Only finding in county’s audit related to mall purchase
Rowan County’s latest financial audit came back relatively clean, but shows the county hasn’t yet replenished its fund balance from the Salisbury Mall purchase.
The audit, dated Dec. 4, listed a single finding in violation of North Carolina’s General Statutes. The finding concerns the purchase of the former Salisbury Mall. The audit, a part of the county’s comprehensive annual financial report, also lists Rowan County’s total fund balance well above the Local Government Commission’s 8 percent minimum.
Though the audit listed a single finding, County Manager Aaron Church said the audit demonstrates the county’s top-notch financial status.
“Rowan County has earned a Certificate of Achievement for Excellence in Financial Reporting for its comprehensive annual financial report year after year which is very impressive and important,” Church said in an emailed statement. “With the leadership of [Finance Director] Leslie Heidrick the finance department did an outstanding job conducting the county’s financial operations.”
The audit’s finding states that Rowan County violated the state’s general statutes by paying for the former Salisbury Mall through its fund balance without replenishing the money in the same fiscal year.
“North Carolina General Statutes preclude units from having funds that operate in a deficit,” the audit states.
In response to the finding, Heidrick wrote in the audit that: “Due to the political climate in the county, staff of the local Government Commission opted not to place consideration of approval of an installment financing contract before the Commission in June 2014. The County anticipates that a new installment financing contract will be approved by the LGC, with proceeds received in February 2015. The proceeds from the installment financing will be used to offset the deficit fund balance.”
When asked about the finding Thursday, Heidrick said the particular part of the audit concerning the finding was written several months ago, before the county officially withdrew its loan application for financial from the Local Government Commission, which is responsible for approving any loans from local government entities in North Carolina.
The county initially sought to receive a loan by the end of the 2014 fiscal year. In July, commissioners asked the LGC for immediate action on the county’s loan. The county’s request was delayed by the LGC until October, but commissioners withdrew the request before the loan was placed on the LGC’s Oct. 7 agenda.
When asked in October about the loan being withdrawn, former commissioner Chad Mitchell said the start of a new fiscal year meant commissioners weren’t in any rush to secure a loan.
Heidrick confirmed Thursday that Rowan County doesn’t currently have a loan application submitted to the Local Government Commission, meaning that the county hasn’t yet replenished the $3.4 million in fund balance money used to purchase the former Salisbury mall.
“Now, it’s going to be up to the new board,” Heidrick said about taking out a loan.
The mall purchase affected fund balance numbers, but not to an extent that the LGC would intervene in Rowan County’s finances, Heidrick said.
The total fund balance listed in the fiscal year 2014 audit is actually up slightly over the previous year. The total fund balance in the fiscal year 2014 audit is $40.2 million. It was $39.6 million in the fiscal year 2013 audit.
Rowan County’s 2014 audit breaks fund balance numbers up into several different groups. The specific fund balance figure most relative to an LGC takeover is more than double the 8 percent minimum amount. The audit shows the county’s available fund balance at 19.5 percent — the number that LGC staff would look to when considering a takeover, Heidrick said.
The available fund balance is slightly lower than both the 2013 and 2012 audits.
Another fund balance number Heidrick mentioned was the unassigned fund balance which sits at 10.1 percent. She said the unassigned fund balance would be money used if all revenue stopped coming in at once. If the unassigned fund balance was 12 percent, Heidrick said the county would be able to operate for six weeks without any revenue coming in.
“To Rowan County, regardless of which number you are looking at, we have a healthy fund balance and are well above that 8 percent,” Church said about the various fund balance numbers listed. “It’s always reassuring when the fund balance is above the states required reserves. Fund balance fluctuates from year to year based on numerous factors. In closing, the audit reflects sound fiscal management and sufficient internal controls.”
Rowan County’s audit is scheduled to be presented at the board of commissioner’s Monday meeting.
Contact reporter Josh Bergeron at 704-797-4246