SALISBURY- A first look at Salisbury’s annual Draft Audit Report shows the city’s position improving over last year, though there are concerns over the complications that new audit standards could create in the future.
It’s unusual for the audit process to be resolved this early in the year, which the Salisbury City Council took as a good sign.
“This is the earliest in at least a decade,” noted councilmember Laura Mitchell.
Pam Baker, an auditor with Barbacane, Thornton and Company, LLP, agreed that the process was relatively quick and painless, which is surprising seeing as how the city once again saw some major staff movement in the finance department.
“This year was another year of change,” she said.
Regardless, the city appears to be in good order. Revenues were down, but so were expenditures, with general fund expenditures in excess of revenues by $706,057, leaving the fund balance this year as of June 30 $11,980,884. The city combined net position as of the same date was $12,766,812. The net position of government activities decreased $2,841,843 or 8.8-percent. The net position of business activity increased $4,747,037 or 6-percent.
With all considered, the city came out ahead, according to Mitchell, as less of the surplus will be needed to be used than expected.
“I think it was very positive, overall. All of the departments came in under budget,” she said. “We ended up basically $100,000 to the good.”
Other highlights of the audit include a 1-percent drop in unemployment in Wicomico County from last year, bringing the total down to 7.7-percent. The national average unemployment is currently 7.3-percent while the state average is 7-percent. There was also a noted increase in construction activity for the city with $364,641 in building permit revenue collected this year compared to $185,570 for last year.
However, the city did see a dip in real estate tax revenue, losing $483,428 from FY2012 to FY2013. Total tax revenue for the year was up $48,171.
There were a number of issues that Baker’s team found during their audit, many of which are rolling over from last year. There are still concerns with the city only having a single general credit card available for all city purchases. Salisbury is in the process of implementing a new P-Card system that would remedy this. Grant management is also on the radar.
“During our current year audit, we noted that the city does not have an individual assigned to manage the city’s grant programs,” read the audit. “As a result, grant expenditures in excess of $1 million dollars at year end have been made by the city for which reimbursements have not been requested or received.”
The audit recommended that the city designate a party to be responsible for grant administration day-to-day.
There were a few other findings but the council felt that they were all relatively minor and should be remedied by next year’s audit. One area where the council did show some discomfort was with impending Government Accounting Standards Board (GASB) changes. These will affect several different parts of the audit, especially things like employee pensions.
“So that GASB standard is kind of bringing those pensions and really flushing out any games that may have been played by any state governments for funding,” said Baker.
The standards will also change how city liability in pensions is looked at, among many other tweaks.
“That’s worrisome,” said councilmember Terry Cohen.
Baker and Mitchell agreed, with Mitchell adding that GASB seemed poised to further muddy an already complicated process. However, the changes are coming and the city will have to adapt.
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