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External auditor issues clean opinion; flags segregation-of-duties weakness
Summary
Baker Tilly presented the 2024 audit for the Village of Waukesha, issuing an unmodified (clean) opinion while noting material weaknesses related to segregation of duties and non-audit services performed for the village.
Baker Tilly auditor Paul Franz told the Village of Waukesha village board on May 20 that the firm issued an unmodified opinion on the village’s 2024 financial statements and highlighted a small number of recurring internal-control findings.
“An unmodified opinion — also known as a clean bill of health — is the highest level of assurance,” Paul Franz, principal with Baker Tilly, told trustees as he reviewed financial highlights and required communications. He reported the general fund held about $1.25 million in fund balance at Dec. 31, 2024, with unassigned reserves comprising roughly 23–35 percent of general fund expenditures (Franz clarified both percentage calculations during the presentation).
Franz advised the board the audit work identified two commonly encountered material weaknesses for entities the village’s size: lack of segregation of duties in the accounting function, and Baker Tilly preparing the village’s year-end financial statements and material journal entries as a non-audit service. He described these items as common in small municipalities where the cost of a larger, dedicated accounting staff is not justified, but said they merited vigilance by trustees.
Franz also noted the village closed out its ARPA fund during 2024 after roughly $350,000 of final expenditures and confirmed capital project fund and reserve levels. He recommended the village bring a fundraising account into the village’s reconciliation process or consider having a fire-department auxiliary adopt separate 501(c)(3) status; currently some fundraising activity was recorded outside the village’s Workhorse accounting system, creating control risk.
Trustees asked questions about the 2% state aid for fire departments and about whether to keep those restricted funds segregated or in the village’s fund accounting; Franz said peers varied on that practice and both approaches can be appropriate if accounting entries and tracking are consistent.
The audit presentation concluded with a standard independence confirmation; Franz said Baker Tilly performed non-audit services (preparing financial statements and regulatory filings) and had assessed independence as maintained while communicating the non-audit work in writing.
