City officials approved an annual audit report Tuesday for the 2019-20 fiscal year. Auditor Mac Neel, III commended the finance department and board of commissioners for its continuous efforts in improving the City’s financial standing, describing Owensboro as “the envy of a lot of municipalities” around the country.
The audit report was conducted by Alexander Thompson Arnold, PLLC through the use of test controls, observing financial processes, establishing flow charts and assessing various risks.
According to Neel, the City’s initial risk assessment covered a number of risks that could impact the Owensboor — including regulatory environment, economic climate, concentrations of payers and other unique factors. Neel’s assessment revealed that Owensboro was doing well, especially in comparison to other municipalities of its size.
“We are blessed locally that we haven’t had it as bad as [some other cities] during the pandemic,” he said.
During the virtually-held City Commission meeting, Neel spoke highly of the City’s finance department and shared a number of highlights reflected in the audit report, including the department being given the GOFA Certificate of Excellence in Financial Reporting for the 39th consecutive year and the Distinguished Budget award for the 20th straight year.
The City of Owensboro was granted an unqualified “clean” audit opinion from Neel as well.
The biggest challenge facing the City, Neel concluded, was its unfunded pension liability, which came in at $88.2 million for the 2019-2020 fiscal year. The issue in funding pensions was something that municipalities all across the country were going to continue to struggle with in the coming years, he noted.
However, the City’s refunding of $65 million in bonds had resulted in an estimated savings of $6.9 million, Neel said.
“Unfunded pension liability is pervasive throughout the nation — a financial crisis,” he added. “It’s not anything that’ll have to be addressed all at once.”
On a positive note, the City’s fund balance increased by $2 million in 2019-2020. Neel commended the City for increasing its fund balance for the third consecutive year, attributing the majority of the most recent increase to “increased tax revenue and being diligent in managing costs.”
Net profit taxes also increased by $654,000 over 2019, he said.
The City’s General Fund had seen success as well. Neel noted the City’s improved credit rating — affirmed through Moody’s Investors Services — as well as its efforts in turning a years-long deficit into a surplus. Since 2018, he said, the City had managed to leave its General Fund with a surplus. Neel credited the City of Owensboro for likely being the envy of a lot of municipalities across the country.
As far as single audit and compliance testing, Neel provided no significant findings or recommendations to the City, calling the move “highly unusual” and that it “speaks very highly of your finance staff.”
Mayor Tom Watson agreed with Neel, commending the City’s finance department for its accuracy, hard work and efficiency.
“I’m thankful to you all for guiding our ship,” Watson said.
