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Smithville auditors deliver clean opinion, note repeat material weaknesses
Summary
External auditors told a Smithville work session they issued an unmodified (clean) opinion for the 2024 audit but identified two repeat material weaknesses related to preparation of financial statements and audit adjusting entries; city management said it will work to mitigate the issues.
At a Smithville work session, Adam Polley, principal in charge of the audit, told aldermen the 2024 audit resulted in an unmodified — "a clean audit opinion." Polley said nothing "alarming" surfaced during the audit but auditors issued two repeat material weaknesses.
The auditors focused their presentation on audit results rather than the city's financial numbers. Polley said the two material weaknesses were "preparation of the financial statements" — meaning auditors provided significant assistance to ensure statements met accounting standards — and the related need for audit adjusting entries. He said such findings are common for municipalities of Smithville’s size and repeated from prior years.
Polley explained the preparation finding arose because auditors assisted the city in assembling statements and footnote disclosures required by Governmental Accounting Standards Board guidance. "We assisted the city in putting together the financial statements to ensure that they were in in accordance with accounting standards," he said. On adjusting entries, he said auditors "did come across a few things that had to be adjusted" to meet appropriate accounting standards.
Polley described general-fund reserves in context for the board, saying the city’s months of expenditures in fund balance is "a little bit under 7," which he explained equates to roughly seven months of coverage based on current-year expenditures and is above the typical minimum many communities seek. He advised that many municipalities look to maintain at least three months of fund balance as a minimum.
When asked how Smithville compares with other Missouri municipalities, Polley said his team and firm work primarily with governmental entities and that the audit findings here — including lack of segregation of duties — are among the top issues they see. Polley told the board, "there's nothing really alarming to me or unanticipated," and that management has expressed interest in mitigating the identified risks going forward.
No formal action was taken at the work session on the audit report during the presentation; board members asked questions and thanked staff and auditors for their work. City management and auditors said they will continue collaboration on mitigation steps for the material weaknesses.
Polley closed by noting several reference slides in the audit packet are intended for trend review and that he and the audit team were available to answer follow-up questions.
