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City's financial house in fine form
It’s good to know when things are going well with the budget, but when an independent expert says they’re going well, it’s very good.
It’s no wonder, therefore, the good feelings over the city’s finances are permeating city hall in the wake of a most positive report from Don Simpson, partner with BDO, one of the leading accounting and advisory firms in the country.
Simpson shared the news with Castlegar City Council to open the regular meeting of June 23.
A passing grade would be one way to describe the result of a close look at the City’s financial house.
Simpson, after directing gratitude to city staff for having all materials at the ready “in a timely fashion,” credited the city for financial records which were “correct in all respects, according to fundamental accounting framework.”
“As auditors we’re always looking for financial health in an organization,” told council. “About two thirds of the way down the document there’s a line item called net financial assets, that dollar value represents cash and negotiable instruments in excess of all financial liabilities of the city. The City of Castlegar, at the end of 2013 had approximately $5.6 million in net financial assets.”
Mayor Chernoff commented after the meeting.
“It’s tremendous when you look around and you’ve got $5.4 million of net (liquid) assets and the auditor says ‘you guys are in great shape. The good thing about it is that we’re in great shape, but we’re still doing things on a regular basis. We’re doing well and taxes aren’t too high. It’s working out well.”
Chief Administrative Officer John Malcolm commented on the situation in a July 10 phone call with the Castlegar News.
“Clearly it reflects the great work of our Chief Financial Officer (Andre Buss) and his team.”
The high marks earned by the City of Castlegar take on added significance when hearing Malcolm supply relevant background information.
“There was a major change in financial reporting and balance sheets a few years ago,” said Malcolm. “It included a requirement for local governments to depreciate their capital assets. This was something that was new. You had to add up the value of sewer pipes, water pipes, roads, storm drains, fire trucks… everything the municipality owned, and apply a depreciation against it, and most municipalities in the province came out with a very significant minus.”
At this point Andre Buss weighed in. “We got a positive balance of net financial assets,” said the Director of Finance. “One of the biggest things is that we don’t have long term debt.”
Malcolm interjected that the local council has been known to take on long term debt, but also to conscientiously pay it down as soon as possible and practical.
“It (long term debt) is not necessarily a bad thing,” explained Malcolm, “but to date Council has been wary of taking it on.”
What the financial scenario boils down to, among other considerations, is that the city has a handy cushion… some ready resources should some kind of emergency come up.