External auditor issues clean opinion; flags two repeat material weaknesses and high fund balance

CliftonLarsonAllen issued an unmodified — or ‘‘clean’’ — audit opinion on Polk County’s financial statements for fiscal year 2024, the firm told the Polk County Board of Supervisors at its Sept. 16 meeting. The auditor also reported two repeat material weaknesses and recommended continued governance oversight.

The firm’s principal, Jonathan Sherwood of CliftonLarsonAllen, told the board the unmodified opinion covers ‘‘the facts, amounts [and] disclosures of your financial statement’’ and represents the highest level of assurance an independent auditor can provide. He said the audit identified two repeat findings: ‘‘material audit adjustments’’ and ‘‘limited segregation of duties.’’

The material audit adjustments finding refers to journal entries the auditors proposed and posted to arrive at the audited numbers; Sherwood said the county files roughly 17–20 adjusting entries annually and that if ‘‘there’s even one entry that’s grand enough in scale that’s material,’’ it would trigger the finding. On segregation of duties, he said limited staffing across department transaction cycles makes complete segregation impractical and that governance review serves as a compensating control.

Sherwood reviewed key financial metrics for 2024. The county’s unassigned general fund balance was about $31,000,000 compared with general fund expenditures of about $35,700,000, producing an unassigned-fund-balance ratio of roughly 86.9%. He said Polk County’s minimum fund-balance policy was updated to 50% in 2025 and that the board’s 86.9% level is ‘‘fiscally healthy’’ while cautioning that federal and state grant inflows that elevated reserves are trending down and capital spending will draw down balances over time.

The auditor also summarized other funds: a negative balance in the dams special revenue fund of about $1,800,000 for 2024 that Sherwood attributed to timing (expenditures recognized in 2024 with reimbursement realized in 2025), a positive operating result at Golden Age Manor (the county nursing-home enterprise) of about $1,100,000 driven by roughly a 10% occupancy increase, and an operating surplus in the highway internal service fund (about $505,000 reported, noting depreciation and noncash items affect that figure). Sherwood said the county uses only about 2.5% of its statutory debt capacity and that long-term debt remains low.

Board members asked whether those two repeat findings are common; Sherwood said in his Western Wisconsin client base ‘‘98% of all of my clients have both of those findings.’’ He recommended continued oversight rather than promising a set of actions that would eliminate the findings immediately. Sherwood also confirmed the county submitted required federal/state reports and filings on time and had no findings under the federal single-audit work he performed.

Sherwood closed by directing the board to the audit report’s fund-balance tables and noting that reviewing planned capital spend will be important as the board considers budget decisions and projected spend-downs of federal/state dollars.