According to the Report to the Treasurer for October 2011-February 2012, AATA experienced an agency-wide loss for those 5 months of $151,420. (A bad trend.) But the reserves for unrestricted assets are calculated to be at 6 months, presumably at budgeted rates of expenditure. (Good; minimum is 3 months.) PMER reports also show an increase in ridership, which means a drop in expense per passenger. (Excellent trend.)

Any future increase in rate of spending should be judicious, given that SAFETEA-LU, the federal transportation bill, is due to expire March 31 and the House has not taken it up. In addition, the Senate has passed a new omnibus transportation bill (MAP-21) but the House version is wildly different and the prospect for moving on that is very poor.

Add to these the uncertainty over the Michigan legislature’s resolution of the large clump of new transportation measures, and it looks like stormy weather ahead in budgetary terms for AATA. A good time to pull the sails in a bit.

The job of auditors is to determine that proper accounting methods are being followed, that accounts balance, and to present a proper summary of the finances at the time of closure of books. They may find evidence of some irregular practices, like failure to document certain types of expenditure, and it is good when they don’t. But their statement should not be taken as a “clean bill of health” for the financial policies of a body.

Analysis is found in the “management letter”, which summarizes the financial position of the body in overview. This is actually prepared by the management, not the auditors. Here is what the auditors say about that:

“We have applied certain limited procedures, which consisted principally of inquiries of management, regarding the methods of measurement and presentation of the required supplemental information. However, we did not audit the information and express no opinion on it.”

I stress this because the chair of the AATA Board, Jesse Bernstein, cited the audit last Saturday at a forum as evidence that AATA’s finances were in good shape. But those statements were in fact the opinion of management, not of the auditors.

Washtenaw County received awards year after year for its audits through the period when it was making investments in building projects and offering generous contract terms to employees, even as the state stopped making revenue-sharing payments and the Michigan economy was in decline.