FORT THOMAS, Ky. — The Finance Committees Nov. 5 review of the FY 2023-24 audit identified capital projects, interfund transfers and timing of payables as the primary causes of budget-to-actual variances in the general fund.

Committee members and the audit team pointed to capital spending and invoice timing as drivers of an approximately $1,070,000 overspend in the general fund and a $2,580,000 variance against revenues reported in the audit. The Tower Park renovation was cited as a major capital account contributing to the variance: auditors said the Tower Park project carried accounts payable of about $1.4 million into the audited year, which affected current-liabilities figures.

Accruals, invoice timing and budgeting

Auditors explained that many municipalities operate on cash during the fiscal year and make accrual adjustments at year-end to produce GAAP-compliant financial statements. In Fort Thomas case, charges that were cash-related in one period but invoiced or payable in a later month produced a mismatch between the amended budget and actual expenditures. As auditors put it, items that are "really June bills" sometimes arrive and are booked in July or August, creating an apparent overrun unless the budget is amended to reflect expected accruals.

The committee was advised that a finance directors routine work includes estimating near-term invoices and ensuring budget amendments reflect those accruals; staff and auditors said that practice needs to be followed consistently to avoid repeat variances.

Pension and long-term liabilities

Auditors also noted changes in long-term pension and OPEB liabilities that affected the government-wide statement of net position. They presented a decline in the stated proportionate share of pension liability in the audited year and explained the change as a measurement-period effect tied to the pension systems valuation. The audit shows total pension and OPEB liabilities in the tens of millions of dollars on the government-wide statements; auditors explained the reductions as a market- and measurement-driven change rather than an operating cash flow.

Beginning-balance and budget carryforward

Public commenters and staff discussed a small discrepancy between the ending fund balance shown in one amended ordinance and the beginning balance carried into the next ordinance; staff said the difference (reported in the meeting as a small-dollar rounding/entry issue discovered during review) was traced to a duplicated pension entry that was corrected and carried forward into the new budget once reversed.

Next steps

Staff and auditors said the finalized audit and the year-end accrual adjustments will produce an audited beginning balance for FY 2025-26; the committee will consider the audit results and budget amendments when they are final.