Tooele Transcript Bulletin – News in Tooele, Utah
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July 9, 2019
County gets ‘clean’ marks from auditor

But auditor finds internal control problems and budget noncompliance 

Tooele County received a thumbs up from its 2018 independent auditors, despite a few significant errors.

The County Commission received the annual independent audit report during its July 2 meeting at the Tooele County Building.

“Our opinion on your financial statements is unmodified,” said John Haderlie, audit partner from the certified public accounting firm of Larson & Company’s Spanish Fork office, the firm hired by the county to perform the required annual audit. 

“That is a clean opinion,” he said.

However, Haderlie also pointed out two material weaknesses:

He said there were deficiencies in internal controls of magnitude that there is a reasonable possibility that a misstatement on the financial statements may not be prevented, detected or corrected in a timely basis. 

The audit also disclosed a problem with budgetary compliance of enough significance that audit standards require it to be reported to the state auditor, according to Haderlie.

“Economic development expenses were over budget by $800,000,” he said. “The municipal services fund was over by $1.1 million and the Class B road fund was over by a couple hundred thousand.”

Haderlie suggested that the county should have a review process to make sure expenses are within the budget before they are incurred, or to decide if the county needs to open a budget hearing to amend the budget before expenses are incurred.

County Commission chairman Tom Trippp said the county has already taken action to correct budgetary noncompliance.

Starting in 2019, county management provides all departments with real time access to their budget status. Departments are also notified on a quarterly basis of accounts that are in danger of exceeding their appropriation, according to Tripp.

“We want to make those reviews of the budget on a monthly basis,” Tripp said.

The audit also found problems with the reconciliation of sub-ledgers with the general ledger and with the journal entry process.

“The general ledger and sub-ledgers need to get reconciled on a timely basis,” Haderlie said. “The general ledger drives financial statements. Without reconciliation, the statements could be incorrect.”

Internal controls need to require that journal entries, entries that bypass the normal ledger process, are completed by one person and reviewed by another, according to Haderlie.

“I expect with the processes that have already been put into place along with new staff that these issues will be taken care of,” he said.

Highlights of the county’s 2018 financial year included in the audit report and financial statements show an increase in the county’s net position.

The county’s net position, the residual value of all assets after satisfying liabilities  — similar to a private company’s equity — increased by $5 million in 2018, from $137 million to $142 million, a 3.7% increase.

The largest portion of the county’s net position includes its investment in capital assets such as land, buildings and improvements, furniture, fixtures, and equipment, and infrastructure. However, net position may serve as a useful indicator of whether the financial position of the county is improving or deteriorating, according to the audit report.

The county’s fund balance also increased in 2018.

The 2018 general fund year-end fund balance was $26.9 million compared to $15.2 million in 2017, which is $11.7 million more or a 77% increase. 

Out of the $11.7 million general fund balance increase, $9.2 million was from the net proceeds of the sale of the Utah Motorsports Campus, leaving $2.5 million from other general fund sources.

The 2018 year-end combined fund balance for all county funds was $67.7 million, an increase of $15.6 million or a 29.9 % increase over 2017.

The county’s total revenue for 2018 was $60.9 million, compared to $56.1 million in 2017, an increase of $4.8 million or an increase of 8.5%.  

The largest source of revenue for the county in 2018 were charges for services at $21.5 million and taxes — property, sales, and franchise fees — also at $21.5 million. The next largest revenue source for the county in 2018 was operating grants and contributions at $16.5 million.

The county has three enterprise, or business-type funds, that are maintained separate from the county’s general fund.

The three enterprise funds are: solid waste, Deseret Peak Complex, and the Wendover Airport. 

In 2018, the solid waste fund netted $394,122 from operating activities and the Wendover  Airport fund netted $439,971 from operating activities. The Deseret Peak fund lost $579, 543 from operating activities.

The Deseret Peak fund lost a total of $1.6 million, after including expenses from non-operating activities such as depreciation and interest expenses. 

After a $1.2 million transfer from the general fund, the Deseret Peak fund’s net position decreased by $421,000 in 2018.

The Deseret Peak fund was the only enterprise fund to receive a transfer from another fund in 2018, according to the audited financial statements.

 

Tim Gillie

Editor at Tooele Transcript Bulletin
Tim has been writing for the Transcript Bulletin since October 2017. In February 2019 he was named as editor. In addition to being editor, Tim continues to write about Tooele County government, education, business, real estate, housing, politics and the state Legislature. He became a journalist after a 20 year career with the Boy Scouts of America. Tim is a native of Washington state and a graduate of Central Washington University.

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