Wednesday, June 04, 2008

Fayette Decreased Surplus Explained

Fayette County commissioners held a special meeting Tuesday to discuss and explain the particulars of an accounting error which overstated a surplus in the county budget by some $750,000.

Children and Youth Services director, David Madison, noted how the loan to the agency was made years back, and how when funds became available from the agency's state funding source the monies were transferred back to the county.

Jeff Weiss, of Susquehanna Advisory Group discovered the former "county" loan to CYS was treated as county revenue - unbudgeted and therefore considered part of a surplus - when it should have remained as revenue neutral to the county.

Board Chairman Vincent Zapotosky was credited by Commissioner Vicites for pursuing details of the surplus with the county's hired firm, otherwise, the error might not have been discovered so immediately.

Weiss explained using past accounting practices to handle the transfer of funds on paper was inconsistent with the accounting software the county had initiated during the last administration.


Commissioner Zimmerlink guest editorial in the Herald-Standard June 11, 2008

Fayette surplus situation explained
Guest commentaryBy Angela M. Zimmerlink
Updated 06/11/2008 12:59:38 AM EDT

As residents continue to inquire about the Fayette County budget and surplus, I will share with Herald-Standard readers questions and my answers.

Didn't the county stop the practice of department loans, which attributed to deficits?

Yes, receiving loans from certain accounts, but the general fund does loan Children and Youth Services funds until state monies are received. Legislation is proposed to speed up state payments to counties.

What then caused the decreased cash surplus and how could it have been avoided?

The $750,000 loan repayment was listed incorrectly as a receivable rather than revenue in the general fund.

How was the error found?

On April 29, 2008 an e-mail and documents from the Fayette County controller's office, at the request of Commissioner Angela Zimmerlink, was forwarded, noting an estimated $2.9 million 2007 surplus, less the $750,000.

At Commissioner Vincent Zapotosky's request the financial advisors, Susquehanna Group, confirmed on May 21 that $750,000 was incorrectly listed and needed to be taken from the 2006 $1.5 million cash surplus, leaving a balance of $791,983.

What means were there to avoid the accounting entry error?

When the 2008 budget was prepared, the commissioners, county manager and controller's office should have noticed the entry before adopting the budget; and in 2008, as per the commissioner manual, any newly elected commissioner had the option to reopen, review and change the budget upon taking office.

Isn't there communication and reviews between the offices?

Susquehanna said they told the county manager to list it as a receivable, but the county manager said he wasn't told by either Susquehanna or the controller's office...

Local media covered the meeting.

Fayette's $1.7M surplus dwindles to about $591K
By Liz Zemba
Wednesday, June 4, 2008

...As for the $750,000 budgeting error, commissioners yesterday provided documents to back up earlier explanations that indicated it was an accounting error based on past practices, which will no longer be used.

Jeff Weiss, of Susquehanna Advisory Group, told commissioners the practice was appropriate in the past, but can no longer be used under new accounting procedures.

"Under old style accounting, years ago, it was based on cash out the door, cash in the door," Weiss said. "So when you sent money over to Children and Youth, when they paid you back it was a revenue. Now it should be booked as a receivable and a payable."

Controller stresses teamwork
By Amy Zalar, Herald-Standard June 04, 2008

Fayette officials to explain $750,000 accounting error
By Liz Zemba
Wednesday, May 28, 2008

...Commissioners last week said the error occurred when a $750,000 loan to the county's Children & Youth Services was listed in the 2008 budget as revenue. The loan is to be paid back to the county, once CYS receives its state and federal funding.

Zapotosky said the loan should have been listed as a "balance" item, not as revenue.

Commissioners last week said such loans were typically listed in the same manner in past budgets, but new accounting practices no longer allow it.

"It was not done, in any way, intentionally," Zapotosky said yesterday. "It was a mistake made on past practice, and it will no longer continue."...

Public Notice of the Meeting


Thursday, May 22, 2008
Fayette Surplus Remains Open for Board Action and Comment

Thursday, May 29, 2008
Fayette Budget Less Than Expected Surplus Provides Excuse


Writer learned his math
Updated 06/16/2008 09:19:09 AM EDT

The author of the editorial that appeared in the Herald-Standard May 27 wanted to know, "Who incorrectly listed a nonexistent $750,000 in revenue in the 2008 county budget?"

I think I know the answer to that question.

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