Lincoln audit finds clean opinion, flags legacy special-assessment accounting issues

Lincoln auditors delivered largely positive news about the city’s finances but urged continued work on older special-assessment records and processes tied to a recent financial system transition.

Erica Bridal Pasteur, the audit manager engaged by the city’s independent auditors, told the City Council on Jan. 28 that the fiscal year ended June 30, 2024, received an unmodified — or “clean” — opinion under generally accepted accounting principles. “For the year ended 06/30/2024, the city did receive an unmodified or clean audit opinion,” Bridal Pasteur said during the presentation.

The audit team praised the city’s financial reporting but reported a continuing material weakness connected to special-assessment debt proceeds originating in earlier decades; those legacy balances remain under cleanup. Bridal Pasteur said the issue does not relate to current-year transactions and that the city expects to continue work on remediation into fiscal 2024–25.

The auditors also reported two significant deficiencies tied to the city’s recent implementation of a new enterprise resource planning system (ERP). Bridal Pasteur said use of new modules to track capital assets and leases produced a number of year‑end adjustments as staff adapted processes to the new software. “A lot of the adjustments that were posted this year were due to new modules that were being used,” Bridal Pasteur said. The auditors and city staff expect many of those findings to be resolved once the ERP is fully implemented in fiscal year 2024–25.

The audit included a single-audit review of major federal programs because the city spent more than $750,000 of federal funds. The auditors tested the HOME program and ARPA-funded activities and issued unmodified opinions on those major programs with no compliance exceptions.

City finance staff and council members framed the findings as expected growing pains during a multi-year systems transition. A city representative responding to council questions said staff had already implemented five of six prior-year recommendations and credited finance staff with significant effort during the multi-month audit process.

Bridal Pasteur said auditors issued several letters accompanying the report: the independent auditor’s report (included in the city’s annual comprehensive financial report), a report required by Government Auditing Standards identifying internal control matters, a single-audit report for federal programs, a management letter with lower-level control recommendations, and a concluding letter summarizing accounting pronouncements and other matters.

Council members thanked staff and auditors for the work and noted the city’s progress compared with several years ago. The presentation and audit materials will be posted on the city website, and staff said they expect the next audit cycle to reflect fewer transition‑related issues as the ERP implementation matures.