The fiscal year ended June 30, 2013.
Auditor Mark Lay presented information on the audit during a recent meeting of the Cleveland City Council.
“Overall the audit went well this year; we received total cooperation from the staff of the city,” Lay said.
“The audit disclosed no instances of noncompliance that were material to the financial statements,” according to the audit summary.
However, the audit did mention some “significant deficiencies in internal control.”
According to the audit, “A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned function to prevent, or detect and correct misstatements on a timely basis.”
The issue dealt with employees using procurement cards (charge cards) to make purchases of more than $499. City policy states that the cards are for purchases less than $500. In a response letter, City Manager Janice Casteel stated that the purchases were in violation of city policy. To correct the issue, department heads will encourage proper use of the cards.
In a phone interview, Casteel said the policy would also be updated, if approved by the City Council. The proposed policy change will state the cards can be used for job-related expenses exceeding $500 when other policies for the cards are followed. The cards should still not be used for purchasing assets more than $500.
Casteel said certain job-related expenses such as travel to professional development no longer take checks, so credit cards must be used. She said when conferences are multiple days the expenses can exceed the current limits. “There is a stringent process for all procurement card purchases for the city of Cleveland,” Casteel said.
The card user, budget officer for department, department head and finance department audits each credit card statement.
“Because of the internal audit we do ... every violation of our policy is identified for our auditors (as soon as the credit card statement is reviewed),” Casteel said.
The cards provide an “efficient means to purchase supplies and keep employees efficient in their work,” Casteel said.
Tickets to athletic events that the local community centers plan trips to also require the use of a credit card to purchase them. These purchases may also exceed $500.
Lay highlighted the revenue and expenditures of the city during his presentation.
Net assets increased by $10,205,571. The general fund increased by $326,402.
Ending unassigned fund balance for the city was $12,388,007, Lay said. This is 46 percent of total general fund expenditures.
“The city of Cleveland's governmental funds reported combined ending fund balances of $27,053,793,” Lay said.
There were many grants represented in the numbers included in the financial highlights of the audit, Lay said.
“During 2013, there were over 20 ongoing grants at the airport,” Lay said. “That was a bit of recordkeeping to keep up with all those grants, and I thank the people [who] kept order there.”
“The assets of the city of Cleveland exceeded its liabilities [as of] June 30, 2013, by $251,654,855 (net position). Of this amount, $16,713,023 (unrestricted net position) may be used to meet the city's ongoing obligations to citizens and creditors,” the audit stated.
For the audited year, long-term debt of the city increased by approximately $2,892,062.
“Total revenues increased $4,594,570 which primarily included a $3,621,096 increase in capital grants and contributions as well as an increase in charges for services. Expenses increased $6,201,332 over last fiscal year, with the largest increase consisting of $2,875,390 for general government and $3,037,040 for Cleveland Utilities,” according to the audit.
The proposed policy change will state the cards can be used for job-related expenses exceeding $500 when other policies for the cards are followed. The cards should still not be used for purchasing assets more than $500.