By Anna Jauhola
The Hallock City Council heard its 2022 annual audit report from Tracee Bruggeman, of Brady Martz, during the regular meeting on Monday, Aug. 7.
The auditors reported two typical findings for small cities. The city has the auditors assist with preparation of financial statements, which is an additional risk, Bruggeman said.
“The city should establish an internal control policy and annually review the financial statement,” she said.
The other finding is separation of duties. With only two employees in the office, this is difficult, and affects financial reporting and internal control. Bruggeman went through a list of issues found during the audit related to a lack of oversight.
They include: the city’s bank account had unreconciled differences; the utility accounts receivable subsidiary records were not reconciled to the general ledger; the city overbilled and overpaid the fire department utilities by $7,900; the payroll liability accounts were not reconciled; the council did not approve electronic fund transfers; the city did not make the first quarter payments to the IRS for federal withholdings; there was no subsidiary ledger for the meter deposit liability; the city has an unsupported undistributed receipts balance of $10,324; and the city was unable to support all campground receipts.
City Clerk/Administrator Aimee Sugden and Bruggeman worked closely on the audit and agree the city will implement Brady Martz’s recommendations.
They will reconcile balance sheet accounts monthly. They will maintain a subsidiary ledger for the meter deposit account. The council will approve all payments, including electronic fund transfers. They will maintain a complete record of campground receipts, reconcile undistributed receipts balance and establish procedures to monitor gas margins. Also, they will establish controls over the grant receivables.
“One comment on your fund balance. The office of the state auditor recommends a fund balance of 35 to 50 percent of the general fund revenue, or not less than five months of operating expenditures,” Bruggeman said. “The city’s general fund balance is 90 percent of the general fund expenditures. So you’re a little bit above what the state would recommend. For the size of your city, that’s good.”
Mayor Dave Treumer asked why the campground receipts were off. Sugden said there are occasional campers who spend one night and drop payment in the city drop box without notice.
Treumer asked why the payroll liability accounts were not reconciled. Bruggeman said there was an error on the quarter one tax, and the fix is to review that monthly.
“We just talked about that and it’ll be the first one we’ll tackle,” Sugden said.
Overall for the proprietary funds, the city had increases in each. The water fund increased by $17,006 for a total net position of $465,212. The sewer fund increased by $44,340 for a total net position of $669,426. The gas distribution fund increased by $99,481 for a total net position of $1,552,029. And the EDA fund increased by $2,267 for a total net position of $24,228.
The general fund increased by $154,907 for an ending fund balance of $986,505.
In other business, the council:
• Approved a request from Northwest Regional Library for a 3 percent increase in funding for 2024. The city’s share toward NWRL will be $16,395, an increase of $478 over 2023.
• Approved the agenda with a change to an item. Attorney Kendra Olson was listed as a guest presentation, when it should have been listed as a closed session. Mayor Dave Treumer cited statute 13D.05, Subd. 3(b) attorney client privilege.
• Closed the meeting at 6:03 p.m. to discuss litigation regarding the airport hangar with Attorney Kendra Olson. Reopened the meeting at 6:50 p.m.
• Approved a new contract with Marco for a different copier at $98.81 per month.
• Discussed purchasing barricades from Newman Signs to use for street closures. The cost through the county is $4 per barricade per day. The estimate for barricades is $1,700. The council did not make a decision.
• Approved a gambling permit for KIDSon Cares to hold a raffle at Two River Golf Course on Aug. 11.
• Approved a resolution declaring Ribfest a community festival. This will legally allow the Hallock Eagles Club to serve alcohol outside its establishment. As the Eagles has a club license, that only allows them to serve within the Eagles Club.
• Approved building permits for Guy Gustafson to add on a one-car garage to his home; Terry and Joan Osowski to replace a deck with a concrete patio, sidewalk and landscaping; and Allison Gustafson to build a fence around her property.
The next meeting is set for Monday, Sept. 11 as Monday, Sept. 4 is Labor Day.
By Anna Jauhola