Palmer receives unmodified opinion on 2020 financial statements

PALMER — The Palmer City Council received a report on the 2020 financial statements audit from BDO USA assurance office managing partner Joy Merriner.

Merriner left a glowing review of the work of Finance Director Gina Davis’ financial statements, which BDO was charged with providing an independent audit on.

“We take a holistic approach of looking at your financial statements to determine where there might be risks, where there might be misstatements, things that might be issues and one thing I will say about your team is Gina calls whenever there is an issue before it really happens or as it’s happening, so she was calling me about the CARES Act funding as it was coming in the door before you ever signed the grant award,” said Merriner. “We audited the CARES expenditures for 2020 very carefully. It was considered a high risk program because it’s new not just to the city, but also to the Federal government and they seemed to not know what to do with it when it first came out and so we tested the CARES money as our major program this year. The rest of my presentation is rather boring because we didn’t find any problems as it relates to our testing of the financial statements or the testing of our major program which was the CARES money.”

Merriner noted that the $6.4 million in CARES act funds received were managed in house, while many other cities hired consulting firms to manage distribution of funds. The largest category of CARES act funds spent was in community services, with public safety wages, small business and nonprofit grants and housing grants making up much of the rest of the funding distributed in 2020. The total general fund expenditure for Palmer in 2020 was $8.5 million.

“Your team was very conservative and very careful and just very diligent in documentation because an audit is all about looking at documentation as it occurred, so if they had not kept copies of meeting minutes and approvals and time sheets from the very beginning, your team was tracking anybody’s time that was working on COVID-19 response. That was happening day one and so that documentation pays off in the long run with a clean audit opinion and no findings as it relates to your Federal compliance,” said Merriner. “You as a council were careful about how you approved the use of the money. You weren’t trying to ask your team to do anything questionable as it relates to the use of those monies. I’ve had several other conversations with other clients that weren’t quite as easy and so I appreciate your diligence in adhering to the rules as it relates to the CARES money.”

Merriner said that Palmer has over $100 million in capital assets such as buildings and vehicles. Of those assets, $66 million are in water and sewer, and $14.7 million are at the airport as business assets. The majority of the liabilities that the city owes are in water and sewer loans, pensions and vacation and sick leave for employees. There was a positive change in the fund balance of $2.7 million and sales tax in 2020 was nearly even from 2019.

“We have audited the financial statements and in our opinion they present fairly in all material respects your financial position and the results of your activities for the year,” said Merriner. “That’s a clean, unmodified opinion that you’d want to see. That’s what the granting agencies want to see, that’s what your constituents should want to see and that’s the result of a lot of hard work.”