Stewardship

 

On December 5, Ken Peterson, who has represented District 5 on the Board of Supervisors since 2012, presided over his last meeting as chair of the Goochland Finance and Audit Committee. Comprised of three supervisors, the county administrator, and the Director of Financial Services, this committee meets quarterly, usually before a regular board meeting. Peterson was joined by supervisors Neil Spoonhower, District 2, Charlie Vaughters, District 4, County Administrator Vic Carpenter, and Director of Financial Services Carla Cave. Also, present were Dr. Michael Cromartie, Superintendent of Schools, Debbie White, GCPS Chief Financial Officer, and Tara McGee, county attorney.

The audit committee was created in 2013 to assist the Board of Supervisors in fulfilling its oversight responsibilities for financial reporting, internal control systems, and audit processes.  The Committee meets quarterly, or as needed to:

• Consider the independent auditor's proposed audit scope and approach and provide input on areas for special attention.
• Review annual financial statements and the results of the independent audit.
• Review the independent auditor's findings and recommendations, together with management's responses, regarding internal controls.
• Recommend appointment, reappointment, or dismissal of independent auditors to the Board of Supervisors.
• Request regular/periodic financial reports on potential areas of concern, as needed.
• Monitor any areas of concern regarding internal controls over financial reporting, as needed.

The first order of business was the presentation of the county’s annual certified financial report (ACFR) by Mike Garber, a partner with PBMares, LLP, the outside auditing firm retained by Goochland to perform the county’s annual audit. Garber made the formal presentation to the entire board later in the day.

As has been the case for the past several years, the ACFR was unmodified, or “clean” and the financial condition of the county is good. Garber pointed out that this does not happen by accident but is the product of hard work and attention to detail by the finance staff. The annual audit will be posted in its entirety on the county website after submission to the state. (Go to https://www.goochlandva.us/ on the financial services tab for details.)

Garber noted that several accounting standards and policies are used when completing the ACFR. He said that it is the auditor’s job to make sure that those are working, but it is the supervisors’ job to make sure that those standards are in place and applied to county finances.

Garber said that Goochland staff works well with PBMares auditors supplying input that makes the county financial operations better. He said that when his firm began to work with Goochland, our county was a “high risk” auditee due to the 40 material findings of a previous audit. It took Goochland several years to work its way out of that category, which involved deeper dives into procedures and controls. Over the years, he said, Goochland has demonstrated its commitment to financial excellence.

PBMares has been the county auditor for several cycles, rotating its personnel assigned to the Goochland account every few years to ensure that county finances are scrutinized by “fresh eyes”. Next year, the county will seek new auditors as part of best practices.

At the afternoon Board meeting, Garber “jumped in to the celebration” of the three outgoing supervisors, Peterson, Susan Lascolette, District 1, and John Lumpkins, Jr. District 3. He said that he enjoyed working with them over the years on the audit committee and entire board. Some of his other clients merely listen to his presentations. Goochland supervisors, however, have comments and questions to better understand the audit process, and what the reports mean.

“For those who had no political aspirations and didn’t know this is where you would end up, kudos to how well you always represented yourselves and Goochland County,” said Garber.

He pointed out that AAA bond ratings are not handed out easily. Citizens do not understand how much money those ratings save the county. The process starts at the top by adopting policies and procedures that make a county stronger.

Back to the Audit Committee meeting. In November 2013, the supervisors formally adopted Financial Management Policies crafted by the audit committee, which were refined every few years. On December 5, the committee proposed further amendments, which were adopted by the supervisors later in the day.

The importance of adopting, and following, financial policies that require detailed accounting and careful use of public funds cannot be overstated. Having strategies in place to navigate economic “bumps in the road” to make raising tax rates to meet the county’s obligations a last resort cannot be overstated.

The financial management policies provide clear guidelines about how the county will spend its money and insulate itself from financial crisis and economic disruption. Other objectives include promotion of long- and short-term financial stability by establishing clear and consistent guidelines; focus on the financial condition of the whole county rather than single item issues; and link long term planning with day-to-day operations.

Peterson often used the term “smoothing” to describe dealing with the impact of external ups and downs of county finances. Among these practices is a requirement to adopt structurally balanced budgets whose expenditures do not exceed expected revenues.

Creation of a revenue stabilization reserve policy—sometimes called a “rainy day” fund—was also established with threshold triggers for its use and replenishment.

Amendments made on December 5 were the expectation of a structurally balanced budget without using fund balance; inclusion of potential funding sources for all items in the capital improvement plan; inclusion of  both assigned and unassigned amounts to determine available fund balance; and better definition of terms governing use of the revenue stabilization reserve if actual general fund revenues, excluding the use of prior year fund balance, decline by more than three percent of revenues collected at the same time in the prior year; or if real estate assessments have declined by more than three percent from the previous year.

To read the entire policy go to policy This is the 2018 version, hopefully, the county will replace it with the latest version soon.