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[00:00:01]

OKAY, WE'RE GOING TO CALL THE MEETING THE WORK SESSION MEETING MARCH 9TH, 2021.

[A. Call to Order]

TO ORDER I DO MY LIGHTS ON IT'S ON AND FIRST ON THE AGENDA IS THE 2019 2020 AUDIT

[B. FY 2019-2020 Audit Presentation – Michael Lupton, Robinson, Farmer, Cox Associates]

PRESENTATION.

MICHAEL LEFT HIM FROM ROBINSON FARMER COX ASSOCIATION.

THANK YOU FOR BEING HERE TONIGHT.

THANK YOU, MADAM CHAIR FOR HAVING ME OTHER MEMBERS AND WAS GOING TO TRY TO TUNE UP OUR POWERPOINT PRESENTATION HERE AND YOUR LIFE WILL GOING ON YOUR MIC.

IT IS.

DO I NEED TO SCOOT IT CLOSER TO ME? PROBABLY.

OKAY.

AND FEEL FREE IF YOU WANT TO.

OKAY.

OKAY.

THANK YOU.

THAT LITTLE DIFFICULT TO BREATHE WITH IT.

YEAH, OKAY.

THERE YOU GO.

YOU READY TO GO? ALRIGHT.

UM, ALL RIGHT, SO THANK YOU ALL FOR HAVING ME THIS EVENING.

I'M GLAD TO BE HERE TO PRESENT THE, THE FYI 2020, UH, COMPREHENSIVE ANNUAL FINANCIAL REPORT AND THE AUDIT OF THAT FINANCIAL REPORT.

UM, I KNOW IT'S EIGHT MONTHS AFTER THE FACT, BUT WE'RE GONNA, WE'RE GOING TO GET THROUGH IT.

AND, UH, AND, UH, AND IF Y'ALL HAVE ANY QUESTIONS, PLEASE STOP ME.

UM, OTHERWISE I'LL HAVE A TIME FOR Q AND A AT THE, AT THE END OF THE PRESENTATION.

ALL RIGHT.

SO THE, UM, REQUIRED COMMUNICATIONS WITH, WITH THE GOVERNING BODY IS THE GOVERNANCE LETTER.

AND IT'S ACTUALLY A LETTER THAT IS IN YOUR, YOUR DOCUMENT THERE.

UM, ONE OF THE LOOSE LETTERS IN YOUR DOCUMENT COMMUNICATION WITH THOSE CHARGED WITH GOVERNANCE, UM, ESSENTIALLY IT DETAILS, UH, OUR, UH, OUR, UH, RESPONSIBILITIES AND ALSO THE RESPONSIBILITIES OF MANAGEMENT.

UM, WE WILL LOOK AT THIS LETTER, UM, ALONG WITH, UH, THE, THE AUDIT RESULTS, UH, FROM THE AUDIT, UM, INCLUDING THE OPINIONS, UH, THE REPORTS, AND ALSO VARYING FINANCIAL HIGHLIGHTS, UM, THROUGHOUT THIS PRESENTATION, STARTING WITH THE LETTER THAT I JUST STARTED TALKING ABOUT, UM, ESSENTIALLY, UH, THERE ARE, UM, THREE OR FOUR DIFFERENT SECTIONS OF THIS LETTER, UH, TO, TO, UH, BRING TO YOUR ATTENTION.

UM, THE FIRST OF WHICH IS THE DETAILING OF MANAGEMENT'S RESPONSIBILITIES.

UM, IT IS, IT IS MANAGEMENT.

I WANT TO BE CLEAR ABOUT THIS.

IT IS MANAGEMENT'S RESPONSIBILITY, UM, TO HAVE INTERNAL CONTROLS AND ALSO TO, UM, UH, TO PREPARE THE FINANCIAL STATEMENTS IN ACCORDANCE WITH GENERALLY ACCEPTED ACCOUNTING PRINCIPLES, UM, AND HAVE THAT PREPARED FOR US, FOR US TO, TO AUDIT ESSENTIALLY, UM, OUR RESPONSIBILITY AS AUDITOR'S IS TO, UM, IS TO OBVIOUSLY AUDIT THE FINANCIAL STATEMENTS AND DO THAT IN ACCORDANCE WITH GENERALLY ACCEPTED AUDITING STANDARDS,

[00:05:01]

AND THEN ULTIMATELY TO RENDER AN OPINION ON THOSE FINANCIAL STATEMENTS, UM, AND THAT DETAILED THOSE, WE, WE, AS PART OF THAT PROCESS, WE EXAMINE INTERNAL CONTROLS.

UH, WE TEST ACCOUNT BALANCES, UH, SAMPLE DIFFERENT, YOU KNOW, TRANSACTIONS THROUGHOUT THE YEAR, UM, AND ALSO TEST COMPLIANCE AND ULTIMATELY ISSUE OUR AUDITOR OPINION, UM, AND REPORTS, DIFFICULTIES ENCOUNTERED IN PERFORMING THE AUDIT.

UH, THERE WERE NONE TO REPORT, UH, NO DIFFICULTIES THAT WE ENCOUNTERED CORRECTED AND UNCORRECTED MISSTATEMENTS.

WE, WE DID PROPOSE SEVERAL ADJUSTMENTS THAT WE CONSIDER TO BE MATERIAL IN NATURE.

UM, AND ON THE SECOND PAGE OF THAT LETTER, UH, WE GIVE A BRIEF DESCRIPTION OF THE ITEMS THAT WE ARE, THE ADJUSTMENTS WE PROPOSE THAT WE CONSIDER TO BE MATERIAL.

UM, ALL OF THE ADJUSTMENTS WERE ACCEPTED BY MANAGEMENT, UM, AND POSTED TO THE ACCOUNTING SYSTEM DISAGREEMENTS WITH MANAGEMENT.

THERE WERE NONE TO REPORT.

UM, IT IS OUR UNDERSTANDING AND IT WAS REPORTED TO US THAT MANAGEMENT DID NOT CONSULT WITH ANY OTHER AUDITORS, UM, OTHER MATTERS.

UM, AND THIS IS A SIGNIFICANT OTHER MATTER TO DISCLOSE IS THE OMISSION OF THE EDA FINANCIAL STATEMENTS, UH, ISSUED A DISCLAIMER OF OPINION ON THE EDA FINANCIAL STATEMENTS, AS YOU ALL MAY BE AWARE, THE EDA, UM, IS A, A COMPONENT UNIT, UH, FOR PURPOSES OF FINANCIAL AFFORD AND FOR THE COUNTY.

YES, SIR.

YOU'RE MIGHTY, THEY'RE USING, THEY ARE USING BROWN EDWARDS LEAVE, AND IF THEY COMPLETE THE 18 AND THE 19 AND THE 20 IN A REASONABLE TIME, UH, AND THE BOARD, THEN THIS BOARD NEXT YEAR ADOPTS WITH THE BUDGET, A LINE ITEM BUDGET, SINCE WE ARE THEIR FISCAL AGENTS.

AND WE PAY FROM THAT LINE ITEM BUDGET, CAN IT BE AUDITED AS PART OF OUR REGULAR COUNTY AUDIT? SO IT'S STILL GOING TO BE CONSIDERED A SEPARATE COMPONENT UNIT COMPONENT.

YES.

CORRECT.

SEPARATE FUND.

YES.

AND, UM, IT WOULD BE, IT WOULD BE, WELL, IT WOULD BE ACTUALLY A SEPARATE SET OF FINANCIAL STATEMENTS SIMILAR TO HOW THE SCHOOL BOARD HAS REPORTED.

UM, AND SO ESSENTIALLY YOU WOULD HAVE A SEPARATE SET OF FINANCIAL STATEMENTS FOR THE COMPONENT YOU TO EDA.

UM, AND THEY WOULD HAVE THOUGH IT'S THE SAME INTERNAL CONTROL ENVIRONMENT BECAUSE THE COUNTY WOULD ACT AS ITS FISCAL AGENT, YOU WOULD HAVE A SEPARATE AUDIT FOR THE EDA.

UM, AND GENERALLY SPEAKING, YOU KNOW, UH, I THINK THE DECISION AS IT RELATES TO WHETHER OR NOT A FUND A SEPARATE FINANCIAL REPORT WOULD HAVE TO BE ISSUED, UM, UH, I THINK THAT WOULD, COULD ULTIMATELY BE THE DECISION OF THE BOARD, UM, AND, YOU KNOW, IN CONJUNCTION WITH THE EDA BOARD AS WELL.

UM, BECAUSE OBVIOUSLY THAT THE SCHOOL BOARD DOESN'T HAVE A SEPARATE ISSUE SEPARATELY ISSUED FINANCIAL STATEMENT.

IT'S, IT'S PART OF THE COMPREHENSIVE ANNUAL FINANCIAL REPORT.

UM, MY VISION OUT THERE IS THAT THERE BE THE GENERAL FUND, THE, THE SCHOOL FUND, AND THEN THERE'LL BE AN EDA FUND THAT THE BOARD CAN REVIEW AND THE PUBLIC CAN REVIEW ALL AS PART OF ONE AUDIT IS WHAT I'M TRYING TO GET AT THE COAL THERE.

AND I DON'T SEE THE SANITARY DISTRICTS.

RIGHT.

RIGHT.

UM, I GUESS WITH THE EXCEPTION OF THE FACT THAT THE SANITARY DISTRICTS WERE ONLY REPORTING IN THIS CASE, UM, UH, THE, WELL, WELL, THE, THE COUNTIES FIDUCIARY.

UM, AND SO ESSENTIALLY IT'S JUST THE FACT THAT THE COUNTY IS HOLDING THE FUNDS FOR THE SANITARY DISTRICTS.

WE'RE NOT NECESSARILY AUDITING THE SANITARY DISTRICTS THEMSELVES SEPARATELY.

CORRECT.

PART OF IT, JUST THE, YEAH, JUST THE FUNDS THAT ARE HELD HERE.

RIGHT.

AND EVERYTHING WITH THE EDA WOULD GO THROUGH OUR ACCOUNTING AND ON OUR LINE ITEMS, JUST AS PLANNING, FINANCE, SOCIAL SERVICES, ET CETERA, THEY WOULD ALL BE YES.

AND IT WOULD BE SHOWN, LIKE I SAID, VERY SIMILAR TO HOW THE SCHOOL BOARD WOULD BE SHOWN KIND OF A SEPARATE SECTION, UM, FOR THAT SET OF FINANCIAL STATEMENTS.

CORRECT.

YOU'RE WELCOME.

CAN I ASK YOU A QUESTION? WHAT SORT OF TESTS DO, WHAT TESTS DO THE AUDITORS APPLY TO THE FINANCIALS? DO YOU TEST VARIOUS INVOICES AGAINST THE, YOU KNOW, WHO THE SAID PAYEE OR PAY FOR IT, AND THEN YOU GO THROUGH THAT PROCESS TO VERIFY? YES.

OKAY.

SO, SO ESSENTIALLY WHAT WE DO IS WE, WE, WE SELECT A RANDOM SAMPLE OF DISBURSEMENTS THROUGHOUT THE YEAR AND, UH, THEY'RE ACROSS

[00:10:01]

ALL DEPARTMENTS.

THEY'RE NOT, YOU KNOW, UM, THEY'RE NOT FOCUSED ON ANY ONE PARTICULAR DEPARTMENT ON THEY'RE ACROSS ALL DEPARTMENTS.

AND WHAT WE DO IS WE HAVE THAT, THAT, THAT SAMPLE.

AND WE LOOK AT ALL THE SUPPORTING DOCUMENTATION RELATED TO THOSE TRANSACTIONS.

UM, AND WE USE THAT, UM, AS OUR TEST TO MAKE SURE THAT THE CONTROLS OVER THE ACCOUNTS PAYABLE PROCESS, UM, IS SUFFICIENT AND IS OPERATING CORRECTLY AND EFFECTIVELY.

UM, WE ALSO TEST CONTROLS OVER CASH RECEIPTS OVER, YOU KNOW, COLLECTIONS IN THE TREASURER'S OFFICE.

UM, AND WE DO THE SAME THING.

IT'S A RANDOM SAMPLE.

UM, USUALLY WE SELECT RANDOM DAYS THROUGHOUT THE YEAR TO SAMPLE THE CASH RECEIPTS FOR THOSE DAYS.

AND WE LOOK AT THE SOURCE DOCUMENTS FOR THOSE CASH RECEIPTS, AND WE, UM, UH, TEST THOSE FOR OPERA CONTROL EFFECTIVENESS, UH, MAKING SURE THAT THE CONTROLS ARE BEING FOLLOWED, UH, THROUGH THAT PROCESS.

SO THAT'S, YEAH.

YOU'RE WELCOME.

YOU'RE WELCOME.

APPROXIMATELY HOW MANY TEST SAMPLES DO YOU COLLECT? LIKE IF YOU WERE TO LOOK AT, SAY THE TREASURER'S OFFICE, YOU SAY FOR ONE DAY, IS THAT EVERYTHING THAT WAS DONE IN ONE DAY OR IS IT GENERAL GENERALLY? SO FOR EVERY DEPARTMENT YOU LOOK AT, OR SO IT'S, THE TREASURER'S OFFICE IS, IS UNIQUE, I GUESS, IN THAT IT'S THE, IT'S THE PLACE WHERE FUNDS ARE COLLECTED.

UM, YOU KNOW, AND SO OBVIOUSLY A LOT OF OUR, UH, TESTING OF TRANSACTIONS RELATED TO THE CASH RECEDING SIDE HAPPENS AT THE TREASURER'S OFFICE.

UM, YOU KNOW, THE, UH, AS IT RELATES TO WHETHER OR NOT WE FOCUS ON THE DIFFERENT DEPARTMENTS, YES.

THERE ARE CERTAIN TESTS THAT WE DO, YOU KNOW, IN DIFFERENT DEPARTMENTS, FOR EXAMPLE, SOCIAL SERVICES, WE DO A LOT OF COMPLIANCE TESTING AT SOCIAL SERVICES TO MAKE SURE THAT THEY'RE COMPLYING WITH STATE REGULATIONS AND IN, UH, FEDERAL REGULATIONS, IF IT COMES TO THAT.

UM, AND ALSO ON THE SCHOOL SIDE, WE DO THE SAME THING.

UM, BUT GENERALLY SPEAKING, YOU KNOW, THE, THE, THE TESTS THAT WE DO ON A TRANSACTIONAL LEVEL, OUR COUNTY-WIDE DEPARTMENT, YOU KNOW, ALL DEPARTMENTS ACROSS THE BOARD, UM, ARE INCLUDED IN OUR POPULATION THAT WE CAN SELECT FROM.

UM, AND SO I WOULD SAY, YOU KNOW, JUST A, A ROUGH ESTIMATE OF HOW MANY, UH, YOU KNOW, INVOICES AND CHECKS WE LOOK AT IN THE YEAR WOULD PROBABLY BE AROUND 80 TO A HUNDRED, I WOULD SAY, UM, RANDOMLY SAMPLED, UM, AND ALSO FOCUSED.

UM, SO A PORTION OF THAT WOULD BE RANDOMLY SAMPLED AND THEN A PORTION OF THAT WOULD ALSO BE FOCUSED ON, UH, THOSE TRANSACTIONS OVER A CERTAIN DOLLAR AMOUNT.

UM, UM, AND, AND ONE MORE QUESTION, CAUSE I DON'T WANT TO STOP YOUR PRESENTATION NECESSARILY, BUT, UM, DO YOU TEST EVERY DEPARTMENT EVERY YEAR, EVERY SINGLE DAY, ALL OF THE TRANSACTIONS IN ALL OF THE DEPARTMENTS ARE PART OF A POPULATION OF OUR POPULATION THAT WE CAN CHOOSE SAMPLES FROM.

SO THEY HAVE, YOU KNOW, THE PUBLIC WORKS DEPARTMENT TRANSACTION HAS AN EQUAL OPPORTUNITY TO BE AS, AS EQUAL AND OPPORTUNITY TO BE SELECTED AS A FINANCE DEPARTMENT'S TRANSACTION.

UM, AND SO I, YOU KNOW, I CAN'T SAY WITH CERTAINTY THAT, UM, THAT, YOU KNOW, UH, EVERY SINGLE DEPARTMENT IS TESTED EVERY SINGLE YEAR, UM, BECAUSE THAT'S JUST THE, KIND OF HOW, HOW THE TESTING IS STRUCTURED.

IT'S VERY MUCH RANDOMIZED, UM, UH, BASED ON THE CHECK SEQUENCES AND THE CHECKS THAT ARE WRITTEN IN THE YEAR.

OKAY.

THANK YOU.

I HAVE ONE MORE QUESTION.

YEAH.

DO YOU, WHEN YOU DO THESE RANDOM TESTS, DO YOU CHECK TO SEE IF THEIR RESOLUTIONS AGAINST THE DISBURSEMENTS OR ANYTHING LIKE THAT FOR SIGNIFICANT DISBURSEMENTS? ABSOLUTELY.

YEAH, ABSOLUTELY.

WE'LL LOOK AT, UM, YOU KNOW, FOR LARGER, UH, PURCHASES, WE LOOK AT THE PROCUREMENT PROCESS, UM, AND MAKE SURE THAT APPROVALS ARE TAKING PLACE.

UH, WE CERTAINLY MAKE SURE THAT APPROVALS ARE TAKING PLACE ACROSS THE BOARD.

THAT'S PART OF OUR TESTING.

THAT'S ONE OF THE ATTRIBUTES THAT WE TEST FOR.

UM, SO YES, YOU'RE IN, YOU'RE WELCOME.

YOU'RE CONSIDERED SIGNIFICANT, SIGNIFICANT IT'S, IT'S BASED ON A MONETARY LEVEL.

UM, AND IT CHANGES FROM YEAR TO YEAR.

UM, I DON'T HAVE THAT NUMBER, UM, ON, UH, AT THE TOP OF MY HEAD RIGHT NOW, UM, AS IT RELATES TO WHAT THE, THE MATERIAL OR SIGNIFICANT ITEM THRESHOLD WAS FOR THE COUNTY, UM, FOR 2020.

UM, BUT GENERALLY IT'S AROUND 50 TO $75,000, UM, MAYBE UPWARDS OF A HUNDRED, UM, TO SOME EXTENT.

SO LESSER AMOUNTS OF MONEY SAY LESS THAN A THOUSAND DOLLARS, YOU WOULDN'T NECESSARILY PULL THOSE RECEIPTS AND SO FORTH.

WE, WE, THEY WOULD BE PART OF OUR, OUR RANDOM SAMPLE.

UM, AND SO ALL, ALL CHECKS, ALL DISBURSEMENTS, UM, AND ALSO SEPARATELY ON THE RECEDING SIDE, UM, THEY'RE PART OF OUR TOTAL POPULATION.

AND SO WE TAKE BEGINNING CHECK NUMBER, ENDING CHECK NUMBER.

WE RANDOMLY GENERATE A SAMPLE TO COME UP WITH A LISTING OF

[00:15:01]

CHECKS THAT WE WANT TO LOOK AT THE TRANSACTION AND THE DOCUMENTATION FOR.

AND SO THAT CHECK COULD BE $5.

UM, BUT WE'VE RANDOMLY SELECTED THAT ONE.

SO WE'RE GOING TO BE LOOKING AT THE DOCUMENTATION FOR THAT CHECK FOR $5.

AND THEN THE DIFFERENCE IS THAT WE LOOK AT EVERY SINGLE ONE ABOVE THAT HIGHER THRESHOLD.

THAT WOULD BE THE DIFFERENCE.

SO, SO YOU GIVE A HEADS UP THAT YOU'RE COMING, I'LL BE HERE ON WEDNESDAY OF NEXT WEEK, BUT NO ONE GETS A HEADS UP OF, WELL THIS YEAR.

WE THINK WE'RE GOING TO LOOK AT FIRE AND RESCUE.

NO.

OKAY.

NO HEADS UP IN THAT WAY.

OKAY.

THANK YOU.

YOU'RE WELCOME.

OKAY.

UM, SO YEAH, WE, UH, DISCUSSED THE OTHER MATTERS.

THE, THE EDA, AS, AS ED HAD MENTIONED, UH, BROWN EDWARDS IS, IS AUDITING THE FYI 18 AND FYI 19 FINANCIAL STATEMENTS STILL.

UM, SO THE FINANCIAL STATEMENTS OBVIOUSLY ARE NOT AVAILABLE BECAUSE THOSE PRIOR AUDITS, UM, HAVE NOT BEEN FINISHED, UH, YET.

UM, SO, UH, THE FINANCIAL REPORT, UH, THE BIG DOCUMENT THAT YOU HAVE IN FRONT OF YOU CONSISTS OF FOUR SECTIONS, THE FIRST OF WHICH BEING THE INTRODUCTORY SECTION, UM, AND THE INTRODUCTORY SECTION INCLUDES THE ORGANIZATIONAL CHART AND ALSO A LETTER OF TRANSMITTAL.

UM, THE LETTER OF TRANSMITTAL IS, IS WRITTEN BY ADMINISTRATION AND THE FINANCE DEPARTMENT, UM, AND IT INCLUDES A LOT OF GOOD DETAILED INFORMATION.

UM, AND SO THERE ARE TWO, THERE ARE TWO VERY, UH, I GUESS, IMPORTANT PIECES OF, UH, EVERYTHING'S IMPORTANT, BUT IF YOU'RE LOOKING FOR A QUICK ANALYSIS AND SUMMARY OF WHAT TRANSPIRED IN THE YEAR, UM, I WOULD START WITH A LETTER OF TRANSMITTAL AND ALSO LOOK AT THE MD AND A, THE MANAGEMENT'S DISCUSSION AND ANALYSIS.

UM, THEY'RE ALL, YOU KNOW, UM, A VERY GOOD SYNOPSIS OF THE HAPPENINGS IN THE YEAR AND PROVIDE A GOOD, UH, SUMMARIZED FORM OF THE FINANCIAL STATEMENTS THAT FOLLOW.

UH, SO THE SECOND SECTION IS THE FINANCIAL SECTION INCLUDES OUR AUDITOR'S REPORT AND ALSO THE SEPARATE FINANCIAL STATEMENT EXHIBITS.

UM, AFTER THAT, UM, WE HAVE THE STATISTICAL SECTION, WHICH HAS SOME TREND INFORMATION, UM, AND ALSO SOME, UH, OTHER HISTORICAL INFORMATION REPORTED, UM, IN THOSE INTO AND TABULAR FORMULA, UH, FORMAT.

AND THEN FINALLY WE HAVE THE COMPLIANCE SECTION WHERE WE HAVE OUR REPORT ON INTERNAL CONTROLS AND ALSO OUR REPORT ON COMPLIANCE OVER THE UNIFORM GUIDANCE, WHICH, UH, IS THE FEDERAL AWARDS, UH, AUDIT THAT WE DO.

SO FIRST AND FOREMOST, OUR, UM, OUR OPINION ON THE COUNTY FINANCIAL STATEMENTS, UM, IS THERE, IT IS AN UNMODIFIED OPINION, WHICH IS A, A CLEAN OPINION ON THE, AND THE SCHOOL BOARD FINANCIAL STATEMENTS.

UM, IT IS THE, THE, THE BEST OPINION THAT WE CAN OFFER, UH, IN OUR PROFESSION.

UM, AND ESSENTIALLY WHAT IT SAYS IS THAT, YOU KNOW, THAT THE FINANCIAL STATEMENTS ARE PRESENTED FAIRLY AND IN ACCORDANCE WITH, UM, GENERALLY ACCEPTED ACCOUNTING PRINCIPLES IN ALL MATERIAL RESPECTS.

AND THAT WAS ON PAGES 18 THROUGH 20 IT'S OUR OPINION OF THE FINANCIAL REPORT.

AND AS I MENTIONED PREVIOUSLY, WE ALSO HAVE A DISCLAIMER OF OPINION, A DISCLAIMER OF OPINION ON THE EDA FINANCIAL STATEMENTS.

UM, THE FINANCIAL STATEMENTS THAT ARE AUDITED BY ANOTHER AUDITOR PREVIOUSLY WERE AUDITED BY ANOTHER AUDITOR.

UM, W THEY ARE NOT, UH, PROVIDE, THEY WERE NOT PRESENTED WITH THE FINANCIAL STATEMENTS WERE OMITTED.

UM, AND THEREFORE WE DISCLAIM THE OPINION ON THOSE FINANCIAL STATEMENTS THAT, UM, ARE, ARE ADMITTED FROM, FROM THE COUNTY'S COMPREHENSIVE ANNUAL FINANCIAL RULE.

SO THE MANAGEMENT'S DISCUSSION AND ANALYSIS STARTS ON PAGE 20, ONE OF THE, THE FINANCIAL REPORT DOCUMENT.

UM, AND AGAIN, YOU KNOW, THIS IS A VERY NICE NARRATIVE OVERVIEW OF THE FINANCIAL REPORT.

UM, IT'S PREPARED BY THE COUNTY'S FINANCE DEPARTMENT, UM, AND ALSO THE COUNTY ADMINISTRATOR AND PROVIDES A NICE ANALYSIS AND SUMMARY OF THE FINANCIAL DATA PRESENTED, UH, THEREAFTER AND ALSO A COMPARISON TO THE PRIOR YEAR AS WELL.

UM, SO IF YOU'RE LOOKING FOR A CONCISE, SUMMARIZED, UM, EXPLANATION OF THE HAPPENINGS IN THE FISCAL YEAR, THAT WOULD BE THE PLACE TO GO.

EXHIBIT THREE IS THE FIRST, UH, FINANCIAL STATEMENT THAT I WOULD LIKE TO BRING YOUR ATTENTION TO.

UM, EXHIBIT THREE IS THE BALANCE SHEET.

UM, IT IS PREPARED ON THE MODIFIED ACCRUAL BASIS OF ACCOUNTING, WHICH IS THE SAME BASIS THAT THE COUNTY THAT YOU ALL DEVELOPED THE BUDGET ON.

UM, SO THIS IS VERY, VERY, UH, PERTINENT TO THE BUDGETARY PROCESS, UM, UH, COMBINED ENDING FUND BALANCE FOR ALL GOVERNMENTAL FUNDS AS OF JUNE 30,

[00:20:01]

2020 WAS 37.23 MILLION.

UH, THE GENERAL FUND FUND BALANCE WAS A TOTAL OF 15.91 MILLION, UM, UNASSIGNED FUND BALANCE OF, UH, FOR THE GOVERNMENTAL FUNDS WAS 12.71 MILLION.

YES.

MA'AM.

WHICH PAGE ARE YOU ON? OH, I'M SORRY.

PAGE 33 33.

THANK YOU.

YEP.

I WAS BACK IN THE WRONG PLACE.

MY APOLOGIES.

I WAS IN THAT OTHER SECTION.

OKAY.

THERE IT IS.

THERE WE ARE.

THANK YOU.

UM, SO YEAH, I'LL JUST GO OVER THAT AGAIN, THE, THE ENDING FUND BALANCES FOR ALL GOVERNMENTAL FUNDS IS 37.23 MILLION.

YOU CAN SEE THERE AT THE BOTTOM OF THE PAGE.

UH, THE VER THE FAR RIGHT COLUMN IS THE TOTAL COLUMN 37.23 MILLION, UM, GENERAL FUND BALANCE, WHICH IS THE FIRST COLUMN, UM, ON THE LEFT-HAND SIDE.

UM, THAT FUND BALANCE WAS A TOTAL OF 15.91 MILLION, UM, ON ASSIGNED FUND BALANCE, WHICH, UH, ALL THE UNASSIGNED WAS IN THE GENERAL FUND, UH, WAS 12.71 MILLION MILLION, EXCUSE ME, AND THEN ASSIGNED AND COMMITTED ACCOUNTED FOR APPROXIMATELY 33.1, 2 MILLION.

UM, AND BOTH OF THOSE CATEGORIES ARE AVAILABLE FOR APPROPRIATION AT THE DISCRETION OF THE BOARD, UM, AND THE, THE FUND BALANCE CATEGORIES THAT YOU SEE LISTED HERE, NON SPENDABLE, RESTRICTED, COMMITTED, AND UNASSIGNED.

UM, THOSE ARE REPORTED, UH, IN LINE AND, UH, WITH, UH, THE GASBY 54, UH, REPORTING OF, OF FUND BALANCE.

IT'S MOVING ON TO EXHIBIT FIVE ON PAGE 35.

UM, THIS FINANCIAL STATEMENT IS AGAIN, PREPARED ON THE MODIFIED ACCRUAL BASIS OF ACCOUNTING, UM, AND, UH, PRESENTS THE REVENUES AND EXPENDITURES AND OTHER FINANCING SOURCES AND USES, UH, FOR THE FISCAL YEAR.

UM, AS YOU CAN SEE HERE, UH, THE, THE COMBINED FUND BALANCES DECREASED BY ABOUT 4.8, $4 MILLION IN FY 2020, UM, OF THAT THE GENERAL FUND FUND BALANCE DECREASE WAS APPROXIMATELY $3 MILLION.

UM, AND THE FUND BALANCE DECREASE WAS IN LINE WITH A, WITH A BUDGETED FUND BALANCE USAGE, UM, FROM THE FYI 2020 BUDGET.

UM, AND, UH, THE, THE MOST SIGNIFICANT ITEMS THAT CONTRIBUTED TO THAT WERE A SIGNIFICANT CAPITAL PROJECTS, THE EXPENDITURES FOR, UH, THE RIVERMONT FIRE STATION, A S RHODES ELEMENTARY, UM, AND ALSO, UH, A SIGNIFICANT INCREASE IN LEGAL AND OTHER PROFESSIONAL FEES, UH, DURING THE FISCAL YEAR.

OKAY.

SO THIS IS A CHART, UM, KIND OF SHOWING, I KNOW IT'S A LITTLE SMALL FROM OVER HERE, BUT HOPEFULLY IT'S, IT'S A LITTLE BIT MORE CLEAR TO YOU ALL.

UM, THE, UH, IT'S THE CHART PRESENTING THE, THE TYPES OF FUND BALANCES FOR ALL FUNDS.

UM, UH, AS YOU CAN SEE HERE, THE GREEN COLOR REPRESENTS, UM, GENERAL FUND, OR EXCUSE ME, UNASSIGNED FUND BALANCE.

UM, THE PEACH OR ORANGE COLOR REPRESENTS COMMITTED FUND BALANCE.

AND THEN THE DARK BLUE COLOR REPRESENTS THE RESTRICTED FUND BALANCE.

AND THIS IS THE LAST FOUR YEARS.

SO AS YOU CAN SEE, THE, THE RESTRICTED FUND BALANCE, UM, IN 2019 WAS A FAIRLY SIGNIFICANT, AND THAT WAS MOSTLY, UM, DUE TO, UH, BOND PROCEEDS THAT WERE HELD AND RESTRICTED FOR USAGE, UM, UH, OF CERTAIN CAPITAL PROJECTS, UM, ASMR RHODES ELEMENTARY, FOR EXAMPLE.

UM, AND AS YOU CAN SEE THAT, THAT DARK BLUE COLOR, UM, VERY MUCH DEPLETED, UH, LOOKING TOWARDS 2020, UM, AND ESSENTIALLY THAT WAS THE DECREASE IN THE FUND BALANCE.

THAT WAS THE USE OF THE RESTRICTED FUND BALANCE FOR PURPOSES OF THE CAPITAL PROJECTS THAT WE MENTIONED PREVIOUSLY.

UM, SO I THINK THIS PROVIDES A GOOD GENERAL ASSESSMENT OF THE, THE CHANGE IN THE FUND BALANCE AND IN A, IN A, IN A GRAPHICAL FORMAT.

YEAH.

AND THIS IS JUST A TREND TABLE SHOWING UP YOUR GENERAL FUND EXPENDITURES, WHICH WE'VE EXCLUDED THE CAPITAL PROJECTS IN THIS CASE FOR PURPOSES OF ANALYSIS, UM, AGAINST THE FUND BALANCE.

AND SO, AS YOU CAN SEE, YOU KNOW, FUND BALANCE HAS FLUCTUATED, UM, UH, FROM, FROM YEAR TO YEAR, UH, TRENDED, UH, DECREASED A LITTLE BIT AS COMPARED FROM AND THE EXPENDITURES, UM, AN INCREASE IN THE GENERAL FUND AND JUST A FEW, UH, GENERAL FUNDS STATISTICS TO POINT OUT TO YOU.

UM, I THINK THESE ARE IMPORTANT FOR, UM, JUST HISTORICAL CONTEXT AND ALSO, UH, COMPLIANCE WITH INTERNAL POLICIES.

UM, SO THE FUND BALANCE AS A PERCENTAGE OF, OF GENERAL FUND EXPENDITURES, UM, IT'S MY UNDERSTANDING THAT THE, THE INTERNAL POLICY IS TO MAINTAIN A 15% APPROXIMATE

[00:25:01]

OF, UH, RATIO THERE.

AND AS YOU CAN SEE FOR THE LAST FEW YEARS, WE WERE EXCLUDING CAPITAL PROJECTS BECAUSE THE CAPITAL PROJECT EXPENDITURES CAN SKEW THE DATA A LITTLE BIT, UM, AND PRESENTING THIS INFORMATION.

UM, BUT AS YOU CAN SEE HERE, THE FYI THAT, THAT PERCENTAGE AS OF JUNE 30, 2020 WAS 20.45%, UM, WHICH IS A LITTLE IT'S SMALL DECREASE FROM THE, FROM THE PRIOR YEAR, BUT STILL ABOVE YOUR, YOUR 15% POLICY.

AND THEN JUST A REPRESENTATION OF THE GENERAL FUND REVENUES FOR THE CURRENT IN THE THREE PRIOR YEARS, A STEADY INCREASE FROM ONE YEAR TO THE NEXT.

SO THE NEXT SECTION TO LOOK AT, UM, IS THE STATISTICAL SECTION, AND THAT STARTS ON PAGES ONE 55 AND ONE, UH, AND IT GOES THROUGH PAGE ONE 75.

UM, THIS PROVIDES SOME NICE HISTORICAL TREND DATA, UM, OF, UH, DIFFERENT FINANCIAL CATEGORIES AND OTHER OPERATING INFORMATION.

UM, IT LOOKS AT TREND DATA FOR EXPENDITURES, REVENUE, PROPERTY TAX ASSESSMENTS, DEBT, UM, AND ALSO SO DEMOGRAPHIC INFORMATION AND DATA FOR POPULATION AND UNEMPLOYMENT RATE, JUST A, A COUPLE OF, OF CHARTS HERE, UH, REPRESENTING THE STATISTICAL INFORMATION THAT'S REPRESENTED IN THOSE TABLES.

UM, AS YOU CAN SEE THE, THE, THE TOP LINE THERE, THE DARK LINE IS THE EDUCATION EXPENDITURES.

AND AS YOU CAN SEE, THE EDUCATION EXPENDITURES HAVE INCREASED, UH, FROM ONE YEAR TO THE NEXT.

AND THAT'S VERY TYPICAL THAT, UH, SOMETHING THAT WE'VE DEFINITELY SEEN ACROSS THE BOARD, UM, LAST FEW YEARS, UM, UH, ULTIMATELY, YOU KNOW, THE OTHER EXPENDITURE TYPES, PUBLIC SAFETY IS THAT BLUE, UH, DEBT SERVICES, THE ORANGE COLOR UNDERNEATH THAT, UH, HEALTH AND WELFARE IS THE YELLOWISH TINTED COLOR.

AND AT THE VERY BOTTOM IS GENERAL GOVERNMENT ADMINISTRATION.

UM, BASICALLY ALL THOSE CATEGORIES HAVE, UH, STAYED THE SAME WITH A SLIGHT UPTICK IN GENERAL, UH, GOVERNMENT ADMINISTRATION IN 2020.

AND THAT WAS MOSTLY DUE TO THE, UH, THE, THE LEGAL AND OTHER PROFESSIONAL FEES INCURRED.

UM, DURING THE FISCAL YEAR, LOOKING AT THAT CHART, THE FLATTEST LINE, YOU SEE THERE IS HEALTH AND WELFARE.

SO AS THE COUNTY HAS GROWN FINANCIALLY AND POPULATION GLADYS EXPENDITURES, THEN FOR THE INVENTORIES INDIVIDUAL CITIZENS.

SO YOU'RE, IS THAT THE MIDDLE HILL? OKAY.

THAT'S WHAT I WANTED TO CLARIFY VERY FLAT.

AND IT GOES PLATINUM FOR FIVE YEARS PRIOR TO THAT AT ALL.

DR.

DALEY, HOW, UM, HOW DO WE COMPARE TO OUR NEIGHBORS IN THAT SENSE? HAVE WE EXAMINED HOW WE LOOK WITH OUR SURROUNDING COUNTIES WITH RESPECT TO HELP THEM WELFARE PER CAPITA WERE LOW? UM, BUT THEY HAVE ALL BEEN IN THE AREA.

A NUMBER OF THEM HAVE BEEN RELATIVELY FLAT.

I WAS GOING TO SAY I COMPARED SOME OF OUR SURROUNDING COUNTIES WITH RESPECT TO OTHER, UM, TOPICS, OTHER CATEGORIES.

AND WE, WE SEEM TO COMPARE TO THIS TRENDS ARE THE SAME.

UM, SO THAT'S WHY I'M ASKING THE QUESTION, TRIED TO FOCUS ON EDUCATION THE LAST FEW YEARS.

AND, UH, THE LINE THAT SURPRISES ME IS DEBT SERVICE.

HOW CAN THAT STAY FLAT FROM 2017 TO 2020? WELL, PART OF THAT IS YOUR REFUND.

EVERY TIME YOU REFUND, YOU'RE GOING OUT A LITTLE BIT, BUT YOU'RE LOWERING, LOWERING WHAT'S YOUR PAYMENT OUT IN CHEER.

OKAY.

AND THAT'S LEVELED IT OFF THAT MUCH.

WELL, YOU DIDN'T EVEN AGREE WITH THAT NUMBER SHOW.

THERE WAS A LOT OF OUR, WE NOW IN THAT, UH, 2016 RANGE THEN HAD WHEN RATES WERE PROBABLY ABOUT THREE AND A HALF PERCENT OR SO, AND THEN COME BACK DOWN SOME SINCE THEN.

SO WE REFUNDED RATHER THAN ANY NEW ISSUES OR A NEW FACILITY

[00:30:01]

SEVEN YEARS.

WELL, I WOULD'VE JUST THOUGHT THAT WITH THE RIVER, MY FIRE STATION, AT LEAST THAT WOULD'VE BUMPED IT, BUT IT DOESN'T, IT WAS ENOUGH OF A REFUND.

OKAY.

THANK YOU.

OKAY.

THERE'S A CHART IN HERE THAT SHOWS THOSE NUMBERS BACK IN THE BACK.

SEE THE DEBT PART BACK HERE.

YES, THAT'S, THAT'S A GOOD POINT.

DR.

DAILY DOES HAVE GOOD HISTORICAL INFORMATION.

IT'S ACTUALLY PRESENTED OVER 10 YEARS.

UM, AND SO THIS GIVES, YOU KNOW, A SIX YEAR OUTLOOK, UH, THE INFORMATION THAT'S PRESENTED AND THEN IN THE STATISTICAL TABLES IS OVER 10 YEARS.

SO THE NEXT, UH, GRAPH HERE, UM, IS A TREND ANALYSIS OF THE MAJOR REVENUE CATEGORIES.

UM, THE, THE TOP LINE THERE IS, AS YOU WOULD SUSPECT GENERAL PROPERTY TAXES, UM, INCREASED, UH, YOU KNOW, A STEADY INCREASE, UH, SINCE THE BEGINNING OF THIS, UH, THE DATE THAT, THAT THIS CHART BEGINS WITH 2015, UM, INTERGOVERNMENTAL REVENUES IS THE LIGHTER BLUE COLOR UNDERNEATH THAT THAT'S FEDERAL AND STATE REVENUES.

UM, THEY'VE MOSTLY STAYED FAIRLY FLAT FROM, UH, YOU KNOW, UH, A $10 MILLION VIEW, I GUESS.

UM, UH, AND THEN THE, THE ORANGE COLOR UNDER THAT IS THE OTHER LOCAL TAXES WITH SLIGHT UPTICK FROM, FROM ONE YEAR TO THE NEXT, UH, THE, THE GREEN UNDER THAT IS CHARGES FOR SERVICES, UH, RELATIVELY STABLE AND ALSO THE, AND FINALLY THE, THE BROWN COLOR AT THE VERY BOTTOM ARE THE PERMITS PRIVILEGED FEES AND REGULATORY LICENSES AGAIN, UM, FAIRLY STABLE, UH, LOOKING AT IT FROM THIS PERSPECTIVE.

OKAY.

UM, SO THIS, THIS TREND INFORMATION HERE, UM, SHOWS THE REAL PROPERTY ASSESSMENTS VERSUS THE OUTSTANDING DEBT.

UM, NOW THERE IS A, UH, IN THE CODE OF VIRGINIA, UH, CITIES AND TOWNS.

AND SO THIS IS NOT APPLICABLE TO THE COUNTY, BUT GENERALLY SPEAKING CITIES, CITIES AND TOWNS CANNOT ISSUE DEBT.

THAT IS AN EXCESS OF 10% OF THEIR REAL PROPERTY ASSESSMENTS.

UM, AND SO AS YOU CAN SEE HERE, UM, IF YOU'RE USING THAT AS A, AS JUST A GENERAL TYPE OF ASSESSMENT AND, AND BENCHMARK, I, UM, YOU CAN SEE HERE THAT AS OF 2020, UM, IT WAS ABOUT TWO AND A QUARTER PERCENT.

UM, AND SO YOU'RE WELL BELOW THAT RANGE, THAT AGAIN IS NOT APPLICABLE TO THIS COUNTY.

UM, BUT, UH, UH, AS WELL BELOW THAT, UH, LEVEL.

SO THE LAST SECTION OF THE COUNTY COMPREHENSIVE FINANCIAL REPORT IS THE COMPLIANCE SECTION, UH, STARTS ON PAGE ONE 76.

UM, IT GOES THROUGH PAGE, UH, WELL, THIS, IT GOES THROUGH PAGE ONE 79, UM, ALL THE WAY ACTUALLY THROUGH THE END OF THE REPORT, WHICH IS ONE 85, I BELIEVE.

UM, SO THE FIRST, UH, OPINION THAT WE HAVE IS OUR OPINION ON INTERNAL CONTROLS OVER FINANCIAL REPORTING.

AND THIS IS THE ONE IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS.

WE DID NOT HA NOTATE ANY SIGNIFICANT DEFICIENCIES.

HOWEVER, UH, THERE WERE TWO, UH, MATERIAL WEAKNESSES THAT WE NOTED, UM, AND THEY ARE DETAILED ON PAGE ONE 84 OF THE FINANCIAL REPORT DOCUMENT.

UM, THE FIRST ONE, UM, IS A MATERIAL WEAKNESS AS A RESULT OF MATERIAL AUDIT ADJUSTMENTS THAT, UH, WERE PROPOSED BY US, THE AUDITORS, UM, AND THE SECOND MATERIAL WEAKNESS WAS, UM, INADEQUATE YEAR END CONTROLS OVER CAPITAL ASSETS AND PROJECTS AND, UH, LONG-TERM OBLIGATIONS.

UM, AND ESSENTIALLY WHAT WE HAVE RECOGNIZED IS THE FACT THAT THERE WAS A SIGNIFICANT AMOUNT OF TURNOVER, UM, ESPECIALLY AT THE VERY END OF THE YEAR AND GOING INTO THE PERIOD WHERE WE WERE BEGINNING OUR AUDIT.

UM, WE CERTAINLY RECOGNIZE THAT FACT.

AND THE FACT OF THE MATTER IS WHEN WE, YOU KNOW, CAME TO, UH, START OUR AUDIT IN OCTOBER, THERE WAS NOT A FULL-TIME FINANCE DIRECTOR IN PLACE.

AND FOR THAT REASON, A LOT OF THE WORK THAT WAS PREVIOUSLY DONE BY, UM, THE FINANCE DEPARTMENT AND MOST, UM, INTEGRALLY, UH, BY A, UH, FINANCIAL CONSULTANT WHO WAS PREVIOUSLY A FINANCE DIRECTOR HERE, UM, UH, THAT WAS NOT DONE, UH, BECAUSE THAT POSITION WAS NOT IN PLACE, UH, WHEN WE CAME TO BEGIN OUR AUDIT AND THROUGHOUT MOST OF THE AUDIT PROCESS,

[00:35:01]

UM, NOW WHEN, WHEN, WHEN KEITH CAME ON BOARD AND ANDRE DID A GREAT JOB AS WELL IN THE, IN THE, IN THE CAPACITY THAT HE COULD, UM, BEING IN THE PART-TIME POSITION, NO, IT WAS DIFFICULT FOR HIM.

AND, AND I APPRECIATE HIS, HIS EFFORTS AND HIS HELP IN THAT PROCESS.

UM, WHEN KEITH CAME ON BOARD, THINGS STARTED ROLLING, UM, AND WE WERE ABLE TO GET A LOT OF THE INFORMATION THAT WAS STILL OUTSTANDING.

UH, ONCE KEITH CAME ON BOARD, UM, TO GET, TO GET THE INFORMATION FOR US.

UM, AND SO ESSENTIALLY THE ISSUES THAT WE HAD OVER, UH, THE MATERIAL WEAKNESSES, YOU KNOW, WE'VE HAD, UH, IN-DEPTH CONVERSATIONS WITH KEITH AND WE, WE FIRMLY BELIEVE THAT 2020 IS A ONE-OFF ISSUE THAT WILL NOT RE UH, YOU KNOW, RECUR IN THE FUTURE.

UM, UH, BUT UNFORTUNATELY IT WAS, IT WAS AN ISSUE FOR FISCAL YEAR 2020.

IS THAT THE FIRST TIME THAT THAT HAS BEEN A DEFICIENCY? YES, YES, IT HAS.

UM, AND MOSTLY, LIKE I SAID, BECAUSE PREVIOUSLY THERE WAS A, YOU KNOW, AN INTEGRAL PIECE OF THE AUDIT PROCESS WAS HAVING, UM, THE FINANCIAL CONSULTANT IN PLACE WHO DID A LOT OF THE WORK FOR GETTING EVERYTHING PREPARED AND ALSO HAVING A FULL-TIME FINANCE DIRECTOR, UM, TO, TO GET EVERYTHING PREPARED FOR US FOR, FOR THE AUDIT, UM, EACH YEAR, UM, WHICH AGAIN, THE, THE, THOSE POSITIONS WERE, WERE NOT IN PLACE, UM, IN OCTOBER, UM, AND INTO NOVEMBER WHEN WE WERE DOING THE ACTUAL AUDIT AND THEN THE OTHER, UH, AUDIT REPORT THAT WE HAVE THE LAST AUDIT REPORT THAT WE HAVE STARTS ON PAGE ONE 78, IT'S OUR REPORT ON THE UNIFORM GUIDANCE, WHICH IS OUR FEDERAL COMPLIANCE REPORT.

UM, WE SINGLE AUDITED, UH, THE FEDERAL PROGRAMS, UH, CHILD NUTRITION CLUSTER, AND ALSO THE SPECIAL EDUCATION CLUSTER.

UM, AND WE HAD NO INSTANCES OF NON-COMPLIANCE TO REPORT OVER OUR AUDIT OF THOSE TWO PROGRAMS. DO YOU HAVE ANY INFORMATION AROUND BOND RATING? I DO NOT HAVE ANY INFORMATION ON YOUR BOND RATE.

NO, SIR.

UM, THERE, UH, IT'S MY UNDERSTANDING THAT, THAT, THAT THE BOND RATING IS STILL AS IT WAS IN PRIOR YEARS.

UM, BUT I BELIEVE THAT WOULD BE A QUESTION.

YES, IT IS WHAT IT IS RIGHT HERE AT THIS POINT.

OUR TOTAL COUNTY DEBT IS $147,968,288.

SO IF YOU LOOK UP, THERE'S ACTUALLY A NOTE THAT, UM, IS A LITTLE MORE HELPFUL THAN THAT STATISTICAL TABLE.

IF YOU LOOK AT NOTE SEVEN, STARTING ON PAGE 58, THIS IS A, UM, UH, SCHEDULE AND TABLE OF THE OUTSTANDING OBLIGATION LONG-TERM OBLIGATIONS OF THE COUNTY.

UM, AS YOU CAN SEE GENERAL OBLIGATION BONDS, APPROXIMATELY 44 MILLION LEAST REVENUE BONDS, 84, 8 MILLION, UM, REVENUE, BONDS, AND, AND, AND, AND THEY'RE BELOW NOTES PAYABLE, LINES OF CREDIT, UH, OR LINE OF CREDIT.

AND THEN, UM, THEN, AND SOME OF THE INFORMATION THAT'S REPORTED HERE, FOR EXAMPLE, NET OPEB, LIABILITIES, AND NET PENSION LIABILITIES, UM, THOSE ARE ACTUARILY DETERMINED.

UM, AND SO EACH YEAR, UM, UH, THE, THE VRS, UH, HIRES AN ACTUARY TO, UH, TO, UH, COME UP WITH THE FIGURES TO REPORT FOR THE NET PENSION LIABILITY OF EACH LOCALITY, UM, THROUGHOUT THE COMMONWEALTH WHO PARTICIPATE IN THE V IN THE VIRGINIA RETIREMENT SYSTEM, THEN THERE'S ALSO A STANDALONE PLAN THAT THE COUNTY HAS FOR RETIREE HEALTH INSURANCE, UM, WHICH IS CONSIDERED TO BE AN OTHER POST-EMPLOYMENT BENEFIT LIABILITY.

UM, AND THE COUNTY CONTRACTS WITH, UH, AN EXTERNAL ACTUARY TO PROVIDE FIGURES ON, UH, ON THAT LIABILITY.

WHY THE TOTAL OF THE ONE 52 OR ONE 55 THAT WAS GOING TO BE MY QUESTION, BECAUSE READING THIS, THIS IS 155 MILLION THAT'S THAT'S RIGHT.

AND IT'S BECAUSE THE TABLE ON ONE 68 DOES NOT INCLUDE ANY OF THE, UH,

[00:40:01]

LIKE OPEB LIABILITIES OR PENSION LIABILITIES THAT I WAS MENTIONING PREVIOUSLY AND ALSO CAP COMPENSATED ABSENCES.

SO THEN OUR TRUE DEBT IS 155 PLUS MILLION.

YES, THAT'S ARE THE LONG-TERM OBLIGATIONS OF THE COUNTY AS OF JUNE 30, 20, 20.

NOW, ONE THING I DO WANT TO BRING TO YOUR ATTENTION IS THAT, UM, YOU KNOW, OVER 5 MILLION OF THAT AMOUNT IS FOR YOUR NET PENSION AND OPEB LIABILITIES, AND THAT FLUCTUATES PRETTY SIGNIFICANTLY FROM ONE YEAR TO THE NEXT, AND IT'S VERY MUCH BASED ON MARKET CONDITIONS.

UM, AND SO, AND, AND JUST TO PROVIDE YOU WITH, UM, KIND OF SOMETHING TO LOOK AT AS IT RELATES TO THAT, IF YOU LOOK IN NOTE, NOTE NINE, UM, AND LOOK ON PAGE 77, EXCUSE ME, THAT'S THE, THAT'S THE SCHOOL BOARD.

I APOLOGIZE ON PAGE 71, THE VERY BOTTOM IT'S A SENSITIVITY ANALYSIS OF THE NET PENSION LIABILITY.

SO FOR FISCAL YEAR 2020, THE DISCOUNT RATE THAT THE ACTUARIES USED WAS 6.75%, AND THAT PRODUCED A $4.3 MILLION NET PENSION LIABILITY.

HOWEVER, IF YOU TAKE THAT PERCENTAGE, THAT DISCOUNT RATE AND YOU INCREASE IT BY ONE PERCENTAGE POINT TO 7.75, ALL OF A SUDDEN THE COUNTY HAS AN ASSET, AN ASSET OF $877,000.

IF YOU DECREASE THAT PERCENTAGE POINT BY ONE PERCENTAGE POINT, UM, THE, THE LIABILITY MORE THAN DOUBLES.

UM, AND SO IT REALLY IS, IT'S A VERY FINICKY NUMBER, I GUESS, UM, THAT IS SO FLUID.

UM, IT'S BECAUSE IT'S SUBJECT TO MARKET CONDITIONS.

UM, AND SO BECAUSE THE, YOU KNOW, THE, THE, THE VIRGINIA RETIREMENT SYSTEM, UM, INVEST IN A POT OF, UH, YOU KNOW, FUNDS ON THE STATE LEVEL AND THEY INVEST IT IN CERTAIN, UM, UH, INSTRUMENTS THAT ARE SUBJECT TO VOLATILITY AND FLUCTUATION FROM ONE YEAR TO THE NEXT IT'S.

I JUST DON'T UNDERSTAND HOW WE CAN GO 1% INCREASE AND, AND DROP 4 MILLION, OR ACTUALLY 5 MILLION, BECAUSE YOU'RE, YOU'RE THE TWO NUMBERS TOGETHER WOULD BE OVER $5 MILLION IN A DIFFERENTIAL.

THAT'S INTERESTING.

AND SO ESSENTIALLY THE, THAT NET LIABILITY IS STRUCTURED WHERE THERE IS A TOTAL LIABILITY, WHICH IS YOUR, AND YOU CAN ACTUALLY SEE IT ON THE PAGE, RIGHT BEFORE THAT IT'S PAGE 70, UM, YOUR TOTAL PENSION LIABILITY, UH, $47.975 MILLION.

AND THEN THERE'S A PLAN FIDUCIARY NET POSITION, WHICH THOSE ARE YOUR ASSETS THAT ARE IN PLACE TO COVER THE NET PENSION LIFE, OR THE, EXCUSE ME, THE TOTAL PENSION LIABILITY, BRINGING YOUR NET PENSION LIABILITY TO $4.3 MILLION.

AND THAT DISCOUNT RATE BASICALLY CHANGES THAT FIDUCIARY NET POSITION, YOU KNOW, IT CHANGES YOUR NET INVESTMENT INCOME, UM, UH, BECAUSE OF HOW THE MARKET, YOU KNOW, HAS, UH, REACTED IN THE PAST YEAR.

UM, AND ONE OTHER IMPORTANT THING TO NOTE, AND I HOPE IT DOESN'T CONFUSE THE MATTER MORE, BUT THE ACTUARIES DON'T GET THE INFORMATION FOR REPORTING IN REAL TIME.

THE INFORMATION THAT YOU'RE SEEING HERE IS REPORTED A YEAR BEHIND.

OKAY.

AND SO, AS YOU CAN SEE HERE, THE BALANCES THAT ARE REPORTED ARE BALANCES AT JUNE 30, 2019, BUT THEY'RE FOR THE REPORTING PERIOD, JUNE 30, 2020.

AND THAT IS STANDARD THAT STANDARD ACROSS ALL PLANS IN THE VIRGINIA RETIREMENT SYSTEM.

WELL, THAT'S CLEAR AS MUD.

YES, IT IS.

DID YOU GO AND HELP ME FOR JUST A SECOND, BUT IF EVERYBODY WAS GOING TO RETIRE AND WE HAD NO INVESTMENT, NO RESERVE OR ANYTHING, WE WOULD OWN ALMOST 70, ALMOST $48 MILLION TO OUR EMPLOYEES.

NO.

AND THE ONLY REASON I SAY THAT IS BECAUSE THERE IS FIDUCIARY NET POSITION IN PLACE.

THERE ARE ASSETS ON THE STATE LEVEL, CORRECT? THAT'S CORRECT.

YES.

IF THERE WERE NO ASSETS.

YES.

BECAUSE WE DO HAVE THE ASSETS IN THE AIR AND WE CONTRIBUTE, YOU SEE THE CONTRIBUTIONS BY THE EMPLOYER AND THE EMPLOYEE ARE GOING TO BE SIMILAR RATES HERE, ALONG WITH THE INCOME.

WE HAVE ESTIMATED 43 SEVEN IN ASSETS AREA IN OUR ACCOUNT, IF YOU WILL.

AND SO IF WE, IF IT STAYS IN THERE, OR WE WIDOW 4 MILLION, 300,000 NOW NEXT WEEK, THE MARKET, AND EVERYTHING'S GOING TO CHANGE MAYBE, YEAH.

MAYBE NOW IT'S BEEN CHECKED.

AND SO WHEN IT CHANGES, THAT'S GOING TO CHANGE THE NUMBER, WHAT WE KNOW, AND THAT'S WHAT THAT 1% FLEXIBILITY.

IF YOU

[00:45:01]

WERE GOING TO HAVE TO PAY THIS AT ONE TIME, IT WOULD BE, YOU'D GO BACK TO THIS WHERE THE DAY OVER TIME USING THE, OR THE, FOR ALL ME, OR IT'S GOING TO CHANGE, AND WE'RE GOING TO CONTINUE TO CONTRIBUTE EACH YEAR.

CORRECT.

AND AS LONG AS WE'RE ARE KIND OF LIKE SOCIAL SECURITY MANAGER, WHERE YOUR WORKERS SUPPORT THE RETIREES, AS LONG AS YOU BALANCE THAT AND DON'T USE ANY PLACE ELSE.

YOU'RE OKAY.

YOU DO HAVE A BIG LIABILITY AS LONG AS EVERYBODY'S COUNTRY WORKING CONTINUES.

RIGHT? SO THESE ARE FUNDED PENSIONS.

DR.

DAILY'S IS UNFUNDED ONES.

IF YOU COULD TALK CLOSER TO YOUR MIC, THOSE THAT ARE STREAMING CAN HEAR YOU VERY WELL.

I'M GETTING TEXTS THAT WE CAN'T HEAR YOU.

SO, UM, YEAH, AND, AND THIS IS CERTAINLY NEW TO, UM, A LOT OF FOLKS.

AND, UM, THE REASON BEING IS THAT IT WAS NOT REQUIRED TO BE REPORTED UNTIL FIVE YEARS AGO.

UM, F Y 16 WAS THE FIRST YEAR THAT IT WAS REQUIRED TO BE REPORTED IN THIS WAY.

UM, AND SO PRIOR TO THAT, THE LOCALITY LOCAL GOVERNMENT FINANCIAL STATEMENTS DID NOT INCLUDE, UM, YOU KNOW, THIS SIGNIFICANT OF A NOTE, DISCLOSURE AND SIGNIFICANT OF, UH, UH, UH, FINANCIAL REPORTING REQUIREMENTS, UM, ON THAT LEVEL.

AND IT WASN'T CONSIDERED A TECHNICAL LIABILITY OF THE LOCAL GOVERNMENTS BEFORE THEN.

UM, BUT TECHNICALLY IT SHOULD BE, AND THAT'S WHAT THE, THE GASBY DID IN THAT YEAR TO CHANGE THAT.

THANK YOU.

YOU'RE WELCOME.

THAT'S THE PRESENTATION THAT I HAVE FOR YOU ALL.

UM, I AM, I MOST CERTAINLY WELCOME YOUR QUESTIONS AND ANY OTHER COMMENTS THAT YOU HAVE? WELL, I'M HERE, I AM READING HERE UNDER, UM, YOUR FINANCIAL FINDINGS AND IT SAYS UNDER CAUSE THE COUNTY FAIL TO IDENTIFY AND RECORD ALL YEAR END ACCOUNTING ADJUSTMENTS NECESSARY TO PREPARE IN.

SO WHAT ADJUSTMENTS ARE YOU TALKING ABOUT? I UNDERSTAND THAT YOU SAID, YOU THOUGHT PART OF IT WAS NOT HAVING A DIRECTOR, BUT IF WERE ADJUSTMENTS, WHAT WERE THOSE ADJUSTMENT? RIGHT.

SO IF YOU LOOK AT THE VERY FIRST LETTER THAT WE WENT OVER, IT'S, THERE'S THE, THERE'S A SECOND PAGE THERE.

UM, FOR CORRECTED AND UNCORRECTED MISSTATEMENTS, I HAVE LISTED HERE IN SUMMARY FORM, THE, THE ADJUSTMENTS THAT WE CONSIDER TO BE MATERIAL IN NATURE THAT WE HAD TO PROPOSE AS PART OF THE AUDIT.

UM, BUT MOSTLY, UH, THE LARGEST ADJUSTMENT WE HAD TO MAKE, EXCUSE ME, WAS, UM, RELATED TO THE BOND ISSUANCE, UH, THE, THE ADVANCED REFUNDING, UM, 2019 C ADVANCED REFUNDING.

UM, WE HAD TO RECORD, UM, THE TRANSACTIONS RELATED TO THAT.

UM, AND ALSO RELATED TO THAT IS THE INFORMATION REPORTED IN THE SNAP ACCOUNTS.

UM, THESE ARE ACCOUNTS THAT ARE, UH, THAT HOLD THE BOND PROCEEDS.

UM, AND THESE, BECAUSE OF THE TURNOVER THAT WAS HAPPENING IN THE FINANCE OFFICE, UM, THESE STATEMENTS WERE NOT BEING FORWARDED TO THE TREASURER'S OFFICE AND THEREFORE THE TRANSACTIONS THAT FLOAT THROUGH THESE STATEMENTS WERE NOT BEING RECORDED.

AND SO WE HAD TO PROPOSE JOURNAL ENTRIES TO RECORD THAT INFORMATION.

UM, ADDITIONALLY, UH, AN ENTRY THAT, UM, IN THE PAST THE FINANCE DEPARTMENT HAD PROVIDED EVERY SINGLE YEAR WAS THE TAXES RECEIVABLE AND RELATED DEFERRED UNAVAILABLE REVENUE.

UM, THAT JOURNAL ENTRY WAS NOT PROVIDED THIS YEAR FOR FY 20.

AND WE HAD TO, TO PROPOSE THAT ENTRY AS WELL.

AND THEN FINALLY THERE WAS AN ADDITIONAL ACCOUNTS PAYABLE THAT WAS MATERIAL THAT WE HAD TO PICK UP AS IT RELATES TO THE, UM, S ROADS, UH, CONSTRUCTION PROJECT.

SO DR.

DAILY, JUST FOR CLARIFICATION, THIS AUDIT DOESN'T INCLUDE THE EDA, WHICH MEANS IT DOESN'T INCLUDE THE EDA DAD EITHER DOES NOT INCLUDE EDA DEBT.

IT INCLUDES THE EXPENDITURES BY THE COUNTY FOR THE EDA ON B, BUT IT DOES NOT INCLUDE THE EDA DEBT SEPARATE.

SO THAT MEANS THAT THE LIABILITIES ARE HIGHER FOR THE COUNTY, BECAUSE WE'RE BASICALLY ASSUMING

[00:50:01]

THE RESPONSIBILITY FOR THE DEBT AT THIS POINT.

THAT'S CORRECT.

SO WHEN, WHEN WE DO AN AUDIT LIKE THIS, I GUESS MY, MY THOUGHT ON WHAT THIS AUDIT WAS WAS THAT YOU LOOKED AT ALL THE BOOKS AND MADE SURE THAT ALL THE COLUMNS MATCHED UP ALL THE PENNIES WERE WHERE THEY WERE SUPPOSED TO BE, AND NOT NECESSARILY WHAT YOU DO, CORRECT, OR THAT'S CERTAINLY WHAT WE DO, UH, FROM A MATERIAL VANTAGE POINT MATERIAL ASPECT, UM, UH, YOU KNOW, KIND OF WHAT I WAS EXPLAINING THE PROCESS EARLIER, THAT'S, THAT'S A VERY KIND OF, UM, A SIGNIFICANT PIECE OF OUR AUDIT, BUT VERY, UM, UH, IT'S, IT'S ONLY ONE OF THE ITEMS THAT WE DO.

WE DO NUMEROUS, YOU KNOW, PROCEDURES OVER THE FINANCIAL STATEMENTS, UM, AND ESSENTIALLY, YOU KNOW, ON THE BALANCE SHEET, UM, WE, WE RECONCILE ALMOST EVERY, EVERY, UH, ACCOUNT THAT'S REPORTED ON THE BALANCE SHEET.

WE RECONCILE ALL CASH ACCOUNTS.

WE MAKE SURE THOSE ARE RECONCILED, LOOK AT THE BANK RECONCILIATIONS.

UM, OBVIOUSLY WE PUT TOGETHER, YOU KNOW, UH, WE RECONCILE THE CAPITAL PROJECTS, THE, THE, UH, LONG-TERM OBLIGATIONS, THE DEBT SERVICE OBLIGATIONS OF THE COUNTY, UM, THE LIABILITIES, OTHER LIABILITIES, LIKE ACCOUNTS PAYABLE, UM, ON AVAILABLE REVENUE, PROPERTY TAXES.

UM, WE DO A NUMBER OF DIFFERENT PROCEDURES OVER THE FINANCIAL STATEMENTS.

UM, AND WE ALSO DO, UH, COMPLIANCE PROCEDURES.

WE'RE REQUIRED TO DO CERTAIN PROCEDURES, UM, FOR STATE COMPLIANCE, UH, COMPLIANCE WITH THE CODE OF VIRGINIA AND ALSO FOR FEDERAL COMPLIANCE, UH, WITH, UH, AN ACCORDANCE WITH THE UNIFORM GUIDANCE.

BUT AS FAR AS LOOKING AT WHAT WE BUDGETED FOR INDIVIDUAL DEPARTMENTS AND SEEING IF THEY STAYED WITHIN THEIR BUDGET, THAT'S NOT NECESSARILY WHAT YOU LOOK AT AND IF THERE WAS OVER EXPENDITURES WELL, WELL, WE CERTAINLY LOOK AT THAT IN A HOLISTIC, YOU KNOW, IN A HOLISTIC VIEW.

UM, YOU KNOW, WE, WE CERTAIN CERTAINLY WILL QUESTION THE FACT THAT, YOU KNOW, HEY, THIS DEPARTMENT, UM, EXCEEDED THEIR, YOU KNOW, A LOT OF EXPENDITURES.

UH, WHY IS THAT? IS THERE SOMETHING THAT, THAT HAPPENED, UM, FOR PURPOSES OF, YOU KNOW, MAKING SURE THAT THE FINANCIAL STATEMENTS ARE REPORTED IN A MATERIALLY CORRECT WAY.

UM, AND WE ALSO ACTUALLY DISCLOSE THE NOTE, UM, FOR OUR FINDINGS QUOTE UNQUOTE, UM, AS IT RELATES TO THAT ANALYSIS.

AND THAT IS NOTE, LET'S SEE, I BELIEVE IT'S NOTE ONE ON PAGE 47.

NO, THE, THE, THE MONETARY VALUE IS NOT THERE.

IT CAN BE FOUND ON SCHEDULE TWO OR EXHIBIT 12.

UM, WE LIST THE DEPARTMENTS AND THE GENERAL FUND THAT WE SAW TO HAVE EXPENDITURES AND ACCESS OF APPROPRIATIONS.

HMM.

SO HOW DO WE OVERRUN THAT MANY DEPARTMENTS? HOW, I MEAN, WE DON'T BUDGET THAT THEN WE HAD TO BE RUNNING OVER WHEN WE, THE TOTAL BUDGET, NOT NECESSARILY THE TOTAL, NOT NECESSARILY THE TOTAL BUDGET MA'AM, BUT HE, WHAT HE'S SAYING IS THAT THESE INDIVIDUAL DEPARTMENTS OR CATEGORIES SUCH AS DEBT SERVICE INTEREST WAS HIGHER THAN WHAT WAS BUDGETED.

THAT DOESN'T MEAN THAT THE, IF YOU LOOK AT THE ENTIRE BUDGET SCHEDULE TOO, YOU CAN LOOK AT SCHEDULE TWO.

YOU CAN ALSO LOOK AT, UH, EXHIBIT 12, EXHIBIT 12 HAS BOTH REVENUES AND EXPENDITURES, AND THAT'S THAT'S PAGE ONE OH FIVE.

THANK YOU.

SO YOU CAN SEE THERE, THE LISTING OF THE DEPARTMENT CATEGORIES, UM, BY BUDGET AND ACTUAL, AND ALSO THE VARIANCE OF THE ACTUAL TO BUDGET.

SO DO WE HAVE A LINE ITEM WITHOUT HAVING TO GO THROUGH AND WHERE IT SAYS, WHERE WE STARTED AND WELL TAKE THE BOARD OF SUPERVISORS? YEAH.

YEP.

YEP.

AND IF YOU LOOK AT THAT LINE, THE ORIGINAL BUDGET WAS 237,000,

[00:55:02]

AND THAT WAS REVISED TO 1 MILLION, 300,000 AND THE ACTUAL EXPENDITURES WERE 2 MILLION, 400,000.

SO THE DEFICIT FOR THE BOARD OF SUPERVISORS WAS 1,039,000.

AND THAT'S HOW YOU READ THESE ACROSS RIGHT.

UM, COME DOWN THE ELECTORAL BOARD, IT WAS THREE OH SEVEN AND IT WAS AMENDED TO THREE 14 AND THEY SPENT TWO 62.

SO THE NET WAS A POSITIVE 52 BACK OVER ON THE NEXT PAGE.

IF I CAN FIND IT HERE, UH, I'M LOOKING FOR THE GENERAL FUND TOTAL.

SO IT'S WHAT I'M LOOKING FOR.

THAT WOULD BE, UM, ON PAGE ONE OH SEVEN, BECAUSE THE EXHIBIT 12 IS JUST THE GENERAL FUND.

YEP.

SO YOUR TOTAL EXPENDITURES, THEIR ORIGINAL BUDGET, 79.849 MILLION AMENDED BUDGET, 86.55 AND ACTUAL EXPENDITURES WAS 84 MILLION.

SO THE ENTIRE GENERAL FUND WAS 2 MILLION, 500,000 BELOW THE BUDGET, BUT THESE INDIVIDUAL DEPARTMENTS W AS INDICATED EARLIER, THEY ARE ON THE LIST, THEY WERE OLD IN CASE YOU'RE, YOU'RE WONDERING THE, THE, THE LEGAL FEES AND PROFESSIONAL FEES WERE BUDGETED IN THE BOARD OF SUPERVISORS DEPARTMENT.

AND SO THAT'S THE, THE REASON FOR THE SIGNIFICANT OVERAGE THERE.

AND THAT'S YOUR MOST SIGNIFICANT OVERTURE OF THE OTHERS ARE THEY'RE IMPORTANT, BUT THEY'RE SIGNIFICANTLY LESS SAY THAT AGAIN.

UM, THE, THE LEGAL FEES AND THE OTHER PROFESSIONAL FEES THROUGHOUT THE YEAR WERE BUDGETED IN THE BOARD OF SUPERVISORS DEPARTMENT FOR .

AND THAT'S WHY THERE WAS THIS SIGNIFICANT OVERAGE, UM, FOR THE FISCAL YEAR.

SO DR.

DALEY, THE DEBT SERVICE IS $953,000.

UM, IT APPEARS TO HAVE BEEN ALMOST DONE LOOKING MA'AM I'M SORRY.

PAGE ONE OH SEVEN.

OKAY.

UM, THIS IS UNDER GENERAL FUND THAT SAYS TOTAL DEBT SERVICE PRINCIPAL, UH, LET'S SEE DEBT SERVICE, AND THEN INTEREST.

AND THEN TOTAL DEBT SERVICE IS AN IS $953,000 MORE THAN, THAN THE ORIGINALLY BUDGETED.

YES.

AND THAT'S, THAT'S IN THE EDA.

NO, NO DEBT SERVICE THAT SERVICE.

OKAY.

SO THIS WOULD NOT BE, AND WE COULD GO BACK TO LOOK EXACTLY WHAT IT IS, BUT IT WOULD NOT BE THE DA.

IT IS DEBT SERVICE THAT WE PAID IN.

WE PAID A 900,000 MORE IN INTEREST THEN WAS BUDGETED THERE.

WHY WOULD THAT BE? THAT'S ALMOST A MILLION DOLLARS.

YES, IT IS.

YOU REFINANCED IT OFF IN YOUR COMPETING INTERESTS.

IT'S CALLED THE PAY DOWN.

SO WHY DID YOU GOT THE BENEFIT OF A LOWER INTEREST RATE? AND THEN DAVENPORT WAS SHOWING YOU THAT YOU'RE GOING TO TURN ON THE MARKET AND SEE IF THERE'S A SAVINGS OF X FACTOR.

WE MAY HAVE, WE HAVE INTEREST TO DO THE PAY DOWN ON YOU, FINANCING PRINCIPAL PAYMENTS.

SO THE PRINCIPLE, IF YOU LOOK HERE, THE PRINCIPAL IN THE FUTURE WENT DOWN, BUT INTEREST HAVING PAID.

SO THAT'S WHY YOUR NEGATIVE PLAN ON AN INTEREST PAYMENT WHEN BUILT A BUDGET, NOT KNOWING YOU WERE GOING TO GO, YOU DIDN'T KNOW YOU'RE GOING TO GO TO MARKET AND YOU FIND THAT THAT'S WHY THAT PURCHASED IT, BUT LONG-TERM, WE HAVE THE COST BENEFIT ANALYSIS THAT DAVENPORT DOES THAT SHOWS YOU IT'S STILL A SOUND REFINANCING.

IT HITS THAT 6% NUMBER.

OKAY.

AND WHAT WE'VE, WHAT WE FAILED TO DO IS TO AMEND, HAVE, HAVE THE BOARD, AMEND THE BUDGET, TO SHOW THE HIGHER INTEREST PAYMENT SHORT TERM.

AND THAT'S WHAT ALL OF THE THINGS IN THE FINDINGS PINE MARIE CIRCLE AROUND OUR, THAT WE HAD BONAFIDE EXPENDITURES, BUT WE DIDN'T HAVE THEM LISTED AND APPROVED ON THE BOARD APPROPRIATION.

SO WE NEED TO MOVE AS WE MOVE FORWARD, WE NEED TO AMEND THAT PROCESS.

THAT'S WHAT WE'RE DOING.

YES MA'AM.

OKAY.

AND, AND I GUESS THAT'S WHAT I WAS GETTING TO IS THAT I DON'T KNOW ABOUT ANYBODY ELSE, BUT I WASN'T AWARE THAT WE HAD RAN OVER IN SO MANY CATEGORIES.

AND WHEN YOU, YOU KNOW, THROUGH THE APPROPRIATIONS, IT WAS NOT MADE CLEAR THAT

[01:00:01]

WE HAD DONE THAT.

AND THAT'S WHAT, AND I KNOW YOU PLAN ON FIXING THAT, AND THIS WON'T BE HAPPENING IN THE FUTURE, BUT, UM, YEAH, THIS IS WHAT WE'RE WORKING ON.

WE'LL ADDRESS THAT FOR YOU, IS THAT PART OF THE SOFTWARE REPORTING ISSUE WHERE YOU CAN'T SEE REAL TIME, WHAT YOU'RE ACTUALLY WHAT YOUR ACTUAL BUDGET IS.

SO YOU'RE KIND OF SHOOTING IN THE DARK AS TO WHERE YOU ARE.

THAT'S WE SHOULD BE ABLE TO GENERATE MONTHLY REPORTS THAT COMPARE BUDGET TO ACTUAL, REGARDLESS OF THE GENERAL MANAGER, YOU'RE GOING TO HAVE TO GO TO THE MIC, JUST IN JOURNAL ENTRIES AND MADE THAT MIKE, WE CAN'T WAIT UNTIL THE FISCAL YEAR TO START RUNNING A BUDGET, ACTUAL REPORT TO GIVE YOU MONTHLY, WHICH WILL SHOW WHERE WE ARE.

OKAY.

AS LONG AS WE'RE RECTIFYING THE SITUATION, THEN YEAH.

IF YOU LOOK AT THIS CHART THAT YOU GET EACH MONTH, THAT SHOWS YOU WHERE THE DEPARTMENT, EACH DEPARTMENT IS AND PERCENTAGE WISE AND COMPARES IT TO THE TWO PRIOR YEARS, THAT DOESN'T TELL YOU THE BUDGET PER SE, BUT IT DOES LET YOU SEE WHERE YOU ARE GOING IN THAT DEPARTMENT.

AND THE NEXT STEP IN THAT IS TO HAVE A BUDGET TO ACTUAL EACH MONTH.

IT SAYS IT IS THE SEVENTH MONTH.

WE ARE AT 60% OF EXPENDITURES AS AN EXAMPLE.

OKAY.

AND JUST A SIDE NOTE AS IT RELATES TO THE 20 VARIANCES OR OVERAGES, UM, YOU KNOW, A LOT OF TIMES THESE, THESE, UH, NOT A LOT OF TIMES THESE FIGURES, THE ACTUAL FIGURES INCLUDE YEAR END ACCRUALS, UM, WHICH USUALLY DON'T GET FINALIZED UNTIL THE END OF AUGUST INTO SEPTEMBER.

UM, AND SO I THINK I HATE TO HARP ON THIS ISSUE, BUT I THINK THE FACT THAT THERE WAS NO, YOU KNOW, FINANCE DIRECTOR IN PLACE OR ANYBODY IN PLACE TO BE ABLE TO PRESENT THIS TO THE BOARD AFTER A LOT OF THE ACCRUALS CAME INTO PLAY, UM, DEFINITELY DID NOT, YOU KNOW, HELP THE PICTURE, I GUESS.

UM, BUT OBVIOUSLY THAT PROBABLY DOESN'T EXPLAIN THE ENTIRE $1 MILLION DISCREPANCY, UM, UH, FOR THE LEGAL FEES.

BUT YEAH, JUST, JUST WANTING TO GIVE THAT SIDE NOTE, IF I MAY, MIKE AND I HAVE MET WITH DR.

DELI AND WE HAVE NO ISSUES WITH HIS FINDINGS, WE THINK THEY'RE ACCURATE.

WE ALSO HAVE BEEN TALKING ABOUT HOW TO IMPLEMENT AN ENCUMBRANCE SYSTEM, WHICH WILL ALSO GET US BETTER YEAR-END NUMBERS, BECAUSE IF WE HAVE AN ENCUMBRANCE SYSTEM, WE KNOW WHAT OUR LIABILITY IS OR SHOULD KNOW BY JUNE 30TH, NOT WAIT FOR PURCHASE ORDERS TO COME IN IN THAT 90 DAY WINDOW FROM JUNE 30TH OF SEPTEMBER 30TH.

UM, THEREFORE WE BELIEVE BETWEEN THE MONTHLY REPORTS OF BUDGET TO ACTUAL IMPLEMENTING AND CONFERENCES AND TIMELY RECONCILIATIONS, YOU'LL HAVE A BETTER PICTURE OF A ROADMAP RIGHT NOW.

YOU'RE, YOU'RE FLYING BLIND.

WE'RE ALL FLYING BLIND UNTIL MARCH.

SO HOPEFULLY WITH THE MONTHLY REPORTS WE GIVE YOU, WE KNOW THAT YOU'LL HAVE BETTER VISION ON YOUR DASHBOARD, ON HOW TO NAVIGATE THE END OF THE YEAR.

OUR GOAL IS IF WE GO OVER, WE'RE GOING TO COME BACK WITH A TRANSFER, RIGHT? SO WE HAVE TO FIND, WE HAVE TO COME TO YOU AND SAY, LOOK, WE'RE GOING TO BE OVER IN THIS LINE.

AND HERE'S WHERE WE'RE GOING TO TRANSFER THE MONEY.

SO WE'RE NOT OVER WHAT MIKE MENTIONED IS THE END OF THE YEAR ACCRUALS OF WHAT WE HAVE TO WHAT'S THE VULNERABILITY.

THERE MAY BE SOMETHING HE ACCRUES THAT WE DON'T TIME IN JUNE ON A CASH BASIS THAT COULD MAKE AN ACCOUNT GO OVER AND WE'LL EXPLAIN THAT TO YOU, WHY IT WENT OVER.

SO THERE WILL BE THE POTENTIAL FOR SOME MINOR OVERAGES, IF YOU WILL, IN A HUNDRED MILLION DOLLAR BUDGET, THAT THE FACT THAT SOMEBODY IS 11,000 OVER IS IMPORTANT, BUT IT'S NOT NEARLY AS SIGNIFICANT AS BEING A MILLION OVER, RIGHT.

AND THE MILLION OVER WILL NOT HAPPEN.

THERE MAY AT THE BUTTON, WE'LL PROBABLY BE TALKING ABOUT CLOSING OUT OUR ENCUMBRANCES EARLY JUNE, AND THERE WON'T BE ANY THE LAST WEEK OF JUNE, UH, TO BE DONE THERE.

AND IF YOU DIDN'T GET YOUR CAR, YOU'RE GOING TO HAVE TO WAIT A YEAR.

UH, BUT THAT SHOULD HELP TO ADDRESS A LOT OF THESE.

AND, UH, SOME OF THOSE ARE JUST GOING TO HAPPEN IN THAT MATTER.

IF YOU LOOK THE PROPERTY TAX FOR THE ELDERLY, WE DON'T BUDGET THAT TILL THE END OF THE YEAR.

SO IT SHOWS UP THAT THERE'S AN ACTUAL AND NO BUDGET.

I THINK THEY'RE TRYING TO BUMP OUR HORSES UP.

THEY'RE TWEAKING IT.

OKAY.

[01:05:10]

DO YOU HAVE ANY OTHER QUESTIONS OR COMMENTS FOR ME AT THIS TIME? THANK YOU VERY FOR EXPLAINING ALL THAT YOU DID.

ABSOLUTELY NO PROBLEM OF ROOKIE AT THE ONE OTHER QUESTION, MICHAEL MIGHT BE THE, I GAVE THEM A COPY OF THE FUND BALANCES FOR THE LAST 10 YEARS FROM THE AUDIT REPORT, RIGHT.

AND THE LAST COUPLE OF YEARS, THE UNASSIGNED BALANCE IS DIFFERENT FROM THE ENDING YEAR BALANCE.

AND, BUT IN THE EARLIER, LIKE 2011, 12, 13, ET CETERA, THEY ARE IDENTICAL.

RIGHT.

IF YOU COULD TALK TO THAT FOR THEM.

SURE.

ABSOLUTELY.

SO IF WE, IF WE COULD TURN THE PAGE, UH, 33 FOR, FOR THAT DISCUSSION EXHIBIT THREE.

UM, SO AS WE WERE GOING OVER PREVIOUSLY, WHEN WE TALKED ABOUT THIS EXHIBIT, THE, THE FUND BALANCES, UM, HAVE DIFFERENT CATEGORIES, UM, AND THOSE CONSIST OF, FOR, FOR WARREN COUNTY, NON SPENDABLE, RESTRICTED, COMMITTED AND UNASSIGNED, UM, BEFORE FYI IN 18 OR FYI 19, I GUESS, IS, YOU KNOW, BASED ON THE SCHEDULE THAT YOU PRESENTED TO ME, UM, ALL OF THE RESTRICTIONS, NON SPENDABLE AND COMMITTED FUND BALANCES WERE IN THE OTHER GOVERNMENTAL FLATS.

UM, THERE WERE NO RESTRICTIONS, COMMITMENTS OR UNSENDABLE OR NON SPENDABLE FUND BALANCE IN THE GENERAL FUND.

ALL OF IT WAS UNASSIGNED PRIOR TO F Y 18, I THINK, UM, CAUSE ALL OF THE COMMITMENTS AND RESTRICTIONS WERE IN THE SPECIAL PROJECTS FUND, THE SCHOOL BOND CONSTRUCTION FUND, UM, AND THE OTHER GOVERNMENTAL FUNDS.

AND THAT'S WHY THERE IS A, THAT'S WHY THE F THE UNASSIGNED FUND BALANCE WAS THE SAME NUMBER AS THE TOTAL FUND BALANCE BACK IN 2016 IS BECAUSE THERE WERE NO OTHER COMMITMENTS OR RESTRICTIONS ON THAT FUND BALANCE IN THE GENERAL FUND THAT YEAR.

SO IF, IF YOU LOOK AT THE CHART, THE RED NUMBER YOU SEE FOR 2020, THAT 3 MILLION YOU'LL NOTICE THAT YOUR ENDING BALANCE WENT UP SIGNIFICANTLY UP $5 MILLION IN 2019 BECAUSE OF THE ISSUANCE OF BONDS.

AND THEN IT DROPS BACK DOWN IN 2020, BECAUSE YOU SPENT THEM OUT CONSTRUCTION OF THE FIRE STATION AND THE WORK AT THE SCHOOL.

SO IT MAKES IT THOUGH, BUT THE UNASSIGNED CUT ACTUALLY IN CROUP PROVES THIS LAST YEAR, IT IMPROVES 717,000.

SO YOU HAVE THAT, THAT'S, THAT'S THE POSITIVE NOTE IS THAT YOU HAVE MORE, UH, UNASSIGNED MONEY THAT YOU SHOULD NOT SPEND, YOU COULD, UM, SITTING IN YOUR RESERVE.

YEP.

SO THAT UNASSIGNED MONEY IS THAT, THAT, UM, WHAT IS IT, 15% OR SOMETHING THAT WE SHOULD HAVE, THAT'S NOT A RAINY DAY FUND, BUT IT IT'S A REQUIREMENT.

YES.

IT'S A RAINY DAY FUND, RIGHT? IT IS YOUR IT'S REQUIRED IN YOUR BOND RATING.

IT'S ONE OF THE THINGS THEY GRADE, UH, FOR THE BOND RATING.

BUT IF YOU CHANGE FROM THAT, THAT DOES NOT A MATTINGLY MEAN THERE'S NO PENALTY FROM THE STATE OR SOMETHING THAT YOU BROKE SOME LEGISLATION, IT'S YOUR BOND RATING THAT SUFFERS.

AND IT IS, IT REALLY IS IN ITS ESSENCE, YOUR RAINY DAY, IF, UH, IF THERE WERE NO CARES ACT FUNDING, UH, LYING OVER THE BLUE RIDGE, YOU WOULD BE PAYING FOR CARES, ACT YOURSELF, AND YOU WOULD BE USING SOME OF THAT MONEY.

RIGHT.

AND THIS FUND, THIS UNRESTRICTED ON ASSIGNED FUND BALANCE IS DIFFERENT FROM, UM, THE SPECIAL PROJECTS FUND BALANCE, WHICH IS 19,549,691.

CORRECT.

IT IS DEFINITELY DIFFERENT WHERE I DIDN'T SEE THE NUMBER IN IT'S.

UM, IT'S ON THE SECOND LINE.

OKAY.

THAT'S IT? YES.

YEAH.

IT'S THE SECOND LINE UNDER SPECIAL PROJECTS.

AND SO CAN YOU TELL ME, UM, HOW SPECIAL PROJECTS IT IS ASSIGNED APPROPRIATED THE PAST? YEAH.

I'D LIKE TO, BECAUSE I BROUGHT MY LIST

[01:10:01]

OF SPECIAL PROJECTS.

WELL, YOU EACH HAVE A LIST OF THOSE PROJECTS AND, UM, THAT MONEY HAS BEEN PUT IN THERE IN THE PAST, BY THE VARIOUS DEPARTMENTS, ALL FOR SPECIAL PROJECTS, WHATEVER THOSE PROJECTS MAY BE.

NOW, SOME OF THOSE ARE THINGS THAT YOU WANT TO SAVE MONEY FOR.

I BELIEVE THERE'S MONEY IN THERE FOR BUILDING INSPECTIONS FOR A VEHICLE.

AND THEY NOW HAVE ENOUGH MONEY IN THERE TO BUILD A VEHICLE.

DOES PLANNING HAVE THE SAME THINGS? SO PLANNING HAS MONEY.

THEY'VE BEEN SQUIRRELING AWAY THEIR MONEY EACH YEAR, PUTTING IT IN THERE.

SO THAT NEXT WEEK THEY CAN COME TO THE BOARD AND ASK TO BUY A VEHICLE.

THEY DON'T HAVE TO ASK YOU FOR MONEY, BUT WHAT YOU DO HAVE TO DO IS APPROPRIATED OUT OF SPECIAL PROJECTS INTO THOSE APPROPRIATIONS SO THAT YOU DON'T GET AN AUDIT FINDING ON IT AGAIN, BECAUSE IT'S ALREADY THERE.

THE CASH IS THERE.

IT'S IN THAT SPECIAL PROJECTS RIGHT NOW.

AND IT'S BEEN PUT THERE AT THE, IN JUNE, THE DEPARTMENTS REQUEST CERTAIN AMOUNTS TO GO INTO SPECIAL PROJECTS.

AND ON YOUR CHART, YOU CAN GO BACK AND YOU CAN LOOK BACK AT LEAST 10 YEARS.

I HAVE NOT GONE FURTHER, BUT YOU CAN GO BACK AT LEAST 10 YEARS TO SEE HOW MONEY COMES IN THERE.

AND SOME OF IT HAS SAT THERE FOR 10 YEARS AND SOME OF IT IS GOING TO COME AWAY.

WE'RE GOING TO BE RECOMMENDING THAT YOU TRANSFER IT BACK TO GENERAL FUND RESERVES.

THAT WAS GOING TO BE MY QUESTION THAT SOME OF THIS HAS AGED SO LONG THAT APPARENTLY THE SPECIAL PROJECT NEVER OCCURRED.

AND SO DO WE? YEAH.

HOW DO WE CLEAN THIS UP? WELL, WE WANTED TO GET THIS FIRST, BUT THEN ONE OF THE NEXT THINGS AS WE WORK ON THIS BUDGET, UM, IS GOING TO BE APPROPRIATING MONEY BACK INTO GENERAL FUND RESERVES FROM SPECIAL PROJECTS AND SHRINK DOWN THAT LIST.

UH, EVERYBODY'S BEEN TOLD THEY SHOULD BE COMING IN WITH THEIR PROPOSAL TO USE IT, OR IT'S GOING TO DISAPPEAR.

SO WHEN EACH DEPARTMENT MAKES UP THEIR BUDGET ON THAT BUDGET, THEY SHOULD HAVE A LINE ITEM THAT SAYS SPECIAL PROJECT, WHATEVER, AND THAT THEY WANT TO PUT $10.

NO, THE SPECIAL PROJECT COMES.

THEY HAVE A LINE ITEM BUDGET THAT THE BOARD HAS APPROVED AND THEY HAVE PERSONNEL.

THEY HAVE BENEFITS, THEY HAVE EQUIPMENT, ET CETERA, UTILITIES, SO FORTH AND COME JUNE.

THEY HAVE A CERTAIN AMOUNT OF MONEY LEFT IN THAT BUDGET, UH, $10.

THEN THEY PROPOSE TO