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City auditor issues modified opinion on 2024 financial report; general fund balance rises
Summary
Auditors from ABDO reported a modified opinion tied to GASB standards for pensions, leases and other postemployment benefits; the city’s unassigned general fund balance rose to about 64% of next year’s budget, well above the city policy goal.
MOUND CITY — Auditors from ABDO presented the city’s 2024 Annual Comprehensive Financial Report on June 24 and said they will issue a modified opinion only because three Governmental Accounting Standards Board (GASB) standards (GASB 87, 75 and 68) relating to leases, other post‑employment benefits and pension reporting were not fully adopted in the report’s scope.
Alex Bridal, senior associate with audit firm ABDO, told the council “the only reason we wouldn’t offer a clean report… is due to GASB 87, 75, and 68,” and said everything outside of those items was “fairly stated in all material aspects” with “no internal control findings.”
Key findings for the council: The city’s unassigned general fund balance increased from 51.3% to about 64% of the following year’s budget — well above the municipal policy goal of 20% — driven largely by higher investment income and stronger tax receipts. ABDO showed a favorable budget‑to‑actual variance in general fund revenues and said public works expenditures came in below budget, contributing to the fund balance increase.
Why it matters: A higher fund balance provides the city flexibility to cover unforeseen costs or to reallocate money to capital projects. During the presentation, staff and council discussed whether the city’s fund balance policy should be raised to better reflect the current cash cushion; staff said they are already working on updated financial policies and forecasts.
Other highlights: Enterprise funds showed varied performance. The liquor enterprise fund’s gross profit and operating income improved and compared favorably to statewide averages. The sewer fund showed a large cash increase driven in part by $1.27 million in unspent bond proceeds. The stormwater fund continues to face cash shortfalls because debt service exceeds operating revenues.
Council questions and follow up: Councilmember Herrick asked whether the current fund balance level is appropriate; ABDO said typical targets are 30%–50% and that Mound’s 64% gives room to consider raising the formal policy. Finance staff and consultants recommended continuing to use the fund balance to cash‑flow enterprise fund deficits and deferred capital obligations while updating financial policy. The council asked staff to include the fund‑balance policy as part of the next budget conversation.
Ending: Auditors did not report internal control deficiencies. Staff said they will work with consultants to propose any policy changes and will return with recommendations during the budget cycle.
Speakers quoted in this article are taken from the official meeting transcript and are listed below.
