Audit shows City of Cape on good financial footing

Lisa Mills, finance director for the City of Cape Girardeau, said the fiscal year 2022 audit presented before Cape Girardeau City Council members Tuesday, Feb. 21, showed the city was in "good health" financially.

The audit was conducted by Cape Girardeau-based accounting firm Beussink, Hey, Roe & Stroder LLC — who have performed annual audits of the city for many years. Jeffrey Stroder presented it Tuesday.

Two material adjustments were made during the audit. Mills characterized one — a $437,500 overstatement in liabilities to the risk management fund and understatement of expenses for the same amount — as a timing issue. The journal entry noting the payment was not made until after the audit had begun, requiring it to be noted as an adjustment in the audit. The other adjustment was needed for bond payments that were recorded in the wrong place.

"They were obvious errors," Stroder said.

He said the obvious nature of the errors indicated to him they were not attempts to hide actions but were genuine mistakes. They appear in around 80% of the audits his firm conducts, he said.

In prior years, these adjustments wouldn't have been noted because they were made before the audit's completion. However, recent changes in the rules for audits require adjustments of a certain size be reported in the audit even if they are made prior to its completion.

Financial health

The city's net position — the value of assets subtracted by the initial cost of setting up the assets — grew 6.2% from the previous year. Net position is a barometer used frequently by financial analysts to determine a government's financial position.

"At the conclusion of this fiscal year, 2022, all of the indicators went in the right direction, and were all up, much improved across the board," Mills said.

Mills said she would like to continue to focus on managing the city's debt in the future, but to make sure to strike a balance with the city's other financial obligations.

Revenue

Revenue during the 2022 fiscal year increased by more than $5.8 million thanks to various taxes collected by the city compared to the previous year.

The following taxes increased:

• Sales tax — 7.2% ($827,835)
• Use tax — $821,403
• Franchise tax — $521,826
• Restaurant tax — $238,915
• Hotel/motel tax — $214,719

Gaming revenue from the casino rose $60,530 from the previous year.

Expenses

During the same year, general fund expenses fell $619,267 — 2.3% — and capital improvement expenses fell more than $5.6 million dollars.

Salary costs rose more than $520,000 in the fiscal year and overtime costs increased $156,359.