Joplin received another "clean" audit of its financial statements.

Brian Holst, a certified public accountant for Cochran Head Vick & Co., told the Joplin City Council on Monday that the firm's review of the city's financial statements for 2016 were in order. 

"We issued an unmodified opinion, which is the best you can get," Holst told the council. "It is also known as a clean audit." 

There were some small things that need correction, according to the auditor.

Holst said the city's payroll system has a glitch in accurately translating the payroll records for employees whose hours must be divided according to how much time they spent on work administering different grants. "It's very small dollars," Holst said, mostly only a matter of a few cents, but is an important detail when compliance is reviewed for adherence to the grants' requirements on tabulating administrative costs.

Last year, the glitch occurred in the payroll records for those who billed hours for working on the city's CDBG disaster recovery grant funding, he said. This year it did not happen with those records, but it did happen for those who work on the city's annual CDBG grant rather that for the disaster recovery work.

Councilman Jim West asked if there had been corrective action taken on the payroll system.

He was told that the city's payroll software provider has been contacted about the problem. Some adjustments have been made both last year and this year, but the problem is not entirely solved.

City staff has been manually keying in the amount of time to record for grant work, "but it doesn't track in the (software) system properly," the council was told. City staff cannot access the coding in the software system to try to look for the problem.

Leslie Haase, the city's finance director, said that at this point the staff may have to continue manually typing a grant worker's hours into the system. She said the city will be done with the disaster recovery work in a couple of years and won't be having to code those grant hours anymore.

Also audited were the financial statements of the Joplin Sports Authority, the Joplin Regional Airport and the financial statements of the Joplin Police and Firemen's Pension Plan.

Last year, cities had to begin showing pension funds as liabilities under governmental accounting rules, Holst said. 

Haase told the council that changes that have been made in the rules and contributions for the pension plan have raised the funding ratio. In the 2015 audit, the ratio had risen to 63.7 percent and was valued at $22.2 million. That is up from a ratio of 54 percent in 2011 and 59 percent in 2014.

The funded ratio is the percentage of future retirement payments that can be made with the value of the fund’s current investments. Accountants describe a fund as being in good condition if it has a funding ratio of 80 percent or more.

Haase told the council the next issue that needs to be addressed with the pension fund is lowering the assumed rate of investment return from 7 to 6 percent.

Haase said the plan's other assumption factors such as the amortization policy and the mortality rates are on trend.

The interest rate will have to be lowered in increments in order to not cause the funding ratio to drop or create a need for increased contribution by the city, Haase said. She said the pension board should consider reducing it by a quarter of a percent for four years in a row.

She said the 7 percent rate was set during a time when the 10-year expectation of pension experts was for annual growth to be at that rate but now the expectation nationally for earnings is to be 6 percent over the next 10 years.

"If you leave the assumption higher, then your unfunded liability won't come down," Haase said. "You want the assumptions to be as close to reality as possible."

 

Accounting rule

A new governmental accounting rule will need to be implemented that will require retiree health care costs to be shown as a liability in city financial statements, the council was told.

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