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Finance committee accepts FY2023 audit; auditors report multiple internal-control weaknesses
Summary
Auditors from BMSS gave an unmodified opinion on Homewood City's FY2023 financial statements but reported material weaknesses in internal control and several compliance items. The finance committee voted to accept the audit and directed staff to remediate issues before federal deadlines.
Homewood City's finance committee voted Feb. 3 to accept the fiscal year 2023 audit after auditors from BMSS presented the financial statements and a separate single-audit report.
BMSS's Jenny Gray, assurance senior manager, told the committee the firm issued an unmodified (clean) opinion on the city's FY2023 financial statements. "We did have an unmodified opinion on the financial statements for fiscal year 2023," Gray said.
The auditors also reported several deficiencies in internal control and compliance. Gray summarized findings that the firm characterized as material weaknesses, including a lack of adequate controls over wire transfers, insufficient separation of duties for the master vendor list, and missing or inadequate supporting documentation for some credit-card purchases. BMSS flagged a significant deficiency for untimely filing of a state fee return (described in the audit as the "craft fee" returns) and noted investment holdings that are not in compliance with state code.
Gray also described single-audit items tied to federal awards: Homewood reported $3.5 million in federal expenditures for FY2023 and, while BMSS said the city complied with major-program requirements in all material respects, the auditors recommended additional controls. The single-audit findings included absence of a documented policy to check for suspension and debarment on federal procurements and missed required ARPA reporting for April 2023.
Committee members and staff discussed timelines for remediation. Gray noted the FY2024 audit field work was already underway and that BMSS targets completing the FY2024 audit around March 31. Committee members and city finance staff said corrective-action plans will be filed; Gray and the committee reiterated that findings reported to the Federal Audit Clearinghouse remain open until closed out by federal reviewers.
The committee voted to accept the audit report. The motion to accept the audit report was made and seconded in committee and the tally was recorded as 4-0 in favor.
Why it matters: auditors told the committee that unresolved internal-control or compliance findings can affect future federal funding and bond-related filings. Committee members and staff said they will bring policy and procedural changes back to the council and committee for approval with the aim of closing findings before federal deadlines.
