Merriam council acknowledges 2024 audit; auditors report clean opinion but flag internal-control issues

MERRIAM, Kan.

The Merriam City Council on Wednesday acknowledged receipt of the city—s 2024 independent audit and a compliance engagement covering Coronavirus State and Local Fiscal Recovery Funds (CSLFRF). Amy Tharnish, an auditor with Allen, Gibson & Hulick (AGH), told the council the firm issued an unmodified (clean) opinion on Merriam—s 2024 financial statements and reported no compliance findings specific to the CSLFRF expenditures.

The auditors told the council they found two material weaknesses and one significant deficiency in internal controls. "The first one relates to year-end reconciliations," Tharnish said, and the second "relates to system access rights" after a new financial system implementation. The significant deficiency concerned the journal-entry approval process; the auditors said some entries lacked proper approval or documentation.

The results matter because a clean opinion means the financial statements present fairly in all material respects, while the control findings identify places management should strengthen processes. Tharnish told the council the city implemented a new accounting policy in 2024 requiring the recording of a liability for compensated absences; that change increased the recorded liability by about $78,000. She also noted one uncorrected, immaterial misstatement related to investment earnings in the capital improvement fund that management and the auditors agreed not to record.

Director Borth, the city—s finance director, thanked AGH and said staff have mapped solutions and begun implementing corrective steps. "We recognize that every audit is a great chance for improvement," Borth said, adding that some staff turnover and a new financial system contributed to the issues identified. City Administrator Chris Engel told the council the changes reflect significant staff turnover and system changes and thanked the auditors for pointing out areas for improvement.

After the presentation President Hans asked for questions; none were raised that changed the findings. A council motion to acknowledge receipt of the audit reports passed 8-0. The motion did not adopt policy changes; it formally accepted the reports and directed staff to continue addressing the auditor findings.

Background: the audit firm also performed a compliance engagement required because the city expended more than $750,000 in CSLFRF funds during the year. Tharnish said the compliance work found the city complied with the grant—s requirements and that the internal-control findings repeated in the compliance report were the same ones noted in the financial-statement audit.

Council members and staff said they will monitor implementation of the auditor recommendations and expect follow-up next year.