The Village of Northport received a clean 16-month audit report for the fiscal year 20232024, which was presented at a special meeting on March 7 by the accounting firm UHY, LLP.
According to village minutes from the special meeting, they encountered challenges due to the “time-consuming process of merging a 12-month ledger with a 4-month ledger, including a $26,000 discrepancy in sewer special assessments that needs to be addressed with Leelanau Township.”
Northport Village Manager Jim Dyer addressed why the audit involved significantly more work than anticipated at the council’s March 13 regular meeting. Dyer said the first reason being because the village system could not produce a 16-month report, explaining how auditors had to take so much more time to conglomerate the 12 month and the four month budget together. The second reason was because an amount of money that was expended by the village before NLTUA was formed was booked as a ‘receivable’ asset without anybody to receive the money from.
“I don’t know how you could have proved an audit that basically identifies something as an asset with no source of where that payment was going to come from. So trying to figure that out added a number of additional hours to the audit both for staff as well as for the auditor,” Dyer said.
The third reason why they encountered challenges in the audit is because of the discrepancy in sewer special assessments. Dyer said the township collects sewer assessments that were to be paid overtime at a low interest rate, adding that there was a closed group of people that were permitted to pay the original sewer connection fee. A portion of that collected money goes to the township because it makes up 19% of the sewer system, Dyer said, and some of it goes to Northport if it’s a property within the village. The amount owed to the village that the township was supposed to collect and distribute to them, about $26,000, still needs to be remedied.
“I think we got a very fine, very capable and very accurate audit of our financial statements as they exist now, but these three things are troubling and we intend to figure them out, but it did cost a lot of time and additional money… They’re (the audit firm) giving us till the next audit two years from now to actually resolve that,” Dyer said. “The original amount for the audit was $18,000 roughly, the amount of additional work that they spent looking at these three issues is an additional $25,000. They have agreed to cut that by a third, 35% down to $16,589, and they’re also willing to take half of it in this budget year and half of it in the next budget year. So we just got a real hard lesson on what it’s like to have an audit firm for 20 plus-years and not paying a lot of attention to what they were doing.”
The audit is conducted every year for the purpose of forming opinions on the financial statements that collectively comprise the Village of Northport’s basic financial statements. All of the village funds can be divided into two categories, governmental funds and proprietary funds.
Based on those findings, the general fund saw a slight decrease, but remains stable, while the major street fund maintains a healthy balance. The water fund requires rate increases to strengthen its financial position, and the marina fund improved its net position despite project expenses.
Financial highlights include how the assets of the village exceeded its liabilities at the close of this fiscal year by $12,612,006. Of that amount, $1,115,533 can be used to meet the village’s ongoing obligation to citizens and creditors. It was also noted that the village’s net position decreased by $111,451 during the fiscal year. In addition, government activities decreased by $326,035 and business- type activities increased $214,584.
Other highlights included balances for unassigned and unrestricted village funds. As of June 30, 2024, the governmental funds of the village reported combined ending fund balances of $1,994,903, of which $676,080 was unassigned. The proprietary funds of the village reported a combined ending net position of $3,289,576 as of the same date, of which $298,143 was unrestricted.
The auditors recommended reconciling the sewer assessment balance with Leelanau Township through either a payment or a clarification of the discrepancy, implementing investment and ACH payment policies, exploring higher-interest cash holdings, consolidating the fireworks fund with the general fund, and strengthening financial oversight by improving the segregation of duties. Despite these recommendations, the audit confirms that the village’s overall financial condition remains solid.
