City finance audit finds no federal grant compliance problems; highlights lease accounting and capital-asset work

The Excelsior Springs City Council received the draft fiscal year 2022 financial statements and single-audit report on Sept. 2, with auditors saying the work is substantially complete and that there were no federal-program compliance findings. Jacob Holman, audit partner with Forbus Mazar, told the council the city spent about $1,400,000 in federal awards during the audit period and that auditors performed compliance testing on two major programs: the Coronavirus State and Local Fiscal Recovery Funds and investments for public works and economic development facilities. Holman said those programs drew scrutiny for procurement, period of performance and eligibility but that the single audit produced no compliance findings.

The audit partner emphasized several accounting and control matters that affected the 2022 statements. He said the city adopted GASB 87 (leases) for FY2022, which brought long-term lease arrangements onto the balance sheet and produced a lease receivable of about $300,000 and accompanying new disclosures. Holman also said the city undertook significant clean-up of capital-asset records that previously had been maintained manually and that the finance department is moving to a capital-asset software module to improve reporting.

Holman described selected financial metrics for the council. He reported the general fund held roughly 3.4 months of revenues in unassigned fund balance, nearly unchanged from the prior period, and noted a major special revenue fund showed about $1,900,000 of unearned revenue at year end — cash received but not yet expended on eligible grant activities. He also summarized a long-term ratio of net position to assets (governmental activities) that rose to about 52% from 46%, and he said net position for government activities and business-type activities increased during the period. The partner told the council auditors reviewed significant estimates (useful lives of capital assets, property-tax collections, utility receivable allowances and pension actuarial assumptions) and found no apparent management bias.

Vonda Floyd, the city's finance director, introduced the auditors and reminded the council that the state requires publication of audited financial statements and a single audit when federal expenditures exceed the $750,000 threshold. Holman said the audit engagement remains open only for management's final review and subsequent-events procedures to capture any material transactions through the report date.

No formal council action was taken on the audit presentation; council members asked clarifying questions about the scope of the component-unit work for the city hospital and the auditors explained they relied on the hospital's separate audited financials as part of a group-audit approach and performed subsequent-events procedures for the hospital as well.