External auditors give Auburn a clean opinion for 2024 but flag internal-control and fund-balance issues

External auditors told the Auburn City Council on Feb. 13 that they plan to issue a “clean, unmodified opinion for 2024” on the city’s financial statements but identified a significant deficiency in internal control and highlighted budgetary and long-term debt pressures the council should consider during the 2025–26 budget process.

Luke Malecki, the engagement partner for the audit firm, presented a summary of the fiscal-year 2024 audit for the year ended June 30, 2024. “That is a clean, unmodified opinion for 2024,” Malecki said, and added the firm had “gotten all the evidence that we needed” to finalize its reports. The auditors also delivered a report on internal control and said they would include a management letter recommending updates to policies and procedures, including journal-entry practices, capital-asset accounting, a debt policy and capital-project controls.

Malecki told the council that the city’s reported fund balance ended the year at about $10.1 million, including roughly $5.1 million held as a debt reserve. He said one-time transfers from the capital projects fund had inflated reported revenues for 2024 — a $5.1 million transfer into a debt reserve explained much of the apparent $5.1 million boost — and that, when isolated, revenues were effectively flat year over year. Total expenses rose to about $46.4 million in 2024, a roughly 5.3% increase from the prior year, driven largely by public-safety salaries and overtime.

Audit staff said the city has a long-term interfund balance related to public utilities that the auditors presented as a $2.3 million nonspendable general-fund balance because the money is not currently available for general-fund use. Malecki and manager Amy Hainsley also noted the city’s outstanding debt levels and recommended the council consider a formal fund-balance policy, a debt-management policy and longer-range capital planning. Malecki suggested those three policy tools would help avoid repeating situations where bond proceeds or capital funds are not timely spent.

The auditors identified restatements to prior-year net position and fund balance related to reevaluation activity and receivable adjustments; they also said a revolving loan was moved from a capital fund to its own special-revenue fund for clearer tracking. Malecki said the auditors expected to finalize and release the financial-statement audit within a week or two and that management’s responses and corrections were being finalized.

Councilors asked several procedural questions. Councilor Cuddy thanked the auditors for a thorough presentation and Malecki offered to share sample policies that other municipalities use. The auditors identified items they expect the city to address in the management letter; city staff indicated they would respond in writing as part of the audit closeout.