Auditors give county an unmodified opinion; committee defers final 2024 audit and fund-balance changes to August

External and county finance staff told the Marathon County Human Resources, Finance and Property Committee that the county's draft 2024 financial statements received an unmodified ("clean") opinion, but officials asked the committee to delay formal acceptance until supplemental schedules and an annual comprehensive financial report are finalized.

The county's administrator, Lance Leonard, and outside auditors from Baker Tilly reviewed the draft statements during the meeting and recommended returning to the committee on Aug. 13 for final acceptance. Leonard said staff will submit the audit in July as required but that the packet contains draft financials while the annual comprehensive financial report is finished.

The clean opinion is the most important takeaway from Baker Tilly's audit work. John, an audit partner with Baker Tilly, told the committee, "we did issue a clean opinion." He also noted the audit incorporated implementation of two new Governmental Accounting Standards Board standards, GASB 100 and GASB 101, and that there were restatements in a landfill fund and in a social improvement fund related to prior accounting.

Why this matters: staff and auditors described changes that affect how much of the county's general-fund dollars are available for capital projects. Leonard and Baker Tilly staff said assigned and committed uses reduced the county's unassigned fund balance. Leonard cited a recent $8,000,000 loan that had been recorded as committed/assigned in the general fund and said that combination of that loan and decisions to apply fund balance toward the 2025 budget contributed to a roughly $10.3 million reduction in the unassigned portion of the general fund.

Committee discussion and next steps: Finance Director Sam told the committee that she has worked to produce a required annual comprehensive financial report and has pulled historical comparative data into the packet; she said the report will be finished in time for the July submission. Leonard and Sam both said the draft financials do not reflect changes they expect to materially alter the audit opinion. Baker Tilly emphasized improvements this year in finance's preparation for the audit, including earlier delivery of a draft (June 20) and fewer audit entries than in prior years.

Auditors and staff flagged internal-control items and procedures for follow-up. Baker Tilly described a cash/internal-control comment that is not a material weakness and recommended centralizing additional controls and oversight in finance; Sam said the county is already changing procedures and policies to address the issue. Leonard said staff will return in August with the finalized audit and with revised fund-balance policy language for the committee's consideration.

Details from the draft financials included: the general fund finished the year with an overall increase of about $3.3 million after revenues exceeded budget by approximately $5.4 million and expenditures were about $2.0 million over budget; assigned fund-balance increases reflected the loan and budgeted carryforwards; the ratio of unrestricted fund balance to general fund expenditures was reported at about 71 percent and is in line with similar counties audited by Baker Tilly; the county is using roughly 11 percent of statutory debt capacity, down from prior years as some bonds are paid off.

No formal acceptance of the audit occurred at the meeting. Staff asked the committee to authorize no action today and to receive a final audit packet in August. Leonrd said the county will submit required materials in July as required by statute and bring the finalized audit back to the committee on Aug. 13 for official acceptance.

The committee discussed broader finance operations and organization during the audit presentation, including continuing work to centralize finance functions and to improve reporting to standing committees.

A closing note: committee members and auditors encouraged board members to review the draft documents and to forward any corrections to Sam so the finalized annual comprehensive financial report accurately reflects requested edits.