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Auditors give Millersville an unmodified opinion but flag internal-control weaknesses
Summary
An external audit of Millersville borough financials for 2024 found the financial statements to be fairly presented under the modified cash basis but identified two material weaknesses — segregation of duties and bank reconciliations — and noted a $550,000 decrease in the general fund balance.
Courtney King, a senior associate on the auditing team, told Millersville Borough Council that the auditors intend to issue an unmodified (clean) opinion on the borough’s 2024 financial statements and that the audit is in draft with no expected significant changes.
The audit matters matter because an unmodified opinion indicates the financial statements are materially correct under the modified cash basis of accounting, while the auditors also identified two material weaknesses that require council oversight. King said the borough must remain attentive to those risks during the year.
The auditors reported two material weaknesses: limited segregation of duties — a common issue in small governments where the same small staff perform multiple steps of transactions — and problems related to bank reconciliations and audit adjustments. King said some bank accounts were not fully reconciled, that transfers between accounts required audit adjustments, and that the accounting software “does not allow for all transactions to be recognized individually rather as a whole.” She said proposed journal entries are listed in appendix A of the audit draft and have been reviewed with borough staff.
The presentation included summary figures from the draft financial statements. For 2024, the auditors reported total general-fund revenues “just under $4,400,000” and total expenses “over $4,900,000,” producing a decrease in the general fund balance of about $550,000. The capital reserve fund decreased by about $353,000 from 2023 to 2024, the park fund increased by approximately $38,000, and the sewer enterprise showed a decrease of about $901,000 attributed to sewer-main and line-replacement projects. King summarized the borough’s combined fund balances at the end of 2024 as roughly $4,000,000 in governmental funds and $2,350,000 in proprietary funds, for a total near $6,400,000.
King also told council the auditors performed the work in accordance with generally accepted auditing standards, performed substantive testing (rather than full internal-control testing) because of limited staff, encountered no disagreements with management, and that the firm is independent and in compliance with ethical requirements. “We express an unmodified opinion in relation to compliance with the modified cash basis of accounting,” she said.
Council members were given the draft audit and the related DCED report; King said written representations will be signed on the audit date and that the audit is being finalized. The presentation closed with an invitation to contact borough staff (Rebecca) with any follow-up questions.
Less urgent details: the auditors noted increases in pension and insurance costs as drivers of expense growth. The auditors recommended continued board oversight given limited staffing and the inability to fully segregate duties, and they attached proposed adjusting entries in the draft audit packet.
The borough did not take a formal vote on the audit at the meeting; the draft was presented for council review and finalization with management prior to issuance.
