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<br />purchased with the Federal and State funds. We also have to report these expenditures to <br />the Federal and State agencies. <br /> <br />Adequate controls do exist to monitor these funds. At no time have the integrity of funds <br />been in question. We do find it confusing that the State would point out to us that two <br />Special Revenue Funds did not have budgets when in fact we have 5 special revenue <br />funds without budgets. I have also attached a fax we received from the State on <br />November 9, 2004. In this fax it was pointed out that we had missing budgets in the <br />Sheriffs Department Special Revenue Fund and the Cannon Memorial Library Fund. <br />Somehow the Cannon Memorial Library Fund got switched to the Capital Reserve Utility <br />Fund by the time the November 24, 2004 letter was written. The Cannon Memorial <br />Library Special Revenue Fund was established during the fiscal year ended June 30, <br />2003. Also please note on the attached fax that the State finding was X'ed in the White <br />Letter (WL) column and not in the Corrections Needed column. Corrections Needed <br />means that the finding has to be corrected before the Comprehensive Annual Financial <br />Report can be accepted by the State. Items X'ed in the White Letter column are for the <br />local government to consider making adjustments in future reports. <br /> <br />) <br /> <br />North Carolina General Statute 159-13 requires that all financial transactions be <br />appropriated during the year. Please note that The Capital Reserve Utility Fund has <br />never had expenditures. The fund has only had an accumulation of revenues. <br /> <br />Although we do not completely agree with the reasons obtained from the State, since all <br />Special Revenue funds were not in question without budgets, we will prepare project <br />ordinances and/or budget amendments for your approval during the current fiscal year. <br />Also Note 2 on page 75 of the June 30, 2004 Comprehensive Annual Financial Report <br />(see attached) was revised to include a disclosure of the fact that we "had five Special <br />Revenue Funds without budgets and appropriations will be made for these funds in future <br />years. This should satisfy the State's concerns. <br /> <br />cc: Mr. John D. Day, County Manager <br />Potter & Company, PA, CPA's <br />Mr. T. Vance Holloman, Director, Fiscal Management Section <br /> <br />r:--'f <br />