Summary
The Leelanau Township Board received the independent audit report for fiscal year ended March 31, 2024, prepared by UHY LLP (Cadillac, Michigan), dated July 19, 2024. The auditors issued an unmodified (clean) opinion on the financial statements but identified four material weaknesses in internal control and one instance of noncompliance related to budgeting. Township net position increased by $355,650 to $8,240,458, and governmental fund balances increased by $212,877 to $5,213,921.
Parks and Recreation Matters
The Parks and Recreation budget line was exceeded: $148,300 appropriated versus $151,271 actual expenditures. Capital outlays during the year included a new gravel parking lot at Peterson Park ($22,500) and renovations to the pickleball and tennis courts ($56,298). The overage was covered by higher-than-anticipated revenues and unassigned fund balance.
Infrastructure Projects
The Township continues to service debt on the 2008 General Obligation Limited Tax Bonds for the Northport Sanitary Sewer Project, with an outstanding balance of $600,980 as of March 31, 2024 (Township responsible for 19.9%, Village of Northport for 80.1%). Interest of 1.625% is payable annually, with final maturity in April 2028. A related special assessment receivable of $82,302 is being collected from residents, with annual installments of approximately $41,243 through 2025 (2.625% interest for those paying over time).
Other Business
The Township adopted GASB Statement No. 96 on subscription-based IT arrangements during the year, though disclosures were deemed insignificant. The Township's defined contribution pension plan (administered by John Hancock) was fully funded, with employer contributions of $113,815 (including $1,315 in administration fees) against covered payroll of $1,071,821. As a subsequent event, the Township purchased a Kubota tractor for $69,235 after year-end; no financial statement adjustment was required.
Financial Summary
- Total assets: $9,320,763; total liabilities: $1,080,305; total net position: $8,240,458 (unrestricted portion: $2,352,037).
- Total revenues: $3,396,899, driven largely by taxes of $2,915,165; total expenses: $3,041,249, led by public safety ($1,689,579) and general government ($553,470).
- General Fund: original budget $931,013 revenue/$951,013 expenditures; final amended budget $931,013 revenue/$1,012,263 expenditures (a $61,250 increase); actual results were $977,552 revenue and $778,869 expenditures.
- Budget violations: Township Board ($13,450 budgeted vs. $29,173 spent), an unbudgeted $12,000 "Other" general government expense, and Parks and Recreation overage noted above. Overages were covered by unassigned fund balance.
- No budget was adopted for the Library Fund, a violation of the State's Uniform Budgeting and Accounting Act; the 2023 library millage of 0.5000 mills raised approximately $272,400.
- Long-term obligations totaled $732,855, including $600,980 in bonds and a $131,875 installment purchase agreement (fire truck), with $278,140 due within one year.
- ARPA funds remained unobligated and unspent as of year-end; auditors recommended obligation by December 31, 2024, to avoid repayment.
- Auditors noted the Township could be earning over $10,000 per month in additional interest income given current market rates.
Action Items
- Draft and adopt a formal written capitalization policy (currently $1,000 threshold, required under GASB 34).
- Adopt an ACH policy as required by Public Act 738 of 2002.
- Review budget-versus-actual reports monthly and propose amendments as needed; adopt a Library Fund budget at the next regular board meeting and annually thereafter.
- Obligate remaining ARPA funds by December 31, 2024, consulting legal counsel as needed.
- Investigate higher-yield investment options and ensure interest is spread across pooled fund accounts.
- Record credit card transactions monthly and reconcile bank balances to the General Ledger.
- Ensure the Clerk and Treasurer reconcile records to each other monthly, seeking outside help if balances do not match.
- Avoid paying sales tax on exempt Township transactions.
- Consult with the Township attorney regarding the Cemetery Perpetual Care Fund: pass a resolution on future lot-sale proceeds and determine whether prior years' interest earnings should be un-endowed for maintenance spending (original Trust Agreement cannot be located).
- Strengthen IT internal controls regarding software, data security, and hardware use.
- Implement a signed/dated timecard system with supervisor approval, similar to the Fire Department's system.
- Reconcile outstanding Library expenses paid by the Township since the March 31, 2023 outsourcing agreement and complete a final settle-up with the Library.
- Maintain documentation supporting Board actions, including budget amendments (support for a prior Board-approved amendment could not be located during the audit).
- Address five identified findings (2024-01 through 2024-05) including lack of independent GAAP reporting controls, segregation of duties, untimely recordkeeping, auditor-proposed material journal entries, and the unfavorable budget variance tied to the missing Library Fund budget.