Council accepts city audit; auditor flags segregation-of-duties and fund balance issues

The City Council voted to receive and accept the annual audit for the fiscal year ended Sept. 30, 2024, following a presentation by Brooke Miller of KSO CPAs.

"As of September 30, the assets or your cash exceeded your liabilities by $34,094,380 for all funds," Brooke Miller, a CPA and shareholder with KSO CPAs, told the council. She said the city’s net position increased by $2,298,078 compared with the prior year and that overall city debt increased by $817,082 during the fiscal year.

Miller highlighted the scheduled receipts and disbursements on a cash basis, noting that the city collected about $1,848,038 more than budgeted for receipts and spent about $3,000,000 less than budgeted in disbursements; the city’s beginning cash balance as of Oct. 1, 2023, was $3,711,000 and the ending cash balance was $4,206,000, according to her presentation.

Miller also reported audit findings and recommendations: a recurring finding for lack of segregation of duties attributed to the size of the organization and staffing constraints, several funds showing negative cash or fund balances requiring interfund transfers to correct, outstanding checks older than one year that should be voided or turned over to the state as unclaimed property, and recommended adopting a formal capitalization threshold (she recommended a minimum of $5,000) to distinguish capital purchases from operating expenses.

Councilmembers moved to accept the audit report; the motion carried on a roll call. Councilmember Luis, Councilmember Howard, Councilmember Gary Johnson, Councilmember McCrory, Councilmember Ben Johnson and Councilmember Smith recorded “yes” in the roll-call recorded in the transcript.

Miller said auditors are available to consult further and encouraged regular council oversight to mitigate the segregation-of-duties risk.