Morgan City does well on ‘invasive’ audit

Morgan City government fared well on its annual audit despite having to go through a more extensive auditing process than normal.
Gerald Thibodeaux of Kolder, Champagne, Slaven & Co. presented Morgan City’s audit report at Tuesday’s city council meeting for the year ended Dec. 31, 2015.
Mayor Frank “Boo” Grizzaffi said the audit was more “invasive” and detailed than normal, but he was proud of the city employees for how they handled it.
Thibodeaux said the report was “more sizeable” than it has been in prior years due, in part, to the city exceeding $500,000 in federal expenditures. Auditors were thus required to examine federal programs more closely in the audit.
Another reason for the larger audit was a new standard relating to the city’s pension plan that requires government bodies to carry a share of the pension plan’s unfunded liability on their financial statements. The liability is based on the pension plan totally collapsing, which is unlikely to ever occur, Thibodeaux said.
Kolder, Champagne, Slaven & Co. issued unmodified opinions, the most favorable possible, on the city’s financial statements for governmental activities, business-type activities, each major fund, including the general fund and emergency management fund, and the aggregate remaining fund information.
An unmodified opinion was also issued on the city’s compliance with the major federal award program.
Auditors were required to issue an adverse opinion on the component units of the city’s financial statements because the city only issues primary government financial statements. The city doesn’t include component units, which are organizations to which the city provides financial support or appoints board members, in its financial statements because “it’s not worth the extra expense,” Thibodeaux said.
From the end of 2014 to the end of 2015, Morgan City increased its “days in reserve” in the general fund from 60 days to 66 days. That means the city could operate for slightly over two months without collecting any revenues, Thibodeaux said.
Grizzaffi said when he arrived in office the city had six days in reserve, and he hopes to get to 2½ months in reserve before leaving office.
In 2015, overall city revenues were down by about $2.2 million compared to 2014, Thibodeaux said. Total expenses increased by $850,000, but the majority of that rise was attributed to state capital outlay funds the city received.
Auditors noted three findings in the audit that Thibodeaux considered “minor but reportable.”
The city had one internal control finding that stemmed from the omission of a bank account that the city maintains to receive electronic funds transfers from various federal and state agencies, which is not included in the city’s general ledger. The account had a balance of $171,340 that was omitted from the city’s financial information, Thibodeaux said.
Auditors made an adjustment to the financial statements to include those funds. Thibodeaux recommended in the future that the city determine the appropriate place to record the balance of the account.
Thibodeaux also noted a compliance finding that was the result of the city having $1.59 million of “under collateralized” bank balances with the city’s fiscal agent. A government’s bank deposits are secured by the Federal Deposit Insurance Corp., up to $250,000 for time deposits and up to $250,000 for demand deposits.
State law requires that, if a government’s deposits exceed those thresholds, the financial institution is required to pledge some of their own securities to collateralize the city’s deposits.
The report cited a second compliance finding that stemmed from Louisiana Community Development Block Grant expenditures. The city did not spend $49,925 in funds that passed through the state Divisions of Administration within three days of the deposit of the funds as required.
In other business, the council:
—Approved Brittany’s Project to hold a Color Fun Run & Fun Day from 9 a.m. to 2 p.m. Sept. 17 at Lake End Park.
—Approved Purple Heart Outdoors to hold a 5K run/walk at 8 a.m. Sept. 24 at Lake End Park.
—Approved a request of $49,000 for the installation of an automatic switch at the wastewater Master Pump Station and the replacement of a 6-inch pump at the wastewater station in Lakeside Subdivision.
—Authorized the city to engage Environmental Engineering Services to perform services on a project to upgrade the Myrtle Street sewer line. The project includes replacing a 10-inch sewer line with a 14-inch line on Myrtle Street and removing a manhole, said Water, Sewer and Gas Supervisor Kawika Kaai.
—Approved a contract extension of $15,577 for engineering firm Moffat & Nichol to perform services on the city’s wharf project. Work resumed on the wharf project earlier this month after January’s high water in the Atchafalaya River stopped the renovation project. The $1.7 million project began construction in the fall of 2015 and involves replacing the city’s 800-foot riverfront wharf and extending it by 220 feet.
—Approved the appointment of Colleen Hunter to the archives commission.