Bloomfield Township on Wednesday, October 16, received a clean bill of health from auditors who presented findings to the board of trustees from its annual review of financial statements for the previous year.
Auditors UHY LLP reviewed the township's fiscal year 2018-2019 financial statements, which ended on March 31, 2019, giving the township an "unmodified" opinion, which is the highest possible rating that can be given and indicates no problems or issues with statements or the review, said Michael Santicchia, a partner at UHY who presented the findings to the board with UHY Principal Marlene Beach.
"Jason (Theis, Bloomfield Township finance director), and his team had everything well prepared and had everything ready for us when we asked for it," Santicchia said.
Santicchia said there were no disagreements between the township management and auditors during the course of the review, which could include how and when data is recorded. Further, he said certain amounts in the financial statements require management to make estimates and assumptions. As part of the audit procedures, auditors also evaluated the reasonableness of the estimates and found no issues.
Beach, who also is a certified fraud examiner, said she conducted fraud interviews with management and one board trustee, who was not identified, and didn't find any instances of fraud.
"We test certain expenditures to see if there was sufficient support, and everything we tested, we did find sufficient support for. Everything had good supporting documentation with it," Beach stated.
"And when we asked for it, we were given it quickly," Santicchia said.
Auditors noted that a change in the township's investment strategy resulted in an increase of around 57 percent in investment earnings, or about $370,000. Still, the largest increases in township revenue came from increased tax revenue and assessments, as well as an increase in state-shared revenue funds, with overall revenues up from about $79.7 million to $84.6 million. At the same time, total expenditures dropped from $93.9 million to about $89.05 million.
Beach noted that revenues have consistently exceeded expenditures despite carrying some fund balance to address pension and other post employment benefits (OPEB) liabilities. She said OPEB and pension liabilities are the primary factors causing a negative net position in governmental activities. Those issues are part of the township's liability when looking at its longterm debt, or a full accrual basis, which indicates a budget deficit.
Beach said the township's modified accrual, or short-term financial statements for the specific fiscal year, don't account for longterm OPEB and pension debt, but rather the amounts due on an annual basis.
Trustee Michael Schostak pointed out the differences between the modified and full accrual amounts to show the township isn't short in balancing its budget on an annual basis. "When people hear 'deficit,' they thing we are losing money," he said. "We aren't losing money per se, because all that OPEB represents is a present value of future liabilities."
"That's correct," Beach said. "OPEB and pension liabilities – this isn't money that is due tomorrow. This is way out into the future. When we are looking at whether the township is making or losing money, you want to look at your fund balance statements, like the general fund, and look at the modified accrual because that's showing your revenues coming in and your expenditures, and what's happening for that year and the next year out. With the other (full accrual), your pension liabilities can change every year, and the OPEB is the same way."
Santicchia further said that under previous accounting rules, the township had carried OPEB liabilities, but the amounts were added as a footnote, while new rules require it to be included in the full accrual amount.
"You always had that liability, but we had to book it so you're more in comparison to what private companies have to do," he said.