It's not the best of audits, but things are improving.
The City of Brazil recently received its nonfederal examination report from the State Board of Accounts, which came back just as Clerk-Treasurer Karen McQueen expected.
"There were errors and mistakes, but that is to be expected," she said about the audit which examined financial records from Jan.1-Dec. 31, 2007. "It is rare to have a clean report, and it is the job of the State Board of Accounts to find mistakes."
The report found the city's General Fund to have a $778,071 deficit in cash and investments as of Jan. 1, 2007, which was reduced to a deficit of $174,691 by the end of 2007, which Brazil Mayor Ann Bradshaw was glad to see happen.
"It was great news to see the deficit drop as far as it did," she said.
McQueen provided an explanation for why the deficit had become so large.
"A large part of the size of the deficit came from paying for work on the sidewalks and misappropriation of funds in recent years," McQueen said. "However, as of right now, the city has a positive balance of about $900,000."
As with other audits the past couple of years, record balances had not been reconciled to depository balances, but the city has since hired the services of the CPA firm Umbaugh and Associates, Indianapolis, to assist in balancing the books.
"Umbaugh has been the best thing to happen to this city," McQueen told The Brazil Times. "Having (CPA Principal Dan Hedden) here to train us on the computer system has been great."
She added there was a lack of training in recent years which contributed to inaccuracies within the financial system.
"Fund numbers were inputted incorrectly, causing money to go into the wrong places and everything was a mess," McQueen said. "But since we've had the training, Umbaugh has only had to be here a couple times the past few months."
Bradshaw was especially grateful for the hard work Umbaugh has done to help get the city back on the right track.
"I have to give a lot of credit to Umbaugh for training our staff the proper procedures they needed to correct the issues we were having," Bradshaw said.
While there were still issues with the financial information provided for the audit, the city incurred no penalties for paying taxes late.
"We were happy not to have any penalties this year," McQueen said. "We had some penalties from the 2006 audit, which puts an additional hit on the taxpayers that we don't have to worry about this time around."
Although negative balances were found in multiple governmental funds, such as the General Fund, the Proprietary (Water, Sanitation etc.) and Fiduciary (pensions) funds were healthy.
"The funds for the utilities are separate from the general funds and have always been healthy," McQueen said.
She added while the report shows the type of mistakes made, it does not specify the number of times the respective incidents occurred.
"The State Board of Accounts keeps a tally on the little mistakes but do not say how many times they happened," she said. "If something comes up in the report, it means it could have happened only once."
While the audit was not the best report the city could have received, McQueen is confident future examinations of the city's finances will be better.
"We are still working with Umbaugh," she said. "I anticipate the 2008 audit to better, but not perfect, and the 2009 audit should hopefully be even better."
Bradshaw concurred with McQueen's thoughts.