Carefree Truth
Issue #705, December 3, 2018
Gary Neiss noted that each spring is budget time and each fall is audit time. It is cyclical. The goals of the the audits are to assure that financial statements are free from material misstatements, to verify that good accounting practices and principles are being used, to confirm compliance with governmental accounting standards and principles, to guard against fraud and the misuse of funds, and to provide an additional layer of transparency to Carefree's financial well being. Once again, the Town has a "clean" audit.
Carefree has a very transparent financial process. Each month, the Council approves the check registry as part of the Consent Agenda. There is not one other community in Arizona that reviews the check registry on a monthly basis. All money spent is invested in the community. Mr. Neiss wanted to focus on the capital reserve funds because that is critical. In the last 10 years, Carefree has increased the capital reserves by approximately $3 million, without a property tax. That was done from sales tax and by using good, conservative fiscal management. This is a badge of honor. Within the next several years, the Town will be investing significantly on the roads, as well as providing water solutions for all Carefree citizens for the future.
Town accountant Jim Keen reported that, as he has done for the last 15 years, the audit shows all the departments and where the money is, as well as a comparison sheet that shows the revenues and how they are categorized. The first page is the revenues and the second page is the assets. Page #22 shows that the figures match the audit, as they did the year before. He also restates the accruals. Income received in July must be put into June as part of the yearly process. Other towns in Arizona have forgotten to do this and thought they had more money than they had. Everything, moving forward, is correct. The audit firm, Hinton Burdick, does a thorough job.
Crimson Singleton, the auditor from Hinton Burdick who attended telephonically, thanked Jim, Kandace and the rest of the staff, saying that they always do a great job and are very accommodating with everything needed to accomplish the audit. Although it is a very long and detailed document, she noted that the highlights are summarized on page 5. She gave the Town an "unmodified clean opinion" letter. There were no issues with general compliance. There is routinely a deficiency in segregation of duties, but that is common in smaller towns with small staffs. Carefree has good oversight that helps mitigate that deficiency as much as possible. In the annual expenditure limitation report, Carefree was under the expenditure limit. The Court was also in good condition. She declared Carefree to be in a good financial position.
Mayor Les Peterson explained that the deficiency mentioned is due to the small size of the Town staff. In big cities like Scottsdale and Phoenix, someone opens the invoices, someone else processes them, and another balances the checkbook. In Carefree, Jim and Kandace do it all. The Mayor and Kandace sign the checks. Mayor Peterson says he has never seen two more honest people than Jim and Kandace, whom he thanked.
The Council unanimously voted to accept the 2017/18 Fiscal Year audit.
https://vimeo.com/302283585
Following a very long agenda item addressing the N.E. corner of Carefree Highway and Cave Creek Road, the final public agenda item dealt with the retirement of the loan for the Council Chambers. Gary Neiss reported that after more than 3 decades of leasing and relocating the Council Chambers, the Town bought the building at 33 Easy Street to serve as its permanent home. 100% of the purchase price of $407,000 was financed at a commercial rate of 3.92%, with the idea in mind of an early pay-off based on the health of the capital reserves.
The space was leased for 1-1/2 years, which more than paid for the loan costs. When the tenant vacated the space, the Town did the necessary improvements to make it into a functional Council Chambers. The first Council meeting was held there last December.
Funds were allocated in the current fiscal year budget to retire the loan. As of December 3rd, the potential pay-off date, the remaining balance will be approximately $368,000. Early retirement of this loan will save the Town approximately $191,000 in interest payments over the remaining 17 years of the loan.
Councilman Gene Orrico thought that the loan was on a 5 year balloon payment schedule, and that the Town had intended to pay it off early anyway. Mr. Neiss clarified that it was a conventional commercial loan, not a balloon loan.
The Council unanimously approved the early pay-off of the loan.
https://vimeo.com/302627138
Lyn Hitchon
Prepared by Carefree Truth
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