Audit shows strong fund balances; Baker Tilly flags segregation-of-duty and close-process weaknesses

Baker Tilly presented the Village of Mount Pleasant's audited financial statements for 2024 at the July 28 board meeting and issued an unmodified (clean) opinion while noting an emphasis of matter related to newly effective Governmental Accounting Standards Board standards.

Principal Wendy Unger told trustees the village's general fund recorded $27 million in actual revenue versus $25 million budgeted, producing roughly $2.3 million more revenue than expected. Key revenue contributors included unusually high investment income (about $371,000 over budget), $200,000 in additional building-permit revenue, $430,000 over budget in fire inspection and sprinkler fees, and around $650,000 more ambulance revenue than projected. Total general fund expenses were about $26.3 million versus a $27.5 million budget, leaving the village with a year-end general fund balance of roughly $12.9 million (about 40% of general fund operating budget), of which the staff noted $1.36 million was budgeted for use in 2025.

Baker Tilly also reviewed other major funds: the debt service fund added about $2.3 million to fund balance and ended the year near $3.5 million (restricted for future debt service); Tax Increment District (TID) 5 had about $36 million in activity, added roughly $6 million to fund balance and ended the year near $75 million (restricted to TID 5 purposes); combined nonmajor governmental funds (24 funds) ended near $27.6 million; and the sewer utility was essentially breakeven for 2024, adding $86,000 to net position but increasing cash by about $3.1 million to $27.9 million, of which approximately $6 million is restricted for equipment replacement per DNR requirements.

Unger said the audit identified two material weaknesses in internal control: (1) segregation-of-duties issues in transaction cycles such as payroll and accounts payable where a small staff leads to overlapping responsibilities, and (2) the financial-statement close process, where the auditors prepare the audited statements and thus become part of the village's internal control for a brief period. Unger and staff described both conditions as common in governments of the village's size and said eliminating them would require management to evaluate cost-benefit tradeoffs, including potential additional staffing or process changes.

Unger highlighted upcoming new GASB standards effective in 2025 and 2026 and noted several significant accounting estimates in the statements (compensated absences, pension and OPEB liabilities, depreciation). She invited trustees to follow up with Baker Tilly for detailed questions. Trustees asked for elaboration on the material weaknesses and were told the firm considers its judgments reasonable but emphasizes the need for management oversight and possible procedural changes.

No board action was taken beyond receiving the audit report and the opportunity to request further follow-up meetings with Baker Tilly and village finance staff.