of the University of Missouri Extension Office for Douglas County, and Randy Wiedmeier, County Engagement Specialist in Agriculture, asked council and the Mayor to consider contributing $5,000 in support of hiring an ag specialist for the Douglas County Extension office. Wiedmeier said the state is willing to cover $10,000 of the $20,000 salary expense, and they are asking the County for the remaining $5,000 in January. The position would be a full-time position with a state benefit package, and even though the job will be located in the Extension Office, the employee will be employed by the State of Missouri not the University of Missouri.
Wiedmeier said similar positions have been established in Houston, Texas County, and most recently, in Gainesville, Ozark County. He noted the ag educator in Texas County has already started initiating programs, and is experiencing a successful response from community members.
Council took the proposal under advisement.
During closed session, council voted on a real estate contract finding, and a litigation issue.
Councilmen present were Keith Jones, Stan Lovan, Burrely Loftin and Noel Dye.
Meeting video may be viewed on the Douglas County Herald website.
Council will reconvene on Tuesday, Jan. 8, 5:00 p.m., as City Hall will be closed Dec. 24-25 for the Christmas holiday.