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HRA auditors and staff outline key fixes in draft 2024 financials; Cornerstone deficits and accounting practices highlighted
Summary
D.W. Jones and county staff reviewed draft 2024 HRA financial statements, flagged interfund balances (Cornerstone deficit), allowance for doubtful accounts, insurance allocation, and recommended capital‑asset and accounting policy changes; no vote taken — staff to follow up with reconciliations and policy proposals.
Consultants reviewing Hubbard County HRA financials presented a draft 2024 report and identified several items requiring further work, including an interfund cash management balance tied to Cornerstone Apartments, the need for an allowance policy for doubtful accounts, and proposed changes to how small capital expenditures are treated in bookkeeping.
The consultant (representing D.W. Jones) and Mary (staff member) told the board Cornerstone Apartments historically operated with large deficits and that the HRA used internal resources to cover operating losses; the consultant said the balance sheet currently shows a negative retained earnings figure tied to that history. Mary and the consultant said the HRA will work to reconcile interfund transfers and present a clearer accounting of how HRA advances and reimbursements are being recorded.
The audit review flagged an allowance for doubtful accounts recorded in December; staff said they will request documentation from D.W. Jones explaining the basis for the allowance and recommended the board establish a formal allowance policy (example: a fixed percentage applied to loan portfolios) so future financial statements consistently reflect expected losses. The board also asked about a line item listed as $5,400 for property insurance; staff said Cornerstone and one single‑family property are still insured through MCIT and the insurer’s premiums should be substantially lower than the amount shown; staff will reconcile actual insurance costs.
D.W. Jones recommended expensing small asset purchases (appliances, small tools) rather than tracking each item as a fixed asset, and suggested a fixed‑asset policy that would track larger building improvements and equipment while expensing routine replacements. Staff said they will propose a capital assets policy (thresholds and useful‑life guidance) and will make manual depreciation entries for larger assets where needed.
Board members asked for clearer monthly reports and for staff to reduce the number of bank accounts where practical. Mary said staff will continue reconciling cash accounts, accounts payable classifications and begin drafting recommended policy changes for the board to consider before audit.
Ending: Staff and the consultant will return with reconciled figures, documentation for allowances and insurance charges, and draft policies for capitalization, allowances for doubtful accounts and fixed‑asset treatment prior to the final audit.
