Audit of City Draws to a Close

Today wraps up the week long audit by an independent accounting firm hired by the City. The auditors review agreements, read minutes from meetings, and conduct a variety of detail and analytical testing procedures on the city’s financial records in order to express their opinion as to whether the City’s financial statements and supplemental information are essentially accurate.

An annual audit is required of local governments by the Colorado Revised Statutes. The goal of this requirement is to provide assurance for citizens, legislators and others that government funds are accounted for properly and that government organizations are in compliance with applicable laws and regulations.

Within a few weeks, the auditor’s final report will be ready and the 2011 financial statements will be presented to the City Council as one of the agenda items at a regular council meeting.

The City maintains essentially five sets of books for its different areas of operations. The general fund represents basic government services paid by tax revenue. The water and wastewater enterprise fund is treated as a business that must generate sufficient revenue to pay the costs of operations and capital needs. The SteamPlant is also treated as a business, although it is currently disqualified as an enterprise fund according to TABOR because of the level of general fund subsidy it receives. Finally, the Conservation Trust Fund receives state lottery money each quarter that can only be used for parks, open space and recreational facilities.

Similar to other organizations with different operating divisions, the financial performance of each fund can vary significantly each year.

Financial results in the general fund were positive in 2011 and reserves increased over $200,000. Sales tax revenue increased, operating expenditures were less than budgeted and some capital projects were deferred to this year. City Council approved the use of some surplus funds to retirement debt ahead of schedule.

Revenue generated by the city’s enterprise funds continued to fall short of the level needed to cover costs in 2011. Debt for water and wastewater capital projects was secured last year and, combined with rate increases, these operations are expected to stabilize financially in 2012.

The City added the lottery proceeds received by the Conservation Trust Fund in 2011 to reserves for future projects. This money may be used as a grant match for the purchase of the Union Pacific land and construction of the Siding Trail if this project moves forward.

The full financial report for 2011 will be available at city hall and on the city’s website once it has been presented by the auditors to City Council next month.