Audit report gives village high marks
Fund balance is up, expenditures and revenue are down
December 19, 2012
Oxford Village received a glowing report last week from its auditor concerning its financial statements for the 2011-12 fiscal year, which ended June 30.
The village's finances received an unqualified opinion from the auditor.
"It's the best opinion you can receive for a set of financial statements. That's good news," said Aaron Stevens, a partner in the East Lansing-based firm of Abraham & Gaffney, P.C.
An unqualified opinion is issued by an auditor when the financial statements presented give a true and fair view of a company or municipality's condition, position and operations.
"I thought the audit went very well this year," Stevens noted. "It was a lot smoother. We had a lot easier time."
In previous years, the village's audit had been fraught with problems as much of the information required for it was disorganized and/or incomplete, which resulted in delays and extra costs.
As of June 30, the village's general fund has an available or spendable fund balance of $263,928. That represents approximately 13 percent of the village's total expenditures for last year, which amounted to $2.035 million.
Stevens indicated it's higher than the previous fund balance, which was 11.5 percent, so it's "moving in the right direction."
But the fund balance is still at its "lowest point in the last five years" and is less than the level Stevens' firm recommends.
"We recommend, as a rule of thumb, a minimum of 20 percent," he told council. "You're a little bit below that recommended balance."
A fund balance is basically a government's savings account that can be used to pay for things like unforeseen expenses, capital improvements and special projects or help offset revenue losses.
Abraham & Gaffney recommends 20 percent because "that would equate to approximately two months of operations before you needed to generate additional revenue" and it "should cover any cash flow needs that you have in the general fund," Stevens explained.
He noted how the village only spent $16,302 of its fund balance last year, which is a lot less compared to the 2010-11 fiscal year when the municipality utilized $419,000 of it.
"I think that's a step in the right direction," Stevens said.
The good news is the village's total general fund expenditures for 2011-12 were $1.82 million, which is 18 percent lower than the previous year.
"The most significant reason for that reduction is that your legal costs were down $232,000," Stevens said.
The largest use of village funds was for public safety (i.e. the police department and dispatch center). That amounted to 44 percent of the village's spending last year, which is up from 36 percent in 2010-11.
The bad news is the village's revenues declined by 6.6 percent last year, amounting to $1.788 million.
"Your largest source of revenue (property taxes) has a downward trend," Stevens said.
Property taxes account for 50 percent of the village's revenue. The village's annual tax rate is 10.62 mills.