Finance committee: cash position stable but income-tax receipts trail; auditors to begin GAAP testing

The Fostoria Finance Committee met to review year-to-date financial reports and internal controls on March 9. Steve, the finance director, told the committee the city's cash position at the end of January was $22.7 million, with the general fund cash balance reported at $11.3 million and an unencumbered general fund balance of $9.1 million after $2.2 million in purchase orders were issued.

"Our ending cash balance at the end of January was 22.7 million," Steve said, adding that the water, sewer and storm enterprise funds are "healthy" and that the water fund has an unencumbered balance of $1.6 million and the sewer fund $979,000. He cautioned that purchase-order activity in the first quarter can make unencumbered balances appear lower until encumbrances clear.

Steve also flagged revenue timing issues. "The only item that caught my eye...is the income tax revenue. It should be at 17% of our annual forecast and we're at 15%," he said, noting the city received Senica County real estate taxes in March that will show up in next month's figures. Committee members said they will monitor first-quarter trends closely when March collections are reflected in the reports.

Council person Layman pressed for detail on enterprise revenues, citing Wood County water receipts and septic-hauling income. Steve said Wood County water revenue was $41,000 year to date and that a December/January timing difference explained much of the variance. He said septic-hauling revenue was running ahead of forecast but that a $26,000 posting error assigned to the wrong account would be corrected and bring the line closer to expectations.

On audits, Steve said the city's external auditors will begin their testing the week of March 30 and expect to complete much of the work remotely. He described staff work to convert cash-based statements to GAAP financial statements, noting the auditors will focus on the GAAP-converted statements and on testing controls and procedures.

Committee members also asked about the fiscal-emergency process with the state auditor's office in Columbus. Steve said there are no substantive developments yet and that the auditor's staff are focused on the GAAP conversions and required statements that are due around the end of April or start of May; he said work on fiscal-emergency items will likely not proceed in earnest until June or July.

Members spent substantial time discussing reconciliation controls after several members recalled past lapses when accounts were not balanced for months. One committee member proposed adding a practical control such as a proof-of-cash spreadsheet or providing the front page of bank statements annually alongside reconciliations so the committee can verify balances without imposing monthly deliverables on staff. Steve said he was "more than happy to send" requested files and preferred providing the bank file that already contains canceled checks and supporting detail. The committee agreed to consider a low-burden approach that strengthens oversight without micromanaging staff.

Procedurally, the committee corrected a referenced date in a minutes motion (the minutes referenced March 16 but the correct meeting was February 17), approved the February 17 regular meeting minutes and the paper minutes from a March 9 special meeting by roll call, and adjourned at 5:46 p.m.

What happens next: staff will include March receipts in the next report so the committee can reassess revenue trends for the first quarter; the external auditors are scheduled to begin GAAP-conversion testing the week of March 30; and the committee will return to the question of a proof-of-cash or bank-statement control at a later meeting.