Get Full Government Meeting Transcripts, Videos, & Alerts Forever!
Get email alerts on the Audit Finance topic
No spam. Unsubscribe anytime.
City auditors cite reporting gaps in 2023 audit; council authorizes fire-department account transfers
Summary
External auditors issued a clean opinion on most funds but an adverse opinion on the city s a whole because component units and certain accounts were omitted from the financial statements; council approved transferring several fire-department accounts into separate EIN accounts and authorized prior transfers to stand.
City auditors presented the fiscal 2023 audit at a joint meeting Tuesday, saying the city—ould not be audited as a consolidated reporting entity because component units and several bank and investment accounts were not included in the city's financial statements.
"We issued an adverse opinion on the reporting entity because those component units were not included," auditor Mike Lamb said, describing the difference between the government-wide opinion and the clean opinions auditors gave for most individual funds.
The audit team reported an unmodified (clean) opinion for the city's governmental funds and for business-type activities such as water and sewer. The auditors also identified two primary findings: a series of material year-end journal entries needed to reconcile accounts, and the absence of complete financial-statement preparation documentation from management.
Lamb said auditors discovered several bank and investment accounts that were in the city's Employer Identification Number (EIN) but were not recorded on the general ledger prior to the audit. "We added about $2.1 million of cash accounts that had not previously been recorded," he said.
The findings came with a list of operational recommendations in the auditors' management letter, including: moving toward GASB-compliant accrual reporting, improving chart-of-accounts structure, monthly bank reconciliations in the accounting system, standardized billing-adjustment policies, and an end-of-year closing checklist to streamline future audits.
Public commenters and former township officials pressed the audit team on transfers from water and sewer funds into the general fund and on rent charges that had been allocated between funds. "We looked at the transfers to see that they reconciled between funds," Lamb said, adding that some transfers appeared to lack supporting documentation and may represent operating expenses recorded in the general fund rather than in the proprietary funds.
In response to the auditors' work and a separate work session with the fire department, the joint board considered a resolution to move multiple fire-department-related accounts into accounts under the fire department's own EIN. The resolution detailed amounts already transferred and amounts to be moved, including a Mango Foundation grant and other donated or restricted funds.
Council members moved and seconded a measure authorizing the transfers and confirming earlier transfers noted during the audit. The motion passed.
Council and staff said transfers going forward must be authorized and documented. "I just want to thank the fire department for working with me on this," Lisa said before the motion; the auditor and staff then recommended the formal transfers.
The auditors said the single-audit report required by federal uniform guidance covered the city's federal expenditures for 2023, including a PennVest-related project that drove a large increase in business-type activity. Lamb said the auditors tested the ARPA/COVID relief and the PennVest program work and found no federal compliance findings that would affect program eligibility.
The audit report and the single-audit booklet will be posted on the city website; auditors recommended management adopt the listed process improvements and offered to provide templates and follow-up assistance.
Ending: The board did not adopt every recommendation on the spot but voted to approve the immediate transfers described in the resolution and asked staff to return with implementation steps and documentation showing how future restricted funds will be handled and recorded.
