CITY OF FULTON'S FINANCIAL STATEMENT RELEASED FOR JUNE 30, 2019

Jay Davis with Alexander Thompson Arnold presented the city of Fulton's Financial Statements and Supplementary Information through June 30, 2019 to Mayor David Prater, Commissioners Elaine Forrester, Martha Vowell and Darcy Linn during regular commission session Nov. 25, which included financial highlights and the identification of ways to increase efficiencies and decrease costs.

Among financial highlights noted, was assets and deferred outflows of resources of the city exceeded its liabilities and deferred inflows of resources at the close of the year by $5.6 million, net position.

According to the analysis, that figure represented a decrease of $654,000 from the prior year, the decrease due to a $445,000 net loss from the current year operations and a $209,000 adjustment charged directly to net position for a prior period correction to payroll taxes receivable.

Of the total net position, $6.7 million represents the city's investment in capital assets, net of related debt and $851,000 is restricted, resulting in negative unrestricted net position of $1.9 million as of June 30, 2019.

At the end of the current fiscal year, the city's general fund reported an ending fund balance of $1.5 million, which includes an increase of $167,000 from the current year operations in comparison with the prior year. Of the total fund balance, $949,000 is available for spending at the city's discretion and the board assigned $15,000 of the General Fund balance for equipment depreciation.

There was a decrease of $445,000 from operations for the current fiscal year.

Davis described the audit as a "clean audit" with the General Fund accounting for 97% of governmental fund revenues, with a balance of $1.5 million, almost $1 million available to meet the day to day needs of the city.

Revenues in the General Fund were approximately $9,000 more than last year due mainly to increased property taxes and the Alcoholic Beverage Control fees. General Fund expenditures increased by $34,000, mainly in code compliance expenditures. Increases in police expenditures were offset by decreased fire expenditures, the audit stated.

In regard to Propriety Funds, the unrestricted net position at the end of the year was a deficit of $1.1 million compared to $0.8 million in the prior year due to the $325,000 loss from utility operations during the current year.

In the Statement of Net Position, Total Assets were listed as $5,259,330 governmental activities, $12,000,249 for business type activities, totalling $17,259,579.

Total deferred outflows of resources were listed as $440,036 governmental activities, $436,881 business type activities and total, $876,917.

Liabilities totaled $11,912,082, which inclluded $2,787,973 for governmental activities and $9,124,109 for business type activities.

Total deferred inflows of Resources were at $595,864 and total net position, $5,628,550.

As to findings, Segregation of Duties and Failure to Close Books and Reconcile Accounts were the listings.

Segregation of Duties is a condition by which the city is not adequately segregating duties related to the receiving, reconciling and depositing of cash, according to Davis, a finding cited often in small communities and municipalities.

The recommendation was for management and the board to develop policies and procedures that adequately segregate accounting functions, including the separation of responsibilities for authorizing transactions, processing and recording them, reviewing transactions and handling any relted assets.

The city's response was : We continue to make sure no one does their own deposit. With our new system, we post the payments as customers are waited on.

In the finding for Failure to Close Books and Reconcile Accounts, it was noted during the testing of revenues by ATA, and the testing of receivables, the city's books for the fiscal year ended June 30, 2019 were not closed in a timely manner. Revenues collected July 1 through Aug. 6, 2019 were included in revenue for the fiscal year ended June 30, 2019. In addition, reconciliations of major revenue sources and receivable balances were being prepared throughout the year or at year end.

The recommendation was that the city's management should ensure that an accurate cutoff of financial transactions occurs at the end of each fiscal year and the city should reconcile all major sources of revenue to source documents and to the general ledger account at least monthly and retain these reconciliations for audit purposes. Any reconciling items should be investigated and appropriate adjustments made when necessary to keep all the city's financial records in balance.

The city's response was : During 2019, we started using a new computer system for the General Fund revenue. We had many errors. We will close books in a more timely manner and reconcile our major revenue sources from now on.

Regarding the segregation of duties finding, Davis stated the city was "doing great with what you have" and contended he would be willing to provide guidance to "map out" options to remedy the finding, without necessarily requiring the hiring of additional staff.

Municipal Order 2019-103 was approved by the officials, to hire Cameron Carmichael as a Utility Maintenance Worker I in the Public Works Department.

In the City Manager's Report, Mike Gunn thanked the Public Works Department, Fulton Electric System and the Fulton County Detention Center work crew for their efforts to string lights, erect Christmas Greeting cards and decorate the Lake Street and Pontotoc Park areas of downtown Fulton. He said he hoped to have the decorations completed by Wednesday, or Monday at the latest.

He also requested authorization from the commission to execute the necessary documentation, for the transfer of the ambulance service facility in Fulton, from Community Health Systems, to the city. Gunn said Attorney Rebecca Biehslich had reviewed the document submitted by CHS for the transfer, of the property at 105 Nolan Ave. as a gift, however she planned to submit a different version for review by CHS. If approved, Mayor David Prater, through authorization by the commission, could execute the documents and finalize the transfer.

Gunn noted the transfer would ultimately save $20,000-$25,000 annually for the Ken-Tenn EMS.

He reported to the officials that he was prepared to sign off on a list for Bad Debt Utilities, and submit to collections, in the amount of $1,053.11, a process now done on a monthly basis.

Gunn and Code Enforcement Officer Nathan Lamb requested the public be made aware of the code violation currently enacted by the city, which results in the event a street number or letter is not visibly displayed on a residence or business, for emergency services, following a dispatch to the location.

Lamb said no visible street numbers or letters could result in a delay for emergency personnel to arrive at the scene, and reminded residents and business owners to make sure the numbers and letters were at least 3 inches tall, and correct, according to 911 addresses.

Gunn concluded his report by recognizing the Thanksgiving holiday and thanked the commission and all city department employees for their service to the community, as did Mayor Prater.

City Commissioner Jeff Vaughn was absent. City Clerk Helen Lee and Chief Financial Officer Lisa Morgan were present for the meeting.