News

December 17, 2004

New Castle County government pulled a 'straight-A' in fiscal management and was told its financial reporting is complete and done fairly.

That praise came from Stephen Baloga, senior partner of the auditing firm of Ernst & Young, while reporting on the annual outside audit of the county's books to County Council's recently formed internal audit committee.

The county, he said, "is managed well financially."

After the firm's representatives participated a closed-door review of the professional performance of county auditor Robert Hicks, a report saying that he complied with the requirements set forth in the state law defining the position and recommending that he be provided with a staff so that he can better perform his duties was made public.

The performance review itself was not disclosed. State law permits public agencies to handle such matters in executive sessions not open to the public and to keep such records confidential.

At a meeting of the audit committee on Dec. 15, Baloga said the county's receiving national recognition for the way in which it manages and reports on financial affairs should not be taken lightly just because it happens every year. Qualifying for the awards is done afresh every year and is not influenced by having received them the previous year, he pointed out.

The most recent awards to which he referred were for its comprehensive annual financial report for the fiscal year ended June 20, 2003, and for its 2004 budget document. Both are from the Government Finance Officers Association of the United States and Canada. New Castle County has received the former for 23 consecutive years and the latter for 14. Baloga said he expects it will extend both streaks this year.

Similarly, he said, maintaining triple-A bond rating from all three major national rating services demonstrates that its fiscal house is in order. That, he said, stands in contrast to most county and local governments around the country which are dealing with deficits by raising taxes and cutting services.

He had high praise professional competence of the Ronald Morris, the county's chief financial officer and the finance department.

Ernst & Young issued an unqualified opinion that the comprehensive report for fiscal year 2004 meets generally accepted standards for government accounting and said its audit "resulted in no identified material weaknesses" and turned up nothing that had to be reported under current auditing regulations of the U.S. Office of Management & Budget.

The annual report showed net assets of $166 million in government operations and $190 million in business-type activities, which are mostly the operation of the sewer system. Government-activities revenue amounted to $168.3 million, of which $105.2 million came from property taxes. Revenue was up from $165.7 million in fiscal 2003. Business revenue was $45.9 million, down from $52.8 million a year earlier. The county's long-term bonded debt at the end of fiscal 2004 was $190.5 million, which was well below the legal limit of $379.6 million.

Referring to the status of the county's 'surplus', Baloga told the audit committee that different governments have different ways of defining 'surplus' and various ways of referring to it. The audit report said the balance in the general operations fund at fiscal year-end was $145.3 million. After subtracting amounts that have been committed or are reserves required by law, the balance available for future spending, as Delaforum previously reported, is $10.8 million.

Ernest & Young's recommendation to increase the internal audit staff noted that Hicks is required to perform several administrative functions in addition to his auditing responsibilities. The combination of relieving him of some of those non-auditing duties and enlarging the staff, it said, would eliminate the need to engage outside auditing firms periodically and "provide an additional measure of checks and balances" in the county's financial affairs.

2004. All rights reserved.

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