Wake Forest earns “record breaking” audit report

Wednesday, January 11, 2023 - 12:45pm

In December the Board of Commissioners (BOC) received the results of an independent audit report from Cherry Bekaert LLP for the period July 1, 2021, through June 30, 2022. In addition to not revealing any audit findings or problems, the report acknowledged that the Town is “in compliance” with all its financial policies and operating with strong internal controls in place.

The report also included several financial performance highlights for Wake Forest which enjoys a triple A rating by all three national rating agencies:

  • Net change in the Town’s fund balance resulted in an increase of $7.6 million in the general fund.

  • Cash balances totaled $48.9 million, significantly higher than the $32.7 million in 2021. Along with above mentioned increase, this also includes American Rescue Plan Act (ARPA) funds received by the Town.

  • Wake Forest collected 99.82% of its property taxes - higher than the average rate of 98.95% for towns of similar size.

  • The Town’s property tax base was $7.1 billion on June 30, 2022, compared to $6.8 billion at the same time last year.

  • Property tax collections were $35.4 million - $1.7 million more than last year.

  • The electric fund’s change in net position increased $29,000.

  • Wake Forest has a total outstanding debt of $42.8 million, which is substantially less than the legal debt margin of $531 million. Also, the percentage of the debt compared to the tax valuation is 0.56%, considerably less than the Town’s policy of 2% or the state’s statute which is 8%.

“We had a record-breaking year,” said Chief Financial Officer (CFO) Aileen Staples. “We increased our fund balance over $7 million and enjoyed a clean audit with no findings. The icing on the cake was that we received the Certificate for Achievement of Excellence in Financial Reporting for the 32nd year in a row.”

The almost entirely positive report did reveal one area of concern related to the Town’s electric fund cash position. As of June 30, 2022, unrestricted cash/total expenses for the electric fund stood at 12.09% - less than the targeted 16% which represents approximately two months of operating cash as defined by the Local Government Commission, a division of the North Carolina State Treasurer’s office.

Staples says the gap was caused by several factors, including rising costs and a delayed electric rate increase. Originally scheduled for 2020, the Town postponed the rate increase pending the results of a 2019-20 service/rate study. Although the increase eventually took effect in September 2021, its limited impact over the past fiscal year coupled with the rising cost of doing business (significantly higher prices for wire and transformers) forced the Town to utilize its cash and working capital to sustain operations.

“The challenges we faced over the past several years, first with COVID, then with the rising costs of transformers and wire, and the delayed rate increase, forced us to utilize our cash, which tightened our margins,” explained Staples. “Still, our team will present the Board of Commissioners with options for increasing our cash position at their planning retreat later this month.”

To view the 2021-22 Annual Comprehensive Financial Report, visit bit.ly/WFAnnualComprehensiveFinancialReport. For more information on the 2020-21 audit report, contact CFO Aileen Staples at 919-435-9461 or [email protected] or Samantha Sanchez, Assistant Finance Director at 919-435-9480 or [email protected].