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External auditor reports clean opinion, flags one internal-control item tied to pension grant
Summary
Yo and Yo partner Alan Cantor delivered the fiscal 2023–24 audit presentation, reporting an unmodified (clean) opinion and noting one internal-control comment tied to recording a state pension grant after year end; management-letter items were fewer than prior years.
Alan Cantor, partner at audit firm Yo and Yo, presented Fraser’s fiscal year 2023–24 audit to the City Council and said the auditors issued an unmodified (clean) opinion on the city’s financial statements.
Why it matters: a clean audit opinion signals to residents, bond markets and grantors that the city’s financial statements fairly present the government’s financial position in accordance with generally accepted accounting principles.
Cantor told the council the audit went well and was filed on time for the first time since 2021. He credited the finance director and city manager for completing overdue accounting work and said the audit team identified one internal-control issue and three management-letter comments — an improvement from several material weaknesses reported in prior years.
The internal-control item stemmed from a state pension grant of about $3.9 million that was recorded to the city’s general fund after year end; the state required the transaction to be recorded as revenue and a like expenditure even though the cash went directly to the Michigan Employees’ Retirement System (MERS). Cantor said the grant was recorded after year end and the city did not amend the general-fund budget to reflect the transaction, producing a large over-budget variance in the audited statements. He characterized the issue as an unusual, one-time occurrence and not a material weakness; the auditors will report it in the governance letter.
Management-letter matters that remained from prior years included long-outstanding checks that should be reissued or turned over to the state as unclaimed property, outdated items on the capital-asset list that may not reflect current holdings, and aged accounts receivable for the building department that need cleanup.
Cantor also noted favorable trends in the general fund and the water and sewer enterprise: revenues exceeded expenditures most years in the presented five-year trend, and the water and sewer fund’s net position and capital-investment trends were improving. He said the city received a state pension payment that increased the funded percentage for the city’s MERS liability from about 50% to roughly 58%.
Ending: Council members thanked the finance director and staff; auditors and staff agreed to continue addressing the management letter items and finalize any recommended process changes.
