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Covington audit reveals no flaws
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As the city council prepares to approve its FY 2011 budget on Monday, city officials can have extra confidence in the finance department after the FY2009 financial audit came back with no findings.

Mayor Kim Carter has praised the financial department numerous times for having a perfect audit, and the city’s independent auditor Mauldin and Jenkins said it had reasonable assurance that the city’s financial statements are "free of material misstatement."

However, Finance Director Leigh Anne Knight is quick to point out an organization can never really receive a perfect financial audit, but they can have one with no critical errors.

"We utilize the resources with our auditors as much as possible. If we’re not 100 percent sure of something, we contact them to make sure we are handling it correctly," Knight said. "It’s difficult to (get a audit with no findings); it all boils down to being as sure as you can. There are always things that slip through the cracks. There’s no way to catch everything in a $120 million budget."

Knight cautioned that one great audit does not mean that the city can expect an audit with no findings every year, because rules and regulations are constantly changing and mistakes do happen. A software glitch or a typo can result in an error.

"We do our best to be on the cutting edge," she said.

In laymen’s terms, Knight said an audit is when a totally independent company comes in and goes through the city’s checkbook.

"They make sure you don’t pay someone you’re not supposed and not get money you’re not supposed to. They make sure everything is accounted everything is accounted for; they’re a double checker," she said.

However, the city’s finances are slightly more complicated than the average checkbook. The city signs more than 100 checks a week, which results in between 500 and 1000 transactions just on the accounts payable side, Knight said. The city also has thousands of utility customers and that creates even more transactions to records on the accounts receivable side.

Fellow financial employee Denise Stiles said she remembered when she first came to the city nine years ago, it would routinely have 20 write-ups in its audit. Over the years, the city has improved its budgeting and financial process and several city officials have commented on the great job Knight has done since being hired last year. Despite the great audit, Mauldin and Jenkins still gave the city two recommendations to improve its financial recording. Local finance experts joke that if an auditor doesn’t find something that can at least improve they’re not doing their job.

First glance at Covington’s budget

In terms of the FY2011 budget, the City of Covington is planning to approve a $118 million budget Monday night, $2 million smaller than last year. The city’s millage rate will remain at 8.21.

Once again, the city managed to cut expenses more than revenues and next year’s budget proposes a $1 million surplus; last year the city budgeted a $500,000 surplus.

The city has again estimated its property tax collections conservatively budgeting $4.43 million. In FY2010, the city budgeted $4.57 million in property taxes, but as of January, the city had actually collected $5.14 million, according to a prelimnary copy of the budget. Sales taxes are expected to be down by $100,000, for a total of $1.5 million.

No mayor and council salary raises are included in the budget, and officials are budgeting for less education and training at $10,000.

The Covington Police Department will have a $5.49 million budget, up nearly $300,000, mainly because of increased salaries, medical insurance, social security FICA payments and retirement contributions. The CPD collected nearly $200,000 in confiscated assets this year, which helps offset other expenses. The fire department has a $5.48 million budget, also up nearly $300,000, largely because of retirement contributions.

The fire department continues to budget $750,000 in capital projects for a joint emergency services training center, which has yet to be built.

The street department budgeted $50,000 more for sidewalks, but $178,838 less in infrastructure and $110,000 less in equipment.

The planning and zoning department budgeted $378,216 this year for building maintenance, which Knight said she believed was for future purchases of homes or home sites that may need to be renovated like the ones in the Neighborhood Stabilization program this year.

The stormwater department is budgeting nearly $850,000 less in infrastructure repairs at $250,000.

Sewer charges will increase by $1.08 million and water charges will increase by $610,000. Water infrastructure costs will decrease by $734,132. The city does have more than $1 million in capital projects for water line improvements.

Once again, the electric and gas departments help subsidize other parts of the budget, as the electricity department made a profit of nearly $7 million and the gas department made a profit of $1.88 million. Natural gas is expected to cost the city $287,565 less in FY2011.

The city projects to collect an additional $84,000 in hotel/motel taxes with a full year of the increased 8 percent tax rate.

Finally, the city has nearly $2 million in capital projects at the airport to pay for a new localizer or glide slope, to improve the southeast section of the apron and to design a new terminal building for the south end of the airport near Nisshinbo.