KRUM — City leaders learned that bookkeeping has improved at City Hall, but the general fund balance is still low.

At its auditor’s recommendation, the city would not publicly release the draft of its annual audit report, but Mayor Terri Wilson said Krum had about $203,688 cash on hand as of Sept. 30.

“I still think we have things to work on,” Wilson said. “That’s one of my goals as mayor — to improve the city’s financial condition.”

Krum had $78,508 in unrestricted funds as of Sept. 30, 2006, which was about two weeks’ worth of spending at the time. The latest figure represents about three weeks’ worth of expenses at current spending levels.

Wilson said neither amount includes cash available in the city’s water and sewer fund.

Accountants generally recommend that cities have about three months’ worth of money in the general fund to get them through the leanest quarter, before property taxes come in.

Fort Worth-based independent accountant William Spore gave a thorough presentation to the City Council of his draft audit report during the city’s special meeting Thursday.

Spore told the council that his final audit report, which he would turn over shortly, would include details on both significant deficiencies and material weaknesses he found as he tallied Krum’s numbers for the 2007 fiscal year, which ended Sept. 30.

Most of the deficiencies and weaknesses had been addressed early on, Wilson said. Those included standardizing the approval of bill payment, transferring money between city accounts and tightening internal control of the city’s checking account.

Spore agreed that the city was quick to respond to his recommendations, and he would double-check those changes at the end of the 2008 fiscal year.

“Next year I will compare the [management] letter to see how you did,” Spore said. “I have to commend how quickly the city corrected matters. There are some cities that I would write the same letter next year.”

Some cities hire a second accountant to make sure that the staff follows generally accepted accounting principles throughout the year, bolstering the quality of periodic reports during the year and making it easier to get through the annual audit. But many small cities can’t afford that extra safeguard.

“It’s not always cost-feasible, so you make a decision to live with it,” Spore said.

The city was still trying to implement several recommendations, most of them minor, Wilson said. However, one of Spore’s major recommendations was to put a formal system in place for overseeing construction projects and approving those payments beyond what was provided by the city engineer.

The City Council tabled acceptance of the audit to the next meeting, so that it could be done in its final form. However, several council members said they were happy the work came through in a timely manner.

“We appreciate getting this early in the year, instead of after May,” council member Alice Carr said.

The 2006 audit was not completed until after the May general election, more than four months after it was due.

The Texas Local Government Code requires that audits be submitted to cities 120 days after the close of the fiscal year. For most area cities, the fiscal year closes Sept. 30, making the audits due in January. But the code has no penalty for audits submitted later than 120 days.

PEGGY HEINKEL-WOLFE can be reached at 940-566-6881. Her e-mail address is pheinkel-wolfe@dentonrc.com.