The city ended fiscal year 2012 with a surplus of about $1.6 million, auditors found.

There is no plan yet on what to do with the money, but Budget and Strategic Planning Director Anne Seward said it shows the city is on a good financial track and came very close to the estimates of revenues and expenditures made in the spring of 2011.

“When you do a budget … it’s always an estimate,” Seward said. “If you’re within five percent, you’re good.”

The surplus was slightly less than 1 percent, she added.

The audit document was presented at Dec. 19 City Council meeting by the auditors, Brown Edwards. The auditors expressed an “unqualified opinion” on the financial statements, which is positive.

“All indications from them were we are doing all the things we need to be able to move forward,” Seward said.

The auditors did, however, find some weaknesses and deficiencies and encounter some problems dealing with vacancies in the city’s financial departments and a new software program, according to the report.

“We encountered certain delays and difficulties during the audit, primarily as a result of turnover in the City’s Finance Department and a change in the City’s general ledger software,” reads a letter that accompanied the report. “The staff turnover led to significant additional audit effort and assistance provided to City staff to discern the accounting treatment of certain transactions. … In addition, the change in the general ledger software resulted in additional procedures to perform our variance analysis of the revenue and expenditure accounts.”

Seward acknowledged the finance department “has had a lot of turnover in the past five years” but added she is “very proud” of her staff’s efforts to help the auditors complete their jobs successfully.

The audit firm also reported what it called “a significant number” of adjustments that were necessary for the financial statements to be in compliance with accounting principles. They included improper accounting in a number of areas, including the city’s capital assets, accounts payable and landfill monitoring expenditures; the school division’s accrued leave and capital assets; and the Economic Development Authority’s valuation of land inventory and bond maintenance fees payable.

Seward said adjustments are common in the audit process and noted the number had been cut in half from last year.

The auditors recommended management develop policies and procedures to address the weaknesses, according to the report. They included closer involvement of the Finance Department in the affairs of other departments. The city concurred with the recommendations, according to the report.