Donations for pool drive revenue increase for city

MARENGO — Public donations for the construction of an aquatic center in Marengo drove an increase in receipts for fiscal year 2023, according to an audit report from Hogan-Hansen certified public accountants and consultants in Cedar Rapids.

The aquatic center fund increased by $482,861.

The city’s governmental activities receipts increased 24.7%, or $658,200, from fiscal year 2022. Governmental activities disbursements increased by 55.9%, or $1.6 million, due primarily to more capital projects.

The city’s total cash basis net position increased by $924.374.

The city has three kinds of funds. Governmental funds account for most of the city’s basic services and include the general fund, special revenue funds such as road use tax and local option sales tax, the capital projects funds and the debt service fund.

Proprietary funds are used to account for the city’s enterprise funds which are used to report business-type activities. Marengo’s three enterprise funds provide for water, sanitary sewer and storm sewer.

The fiduciary fund is used to account for assets that belong to others for which the city acts as custodian.

Marengo’s general fund cash balance increased by $81,649 to $1.8 million. The increase was less than the prior year due to higher public safety costs, the audit report said.

The general fund receives receipts from property taxes, licenses and permits, interest on deposits and various charges for service.

Money from the general fund is used for police, fire, animal control, landfill payments, contributions to health and social services, the library, recreational facilities and activities, and salaries for the city’s officials.

The road use tax fund cash balance decreased by $34,088 to $596,939 due to more street improvement costs.

Local Option Sales Tax cash balance increased by $169,83 to $762,330 due to more tax dollars received and less transferred out of the fund for projects, according to the audit.

The sanitary sewer system cash balance increased by $400,992 to $1 million dure to rate increases implemented to help pay for improvements to the wastewater treatment plant current in the planning and design phase.

The city’s general obligation debt was $735,000 as of June 30, and the sewer revenue debt was $683,000.

The auditors expect property taxes to increase by a small amount but expect expenditures to be impacted by higher-than-normal inflation.

Auditors found no instances of noncompliance but reported several deficiencies, most due to the size of the city government and lack of enough employees to follow best practices.

In order to maintain proper internal control, duties should be segregated so authorization, custody and recording of transactions are not under the control of the same employee. This prevents losses from employee error or dishonesty.

But the city has a limited number of employees and procedures have not been designed to adequately segregate duties.

The city is aware of the lack of segregation and will consider alternatives to improve the situation, the audit report says.

The city does not have a system of internal controls that fully prepares financial statements and disclosure in conformity with generally accepted accounting principles. While the city has employees who are knowledgeable and skillful they do not have time to maintain the current knowledge and expertise to fully apply the cash basis of accounting in preparing the financial statements and related disclosures, the audit said.

The city said its staff will research available educational courses regarding financial statement preparation and will continue to attend work sessions held by the League of Cities.

Auditors said the manual input of utility billing should be reviewed and approved by an independent person prior to issuance of utility bills. The city is in the process of implementing better controls around the utility billing process.