Auditors gave the city's financial reporting a clean bill of health, Financial Services Director Victoria Bateman told the Cape Coral City Council on Monday, adding there were only a few minor concerns.
The city's financial statements, included in the 2012 Comprehensive Annual Financial Report, were audited by CliftonLarsonAllen, a firm of licensed public accountants, which issued an unqualified "clean" opinion they were fairly presented under the guidelines of generally accepted accounting principles.
The audit found no weaknesses in matters involving internal control over financial reporting, nor noncompliance in federal or state grants, although one deficiency was noted.
"The audit is an ongoing process. From last year to this we accomplished a few of the inequities in the audit and moving forward to finish out the others," Councilmember Lenny Nesta said. "Everything looked real good."
The audit also found that previous issues from last year, such as the procurement and accounts payable process and the authorization and use of purchasing cards, had been properly addressed by the city this year.
The concerns this year in the audit were a recommendation of a series of internal control enhancements in the payroll process and of the review of audited financial statements for subrecipients, which will be implemented next month.
The audit also recommended the city adopt policies for adjustments in utility billing and ensure staff is trained and that the adjustments don't violate debt covenants, and a more centralized approach for pension administration and reporting.
The audit reported all concerns are being responded to, an improvement from when Bateman came to work for the city two years ago.
"When I came in there were findings that came into existence for a few years. That they gave us recommendations and we were able to implement them acceptably; it the job of the finance director to make them a priority," Bateman said.
As for the numbers, city-wide net assets shrank $29.6 million, while governmental activities reported a decrease of $20.8 million due to an OPEB obligation increase of $11 million and a decrease in assets because of $2.2 million less in property taxes and $6.3 million less in capital grants.
Government activities reported negative unrestricted net assets went from $9.2 million in 2011 to $31.6 million in 2012 because of the planned use of fund balance and prior debt proceeds to complete capital projects.
Business type activities reported a decrease in net assets of $8.8 million due to OPEB and nearly $7 million in debt service, and even with the land purchase last year, overall capital assets decreased due to depreciation.
"When you look at the CAFR you don't see a reserve we've built up for depreciated assets. And that's right. There is no reserve. We've ignored it,' Bateman said. "We haven't set reserves aside since 2007, so we don't have money to replace vehicles or roads."
They also reported $25 million of unrestricted net assets, a $17 million decrease, caused by the purchase of capital assets for current and future utility use.
Revenues decreased $2.5 million as tax receipts decreased $2 million, expenditures increased $1.4 million as capital overlay increased $4.8 million from the purchase of 40 police cars, 15 school buses and land purchases. Debt service went up $2.3 million because park impact fees weren't sufficient to pay its share.
The overall revenue variance was $616,000 higher than the budget as a result of $1.2 million more in taxes and from funds received from renewal of insurance contract. That countered a reduction in interest income and fines and forfeitures.
Capital outlay, overall debt service and personnel and operating were also below budget.
Sun Splash Family Waterpark and parks and recreation required subsidies, while the building division was fully self-supporting.
"Nothing jumped out as being a bad thing. There are a few corrections we're working on and we're moving forward," Nesta said.