CPA gives Town of Lovell praise in audit report

The Town of Lovell received a glowing report about the town’s financial practices during an audit report from CPA James Seckman at the October 13 town council meeting.

Seckman told the council that there are three primary purposes of an audit, and he reported his findings in each area.

The first item assesses whether the town’s financial statements are in accordance with accounting principles generally accepted in the United States, and Seckman reported a “clean or unqualified opinion.”

Second, Seckman assessed deficiencies in the town’s internal control structures, and like most small towns, Lovell’s segregation of duties is an issue, but the town has implemented “compensating controls,” he said.

“By having the town administrator approve all journal entries and review bank reconciliation to make the council aware that they’re part of the internal control system through the review and approval of bills, those are what we call compensating controls. So it offsets that limitation, the segregation of duties,” Seckman said.

Third, the audit assessed the town’s compliance with all laws, contracts, grant agreements, loan agreements, state statutes and internal revenue service requirements.

“We find you to be in compliance with all those, so your records are extremely clean,” he said, adding, “Top-notch job.”

Seckman then reported on the health of the town’s accounts.

• General Fund: There is $5,062,844 in cash in the town’s General Fund, with annual operating expenses of $2,348,107. Seckman said that means Lovell has 2.15 times expenses in reserves, or 25 months of operating cash, and he said six to 12 months is recommended. Annual revenue exceeded expenses by $370,199 over the past year.

“Your general fund is extremely, extremely healthy right now, because your revenue has exceeded your expenses in the general fund by $370,000,” he said. “Most entities are really struggling keeping 12 months’ worth of reserves in their General Fund. So you have 25. That’s fantastic. I’d rather be in that position.”

• Water Fund: The Town has $1,537,210 in the Water Fund, with annual operating expenses of $1,043,760 -- 17 months of operating cash with 12 to 36 months recommended. Cash increased by $225,327 over the past year.

“There’s so much infrastructure involved in water, and it’s getting more expensive,” Seckman noted. “I would say the life of your infrastructure is somewhere in its mid-life. So that 17- to 24-month range is probably adequate.”

Sewer Fund: The Sewer Fund has $1,146,558 in cash, with annual operating expenses of $504,133, giving the town 27 months of operating cash in the fund, with 12 to 36 months recommended. Cash increased by $51,804 over the past year, the CPA said.

“So you’re at that midpoint. You’re above that 24-month threshold. Cash increased by $51,000 in that fund. So again, all positives,” Seckman said.

Sanitation: Cash in the Sanitation Fund amounts to $376,645, with $493,867 in annual operating expenses – nine months – but enough cash to cover the cost of replacing trucks and receptacles. Cash increased by $122,987 over the past year.

“Sanitation funds are a little bit different,” Seckman said. “We just want to make sure we have enough cash reserves when it’s time to replace the sanitation trucks. We have enough money set aside for that, and we’re generating enough cash flow each year to replenish that. They’re saying now that with these sanitation trucks you can get about 8,000 hours on them. I don’t know what you guys’ replacement policy is, but that’s what a lot of our cities are doing. When we get to 8,000 hours on a sanitation truck, it’s time to upgrade. … You’re generating adequate cash flow in there. I think we’re in good shape in that fund.”

Mayor Tom Newman noted that the last time the town needed a garbage truck, it took years to obtain one, and the current “new” truck is about three years old.

Seckman added that the town is covering 76 percent of depreciation in the Water Fund, 68 percent of depreciation in the Sewer Fund and 100 percent of depreciation in the Sanitation Fund.

He also noted that the town has $2,627,823 in debt to still be retired from the extensive water and sewer project the town undertook in stages several years ago. The interest rate is 3.05 percent with $450,000 of the loan repaid annually.

Clerk/treasurer Colleen Tippetts pointed out that the town has been paying off the loan with monthly payments rather than one annual payment, which has cut eight to 10 years off the payoff date, currently estimated to be around the year 2032 to 2034 range.

Regular business

Following the report by Seckman, Mayor Newman held a public hearing on the renewal of eight town liquor licenses. There were no comments, and the town council later voted to approve all of the renewals.

Town Administrator Jed Nebel presented information about the Wyoming Department of Transportation National Electric Vehicle Infrastructure (NEVI) program funding allocation, noting that WyDOT is seeking requests for proposals for the program.

Under the program, the town could receive 80 percent funding for an electric car charging station, with the town providing a 20 percent match. According to the release, each NEVI station must have at least four charging ports, and WyDOT is asking for at least two Level 3 fast charging ports at each location.

Nebel said there is a push to place charging stations in small towns, with many charging stations currently located along the interstate highway system or in cities.

“If you want me to dive into this, I will,” Nebel said.

“It is something we need,” councilman Mike Grant said, adding that people driving to Yellowstone or Cody need places to charge their electric vehicle.

Newman said a charging station could be located at a town park or near a restaurant. Councilman Dan Anderson said a location downtown would be great.

Mountain bike trail update

Nebel said the cultural survey currently underway for the Cottonwood Canyon Mountain Bike Trail System project east of Lovell may have to be more extensive than originally thought, requiring the town to allocate additional funds to the survey. The council voted to approve up to an additional $30,000 in matching funds from the town’s Community Development Block Grant fund.

Nebel also informed the council that the grant the town sponsored on behalf of the Bureau of Land Management for a vault toilet at the Darnell Hills Recreation Area northeast of Lovell was approved.

Finally, the council voted to approve three boundary line adjustment plats recommended by the town planning and zoning commission in the Legacy Subdivision, Old Hospital Subdivision and Robin Road Subdivision.

The council scheduled a work meeting for November 4 at noon.