BELLEVILLE — The City Council on Monday will vote on whether to accept the annual audit completed by C. J. Schlosser & Co. and whether to hire the firm for next year's audit.
Some aldermen have said the city should change accounting companies, after working with the same group for about 10 years, and get a forensic audit of the city's finances.
These same aldermen are concerned the city continues to receive an "adverse opinion" on annual audits and believe the city should change its basis of accounting to get a better audit rating.
Other councilmen believe that changing companies is unnecessary because the current firm does a good job and is already familiar with the city's processes. And they say it's common for municipalities to retain auditors.
The 2012-13 audit will be available on the city's website, www.belleville.net, if the council approves the document.
The council meets at 7 p.m. Monday in the Council Chambers at City Hall, 101 S. Illinois St.
Belleville Finance Director Jamie Maitret explained to aldermen of the Finance Committee last Monday that the city will get an adverse opinion on its audits as long as the city continues to prepare financial statements on the modified cash basis of accounting instead of on an accrual basis.
According to the independent auditor's report, the cash basis method is not the method generally accepted in the United States.
"The financial statements ... do not present fairly the financial position of the governmental activities of the City of Belleville," the report states.
Maitret said city leaders, before her time, decided to use the cash basis method -- when you recognize an expense when you pay the cash out -- and is easier to understand. To switch to an accrual basis would mean the city needs to record every fixed asset it owns, such as sanitation trucks, buildings and alleys.
"The city owns 300 miles of streets," Maitret said. "I would have to value every sidewalk, alley, even if a road was built in 1989, and record that in our books."
The city's liabilities exceeds its assets because the city does not record any of the fixed assets it owns, value that would be in the hundred of millions, Maitret said.
For the fiscal year that ended April 30, 2013, the city's liabilities totaled about $113.5 million and the city's assets totaled about $108 million.
The city's net position increased by about $2.2 million from the previous fiscal year.
The city did record some of its capital assets and, net of depreciation, the total is $70.8 million. Capital assets increased by about $12 million, from $58.7 million in 2012, mostly because of the city's sewer plant expansion.
The total revenue was $58.8 million compared to total expenses of $56.6 million.
Long-term debt obligations, various bonds, totaled $108.8 million.
Maitret said that the city is not doing anything wrong by not following the new template set out by the Governmental Accounting Standards Board Statement No. 34. In the past, most cities used cash basis.
"We're following all the rules as long as we note that we keep our books on the cash basis in our audit," Maitret said. "We're not punished if we don't follow it."
And, the adverse opinion does not affect the city's A+ bond rating, where the city's reserves balance play a greater role, Maitret said.
Maitret said no one at the city wishes the city was more in compliance than her.
"It's going to take more than just me, or me a whole lot of time, to try to value all the infrastructure that we own," Maitret said.
As Belleville Ward 2 Alderwoman Melinda Hult has said since she ran for council in 2011, she believes it is time to change auditors and it would be a wise, best practice to get a forensic audit.
"A fresh set of eyes would be very helpful in streamlining our processes," Hult said.
Maitret has said forensic audits typically are done when there are allegations of fraud or negligence, for use as evidence in court.
"If there was something else wrong, the auditors would note it in there," Maitret said.
Hult said she is happy with Maitret's job performance and she is not alleging any wrongdoing. Hult said she will advocate for a new hire in the Finance Department so Maitret has the staff to "follow standard reporting practices" and take an inventory of the city's assets.
"How do you know if anything's missing if you don't have a list of what you own?" Hult said.
Hult said the city now has a geographic information system coordinator who will be mapping the city's infrastructure and that will help Maitret. The city hired Elle Davis this summer as the city's new planner and GIS coordinator in the Economic Development and Planning Department.
Hult said she consulted the Illinois Comptroller's Office and a representative said only about 30 municipalities in the state keeps records by cash basis.
Hult is not on the Finance Committee but she attended the committee meeting Monday.
The committee voted to approve the audit report and the rehiring of C. J. Schlosser & Co., and to forward both items to the full council for approval.
Belleville Ward 4 Alderman Jim Davidson, a member of the Finance Committee, said at the committee meeting that the city is lucky to have Maitret, who has four years of auditing experience.
Belleville Ward 8 Alderman Jim Musgrove, a member of the Finance Committee, said after the meeting that it is foolish to hire a new auditor unfamiliar with the city's procedures and it is unnecessary to do a forensic audit.
"What are they hoping to find?" Musgrove said. "I think it would cost more for one thing, a lot more probably. Our auditor has made suggestions and we've followed them. If we do something wrong, they'll tell us. Why do you want to change something that works?"
Here are numbers from an audit of Belleville's finances as of April 30.
Liabilities: $113.5 million
Assets: $108 million.
Net position: $2.2 million increase
Some capital assets, minus depreciation: $70.8 million.
Total revenue: $58.8 million
Total expenses: $56.6 million
Long-term debt obligations: $108.8 million