A Lesson In Governmental Accounting

Dear Readers,
First, let me say that I am not representing the City of Ridgecrest in any shape or fashion. However, Iabove average experience in dealing with Governmental Finances. If the following qualifies me then so be it... I have receive State and National Awards from multiple organizations, so I know whereof I speak.

I am using the information that the City of Ridgecrest has posted on its website. I do not have access to detailed records because they will not grant it to the general public -- folk like you and I. If they want to provide the detailed records, I and others like me are open to looking at them.

Here is the Lesson: In a multifund accounting system like a City or County operating transfers (transfers in & transfers out) are an essential part of the budget. However, Transfers In (quasi revenues) must equal Transfers Out (quasi expenditures) that is TI-TO=0.

Here is the Application: In the case of the most recent draft budget presented to the City Council by the new City Manager, the net TITO between the two fiscal years (FY Year Ending 2008 estimate and FY Budget 2009) was out of balance by $6.3 Million. In this case, the TITO was overstated in various funds in the two years. This means that the fund balance was also overstated and hence the budgeted “reserve” was a phantom number.

Now, it might be possible that staff simply made a posting error on the excel form. However, since they have not included the detailed TITO accounts in the online budget it is impossible to tell.

The staff and Council should be challenged to justify the budget they recently adopted. They have been provided with an analysis that on the summary level of TITO posted from their website, which shows their budget is out of balance by over $6 Million. Additionally, it has been in their custody since September 2008.

RidgeBlogger