Audit: CliftonLarsonAllen gives Framingham an unmodified FY24 opinion, cites fixable federal grant findings

CliftonLarsonAllen issued an unmodified opinion on the City of Framinghamfinancial statements for fiscal year 2024 but flagged compliance gaps in the single-audit and several internal-control items in its management letter.

The audit partner, Matthew Hunt of CliftonLarsonAllen, told the Finance Subcommittee on March 25 that an unmodified opinion is "the best opinion available" and means auditors did not identify material misstatements in the city's financial statements. Hunt summarized key balances: about $158 million in bonds payable; a net OPEB liability of about $267 million; and a net pension liability that declined to roughly $92 million from $123 million the prior year, driven by investment gains in the pension trust fund.

Hunt said the city's general fund balance ended FY24 at about $68 million, with roughly $11 million committed to FY25 and $55 million unassigned. He noted the unassigned fund balance-to-expenditures ratio rose to about 15.2% from 13.7% the prior year, which he described as a sign that the city has built "a healthy amount of reserves." The pension trust fundnet position was reported at about $454 million, a funded ratio near 82% as of Dec. 31, 2023.

But the single-audit work, which applies when a municipality spends $750,000 or more in federal awards, produced six findings. Hunt said the findings are largely documentation and compliance issues and "very fixable," but they include repeated items that departments must address. The findings summarized by the auditors include:

- Special education and child nutrition: the audit team could not obtain documentation the city used to confirm that certain vendors were not suspended or debarred from receiving federal funds. - Child nutrition procurement: one tested vendor lacked a signed, fully executed contract in audit files. - Adult education: missing time-and-effort documentation for payroll charged to the program and incomplete eligibility intake forms. - An ARPA/other federal-grant reporting lapse: a required quarterly report for one quarter was not filed.

During questioning, subcommittee members pressed Hunt on the adult-education payroll finding; he said the auditors tested a sample of 60 transactions and were not able to obtain the requested time-and-effort support for those items. Hunt told the subcommittee: "We were not provided with time and effort. Right." He characterized the issues as recordkeeping gaps rather than necessarily intentional misuse of funds, but said the missing documentation caused failed tests in the sample.

The management letter contained a mix of carryover comments and new items. New items included inadvertent deletion of certain water-and-sewer billing reports during a software update, and continued recommendations to formalize water/sewer multipliers for multi-unit properties and to ensure billing commitment letters are signed before bills issue. The letter also reiterated previously reported needs: a formal disaster recovery/business continuity plan, an OPEB asset-allocation policy to finalize and execute, and a citywide fraud-risk-assessment program.

City administration told the committee they have already taken steps on several items. The administration said it engaged a consultant under the state's Municipal Local Cybersecurity Program to develop and test a disaster recovery and continuity plan and expects deliverables by June. Officials said they have started an internal fraud-risk assessment initiative and are working with the school department and grants manager to improve federal-grant documentation procedures.

Subcommittee members asked whether the audit should be presented to the full City Council. The subcommittee chair directed staff to place the report on a future full-council agenda so the full council can review the audit package.

The auditor closed by reiterating that while the financial statements are in good order, the single-audit findings require departmental follow-up and better record retention and filing practices going forward.