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City auditor warns Alexander City must rebuild reserves; audit shows accounting gaps
Summary
A CPA presenting the city's 2023 audit told council the general fund's unassigned balance remains negative, infrastructure assets remain unrecorded on accrual statements, and the city should stop subsidizing the general fund from utility transfers to reach a 90-day reserve target.
Jason Horrell, a CPA with Carr, Riggs & Ingram, told the Alexander City council that the city's 2023 financial statements show improvement overall but still include material issues that require work to reach standard benchmarks.
Horrell said the city's overall 2023 position is positive on certain statements but that the unassigned general-fund balance remains negative and needs about $9.2 million to reach a 90-day reserve benchmark. He urged the council to stop relying on transfers from utility funds to subsidize general operations so those utility revenues can support necessary capital work and debt service.
He also explained why the auditors issued modified opinions on some statements: the city has not yet recorded infrastructure and certain long-lived assets on its full-accrual (government-wide) statements, a task the auditors said must be completed and will likely produce a very large number. Horrell recommended additional accounting capacity in the finance office to help catch up on audits and asset recording.
Why it matters: The city's fund balance and audit status affect creditworthiness, borrowing capacity and the timing of capital projects. Council members were told there are multiple prior-year audits to complete and that staffing constraints make catching up difficult.
Horrell reviewed several charts showing revenue/expense trends and fund-balance history and said the city delivered the 2022 audit in July and 2023 in April, an improvement but still behind the typical schedule. He estimated the city needs additional staffing or external assistance to complete the backlog and meet routine deadlines.
Council discussion focused on next steps to build unassigned reserves, the timetable for catching up prior-year audits and whether the city should hire more accounting staff or continue using external consultants to complete the remaining work.
The presentation prompted requests for follow-up documents and for staff to report plans and timelines for improving reserves, completing asset recording and scheduling future audit deliveries.
