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Johnsonville audit shows positive net position

December 19, 2018

JOHNSONVILLE, S.C. – The city of Johnsonville finished the 2017-2018 fiscal year with a total net position of $14,452,056. The total net position is the sum of all of the town’s funds added together under the same basis of accounting.

The city’s total assets were $21,361,931.

Accountant Monica Richardson recently completed the city of Johnsonville’s audit for the latest fiscal year and said one indicator she highlighted to the council was in regard to the city ending the year with minus-24 days’ worth of operating revenues in unrestricted net position. But the minus-24 days are just an indicator and not yet a problem area, she said.

Richardson said unrestricted funds are not designated for one particular purpose. The city should have 60 to 90 days of operating revenues in unrestricted net position, according to Richardson. Having minus-24 days’ worth of operating revenues in unrestricted net position means the city does not have enough cash flow to operate in the governmental activities fund, which consists of the general fund and non-major funds. But it does not mean the city does not have enough money in the bank, she said.

“It (governmental activities) showed income, but cash flow is negative. I don’t like that,” Richardson said. “And these days, you need to have that 60 to 90 days operating revenue in unrestricted net positon and at least a minimum of 60 days on hand.”

The suggested number of days’ worth of revenue and cash on hand are what should be available for the city so that if something happened, it could operate without revenue coming in. A negative cash flow and expenses could have caused the city to have a minus-24 days of operating revenues in unrestricted net position, Richardson. The city finished the 2016-2017 fiscal year with four days of operating revenues in unrestricted net position.

“The governmental funds in total have a positive cash flow,” Richardson said. “But the unrestricted cash is negative. It’s a little piece of a pie of an even bigger pie.”

Richardson said that one fund needs to be examined. She said the audit showed no concerns with the city’s water and sewer funds.

One finding mentioned by Richardson involved segregation of duties. The city has not been able to adequately segregate duties, but Richardson said it will never have a segregation of duties simply because there are not enough employees.

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