City is making progress, auditor says

Yukon officials are working to correct errors that were made in previous years, representatives with an auditing firm say. Still, there are areas where work is needed.

Lonnie Heim, who represents the accounting firm HBC, presented the company’s findings for the 2015-16 fiscal year during Tuesday’s city council meeting.

Heim said that overall the city had no unknown compliance issues for the 2015-16 budget year. However, there were issues that continued to carry over from the previous year when the city overspent its budget and drained its reserve account to pay its bills.

Among the concerns found were internal control issues involving debt activities from trustee bank accounts and the accounting of assets.

Heim said both appear to be issues that occurred early in the fiscal year, which runs from July 1. The issues were resolved later in the year.

“They are repeat findings from our 2015 report. There was not a lot of time to react to the findings and we feel they will be addressed. I think you have already addressed them,” he said.

In addition, Heim said there were four compliance issues that involve federal, state and local law violations. Three of the four violations were self-reported to the auditors.

Those include a previously reported alleged bidding law violation, departments overspending their budgets, the use of a reserve fund without proper authorization and failure to properly report how disaster recovery funds were spent.

In each of those cases, Heim said, it appears work is being done to correct the issues.

One of the key areas of concern was the city’s reserve fund, which is funded through a .025-cent sales tax.

City Manager Jim Crosby said the fund, which was nearly depleted by December 2015, now has a balance of about $2.4 million.

A city ordinance requires that fund to maintain 25 percent of the previous year’s budget. Crosby said it will take several years to reach the level required.

Heim said the fact the fund doesn’t have the necessary funds is not the compliance concern. The spending from the fund is the concern.

Crosby said the city is no longer spending from the fund.

Council member John Alberts, who was mayor in 2015-16 when financial problems were discovered, asked what the public’s takeaway from the audit is.

“They get confidence that the numbers are materially correct,” said Heim.

“If I am taxpayer that wants to know how my city is spending money, and what financial condition my city is in … I want to know, good or bad, those numbers represent what actually happened and where the city really is,” he said.

Alberts also asked how the concerns listed in the audit were being handled.

Crosby said the items involving overspending budgets had been resolved through closely monitoring each account, and properly transferring funds when necessary.

As for as the other issues, the city is following the recommendations of the city’s accounting firm.

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