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Thursday, July 10, 2014

Progress with finances reviewed

Wednesday, March 19, 2008

Brazil continues to get a little closer to clearing up its financial issues.

Dan Hedden, CPA Principal for Umbaugh and Associates, Indianapolis, addressed the Common Council of the City of Brazil in a special meeting Tuesday night to outline the progress he has made in correcting errors in the city's accounting system.

"We have made a lot of headway, but still have more work to do," Hedden said. "But at this point, we at least have a good idea of what the city is working with and the ability to manage funds."

He said reconciliation of all funds through the end of 2007 is nearly complete, but there are still a few discrepancies to solve.

"When the city first switched to the current accounting system in about 2003, the numbers were not inputted correctly," Brazil Clerk-Treasurer Karen McQueen said.

Hedden and other associates of Umbaugh have been working on correcting inaccuracies in the system for a number of months.

"We have been able to get the numbers from the current estimated budget for 2008 into the system," he said. "Now we just have to worry about clearing up the shortfalls and bridge gaps left."

According to Hedden, the city is an estimated $730,000 in the hole, but through a series of measures should be able to make it through alright.

"The biggest thing we need right now is the certified budget from the state so we can see exactly what and how much needs to be cut," he said. "Once that comes in, we will have an estimate of how much revenue the city can bring in from taxes and work from there."

A couple of the options Hedden suggested for solving the financial situation included, but were not limited to:

* Adhering to spending limits within each department,

* Consider Local Option Income Taxes,

* Freeze hiring,

* Raise fees for services,

* Review deductibles, co-pays and other cost-saving measures, and

* Seek grants (particularly for public services).

With the computer system now in balance, the council will be able to receive a monthly financial report at their regular meetings, starting next month.

"There is a little bit of cleanup left to do, but the city now has reliable information on which to make decisions," Hedden said. "The next steps are to get the certified budget back then transition to planning out the 2009 budget so the city can get back on track."

CAUSES OF PROBLEM

Dan Heddon, Principal CPA for Umbaugh and Associates provided the council with this partial list of causes that led to the problems in the City of Brazil's accounting system:

* Accounting system was not reconciled on a regular basis,

* The annual spending has historically been greater than annual receipts, leading to depleted cash reserves,

* Increased insurance premiums,

* Increased costs of power, fuel, maintenance of aging fleets, etc., and

* Lack of formalized budget controls.



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