City auditors issue highest opinion but flag one large accrual adjustment and control weakness

The city's independent auditors presented the 2024 annual comprehensive financial report to the Gardner City Council and said they issued an unmodified opinion on the city's basic financial statements, the highest level of assurance an auditor can give. Bridal Holst, vice president in assurance at auditing firm Allen Gibson Hulick, told the council the firm also required the city to implement Governmental Accounting Standards Board guidance on compensated absences, which increased reported liabilities by about $300,000.

Why it matters: an unmodified opinion means the auditors found the financial statements to be free of material misstatement, preserving the city's fiscal credibility; the separate internal-control comment and the large accrual adjustment, however, identify one-off process weaknesses and a discrete accounting correction the city must address going forward.

Holst said the audit contained one adjustment of roughly $750,000 involving a contractor invoice for December work that was not recorded in the proper year because it was not paid until March. Holst described that entry as the basis for an internal-control finding, noting the size of the adjustment made the item material for the wastewater fund though the underlying issue appeared to be human error rather than fraud.

Matt (finance staff) told the council the finance team has already put additional procedures in place and the audit's internal-control letter included a corrective-action plan with an estimated completion date that has already passed. Holst said the finance staff was "well prepared" for the engagement and that the audit went "very smoothly" overall.

The auditors also noted the city did not have a federal single-audit (no federal awards audit) for 2024, and they reminded the council about routine FYI items including electronic fund-transfer fraud risks, cybersecurity vigilance and keeping policies and procedures up to date as technology and work arrangements change. Council members asked whether the finding could affect bond ratings; Holst said bond raters focus on whether the financial statements are reliable and that because the adjustment was posted and the opinion remained unmodified, she did not expect a ratings impact.

Council direction and next steps: staff will continue implementing the corrective actions described in the internal-control letter and return with any follow-up required by auditors. No formal council vote was required on the audit presentation.

Ending: The auditors said they will submit the comprehensive annual report for a Government Finance Officers Association certificate of achievement; staff and council emphasized the quick corrective steps already taken to reduce the risk of repeat errors.