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Walsenburg receives clean audit for 2011

Staff report
WALSENBURG — The Walsenburg City Council at their last meeting did something no other council has done for a number of years; sign off on an unqualified ( i.e. clean) audit of city finances.
Representatives of the accounting firm of RubinBrown made a brief presentation to city staff and council members at the September 18 regular meeting.
The accounting firm did however, identify a number of areas in which the city could improve the way it does business saying in part, “we identified material misstatements, including prior period restatements for unbilled sales and unrecorded liabilities and incomplete disclosures”.
Some of those included; City personal should implement an annual reconciliation and close process as well as implement an enhanced budgeting process.
The value of water rights should be researched to ensure current value is accurate. During our audit, we noted the city advance funds to Spanish Peaks Apartments; however, a formal, signed note or loan could not be located. In order to make the advance legally enforceable, we recommend the city obtain a loan agreement, or note payable, showing the interest rate charged and the repayment schedule.
Timeliness of vendor payments and use of purchase orders was also addressed. The management letter said the auditors noted several instances where vendors were not being paid within 30-days or upon receipt of the invoice. The firm said, “the use of purchase orders has been instituted at the city, however, a purchase order is only created when an invoice is received and the expenditure already incurred. We suggest the city use purchase orders prior to making expenditures and encourage the accounting function to go one step further by tracking accounts payable from the point of purchase order approval”. This will help the city reduce late fees it has to pay.
RubinBrown also had suggestions in the city’s collection procedures. They noted a large number of accounts are past due or slow pay accounts (approximately 16 percent of total utility receivables). “Collections of accounts receivable is critical to all enterprise funds and the customer knowing that delinquent or slow paying accounts will be pursued is an effective and economical method of keeping this issue under control,” auditors said in the management letter to the city.
The firm also suggested a formal capitalization policy, a fund balance policy and ending the ‘handshake agreement’ used in a number of identified intergovernmental agreements.
“We recommend that all ‘handshake agreements’ be formalized and documented by all parties involved,” the management letter said.

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