Ithaca council accepts delayed 2021 audit, auditors flag accounting weaknesses and late filings

The Ithaca Common Council on Aug. 6 voted unanimously to accept the city's independent audit for the year ended Dec. 31, 2021, after a presentation by outside auditors that highlighted corrected accounting errors, operational weaknesses and late federal reporting.

Auditors from Ansero Advisors LLC told the council that the city's financial statements for 2021 were ultimately usable but required several significant adjustments. "Other than the timing of them, other than the fact that they are quite late, the financial statements are pretty good," an Ansero Advisors representative said during the council meeting.

The audit matters because municipal financial statements underpin bond-market confidence, budget decisions and federal grant compliance. The auditors described recurring weaknesses in how the city records capital projects and fixed assets, noting those led to formula errors and adjustments during the 2021 audit cycle. Auditors also flagged a late single-audit filing required for certain federal programs and identified a significant deficiency tied to review of ARPA-related reporting.

Key figures presented in the August 6 briefing were for 2021: the general fund showed an increase in fund balance of roughly $6 million; total fund balance across funds was about $50 million; and on a government-wide basis the city reported a net position deficit around $65.6 million driven largely by other post-employment benefit (OPEB) actuarial liabilities. Auditors said the city spent about $950,000 in ARPA funds in 2021 that needed to be recognized in the general fund accounting, and they adjusted cash, receivable and payable balances that together changed fund balances across funds.

Council members asked for clarification about causes of delay and for ways to reduce future errors. The auditor said delays were caused in part by staff turnover and COVID-era staffing gaps and that some requested records took weeks to produce after follow-up. The auditors recommended a physical inventory of capital assets and tighter controls around spreadsheet-based tracking.

Council members and the auditor discussed debt and long-term obligations: the audit showed long-term debt (bonds) of roughly $103 million in 2021 and short-term borrowings of about $15.8 million; auditors noted the city was within the New York constitutional debt limit at roughly 59 percent of capacity for that year. On retiree health-care obligations, the auditor said the large negative net position is common for municipalities because OPEB liabilities are actuarial estimates with no dedicated trust asset in many cities.

The council moved and seconded a resolution accepting the auditors' report and related single-audit materials; the motion passed unanimously.

The auditor urged the council to review the management discussion and analysis section of the report for a concise summary of the 2021 financial picture and to continue efforts to move accounting systems onto integrated software that will reduce reliance on Excel spreadsheets and lower the risk of formula errors.

The council accepted the report and voted to file the audit materials as required; members indicated they expect improved timeliness and controls on later audit years.