O'Fallon

 

By John Tremmel

 

Missouri statutes (Section 105.145, RSMo) require the city of O’Fallon to file a financial report with the state auditor’s office. Those statutes do not require the city to file an audited financial report prepared by a certified public accountant. However, as a best practice, O’Fallon does have an audit conducted each year.

A financial statement audit is the examination of an entity’s financial statements and accompanying disclosures by an independent auditor. The result of this examination is a report by the auditor, attesting to the fairness of presentation of the financial statements and related disclosures.

In 2022, Fallon engaged Sikich, LLP to conduct the audit for the full fiscal year 2021. Sikich is a global certified public accounting and advisory firm with more than 1,400 employees located in 50 states and around the world.

Their fee was $42,100 for the audit, which primarily focused on O’Fallon’s 136-page “2021 Annual Comprehensive Financial Report,” but also delved into detailed practices and procedures behind what was in the financial report.

At the O’Fallon City Council Workshop on Sept. 8, Sikich partner Mike Williams and audit director Victoria Dailey presented the 2021 audit report and answered the council’s questions.

“In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the city, as of Dec. 31, 2021, and the respective changes in financial position and, where applicable, cash flows thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America,” the independent audit report states. 

According to the Auditors Management Letter, the most sensitive estimates affecting the city’s financial statement were management’s estimates for:

• Depreciation expense of its capital assets, based on assumptions of remaining useful life of those assets.

• Net pension liability, based on the actuarial valuation performed by the city’s actuary.

• Total Other Post Employment Benefits (OPEB) liability, based on the actuarial valuation performed by the city’s actuary.

• Various other items, including investments, long-term debt, donations, and allowances for doubtful accounts.

According to the audit letter, Sikich determined the estimates are reasonable in relation to the financial statements taken as a whole, and the financial statement disclosures are neutral, consistent and clear. In addition, Sikich encountered no significant difficulties in dealing with city management in performing and completing the audit. The audit did not find any misstatements for management to correct, and there were no disagreements with management about financial statements or the auditor’s report.

The letter noted auditor recommendations and city responses, including recommendations that the city:

• Adhere to its purchasing card manual and document any exceptions and how those were addressed.

• Consider annually updating its various financial policies and procedures, to document approved processes and determine appropriate accounting system roles and permission policies.

• Implement a formal review process of employee demographic data sent to the Local Government Employees Retirement System (LAGERS), for accuracy and completeness.

The responses say the city will or already is implementing changes to follow those recommendations.

O’Fallon’s finance director, Vicki Boschert, clarified for Mid Rivers Newsmagazine that in addition to the audit performed each year on the financial statements, “the city also participates in the Certificate of Achievement for Excellence in Financial Reporting Program offered by the Government Finance Officers Association (GFOA).”

“The intent of the award program,” Boschert said, “is to assist local governments to go beyond the minimum requirements of generally accepted accounting principles, and prepare annual comprehensive financial reports that evidence the spirit of transparency and full disclosure.”