City auditor gives clean opinion on FY2024 statements, flags material weakness for unrecorded transactions

Jeff Schroeder of Bucinec, Hay, Roe and Schroeder LLC told the Poplar Bluff City Council on Aug. 4 that the firm issued an unmodified (clean) opinion on the city and municipal utilities’ FY2024 financial statements but identified a material weakness related to recording errors. In his presentation, Schroeder said auditors recommended significant adjustments because about $233,000 of capital improvements had not been recorded in the capital improvements fund and loan proceeds and capital expenditures associated with a Highway 67 fund—totaling a little over $11 million—had not been recorded in the financial statements. “The transactions were done right. They were handled properly. They just weren’t recorded in the financial statements the way they needed to be,” Schroeder said. Why it matters: the unmodified opinion means the statements fairly present the city’s finances under the modified cash basis of accounting, but the material weakness indicates deficiencies in internal controls over financial reporting that the city should correct. Schroeder also reported that several funds had either overexpended their budgets or had no adopted budget for the year; he recommended that the city amend budgets as appropriate or keep expenditures within approved limits. He said those budget-comparison findings are a common audit result and that the state auditor’s office might take a more conservative interpretation if it reviewed the matter. On federal awards, Schroeder said the city expended about $4.8 million in federal funds in FY2024 (approximately $3.2 million of which was ARPA coronavirus funds) and that auditors found no instances of noncompliance in the tests they performed. He did note a control weakness: staff had not always checked the federal suspension/debarment status of vendors before making payments to five vendors; the vendors were later found to be acceptable. Council action: the council moved, seconded and voted to accept the audit report during the meeting. The motion was approved; the meeting record does not show a recorded roll-call tally or the individual names of the mover and seconder. Next steps and city response: Schroeder recommended establishing or strengthening controls to ensure transactions are properly recorded and that staff check vendor debarment status when federal funds are involved. Council members asked about potential ramifications for budget noncompliance; Schroeder said to his knowledge there is no direct statutory penalty for the item but the state auditor might take a stricter interpretation. The council accepted the audit and will proceed with recommended corrective actions.