Single-audit reports show progress; auditors, mayor and finance director highlight improved fund balance and outstanding items

External auditors and the city—s finance team presented results from the FY2024 audits and ongoing financial monitoring at the March 10 council meeting, reporting improvements in fund balance and fewer material weaknesses but noting remaining control items to resolve.

Joe Santifani of PKF O—Connor Davies walked council members through the audit highlights. He said the city received a modified opinion on the financial statements and that the management—s discussion and analysis (MD&A) offers a concise executive summary of major changes. Santifani reported the city—s unassigned general-fund balance rose to about $21.2 million, roughly 12.5% of general-fund expenditures, up from 9% the prior year.

Santifani said the city—s net position improved in part because of higher revenues (including a one-time revenue-sharing grant and investment income) and underspending across multiple departments. He highlighted the establishment and recording of OPEB trust funds, which reduced long-term liabilities, and noted that pension funding and fair-value investment gains improved funded ratios.

The federal and state single-audit reports showed an unmodified compliance opinion overall; auditors noted a remaining significant deficiency related to bank reconciliations that auditors expect to be cleared with continued controls and documentation. Santifani recommended continuing to strengthen policies for payroll review, receivables, capital assets and formalized investment policies for pension plans.

City Finance Director Michael Gormani gave monthly and mid-year budget updates, saying the city is projecting a small surplus on the general-fund side (he estimated about $315,000 at the time of the meeting) and a surplus in the Allentown Fire Department operations. He noted sewer operations remain monitored because they can vary with plant needs and capital work.

Mayor Borer told the council the city had presented materials to Moody—s for a credit review and expected an update the following day. She also updated the council on MARB: she said the city has met most statutory exit criteria but that MARB added a requirement in May 2024 related to "unsound financial practice" that MARB had not fully defined. She said the outstanding MARB issue centers on the police pension structure, which is in mediation and the courts; a MARB executive-session meeting on March 21 would further examine the police pension question.

During questioning, auditors and finance staff said progress has been made on prior-year findings and that remaining recommendations are primarily formal documentation and policy items. The city and auditors said they expect further improvements in the coming audit cycle if the implemented controls remain in place.

Ending Council members thanked auditors and staff for the updates. Auditors recommended continuing to document and institutionalize controls; city staff said they have engaged consultants and made operational changes designed to eliminate prior material weaknesses and support an improved credit profile.