Council accepts FY2024 audit, auditor cites material adjustments and control weaknesses

Roosevelt City Council on Oct. 25 accepted the fiscal year 2024 financial audit and instructed city staff to correct material accounting errors and implement stronger monthly controls.

The audit presenter, Mike Miles of the auditing firm in the meeting packet, told the council the audit work identified numerous “material audit adjustments” needed to reconcile the financial statements to the general ledger. Miles said those adjustments touched capital-asset reporting, cash balances, long-term debt, revenues, payables and accruals. The auditors classified two internal control issues as material and noted three compliance findings tied to fund deficits and budget overruns.

Why it matters: The audit shows the city’s fund accounting and the transition to the Tyler financial system created gaps that required correction. The council discussed how the conversion to Tyler in July 2023 contributed to missing or misposted entries and urged finance staff to perform timely monthly reconciliations and to clean up the chart of accounts.

What the council directed and next steps

- Staff were directed to develop a corrective-action plan, complete monthly reconciliations, and correct general ledger entries identified by the audit. - The council asked finance staff to work with the auditor and provide regular updates; the auditor said much of the remediation depends on bringing reconciliations current. - Council requested clearer monthly financial reports that reconcile to the general ledger so the budget and fund balances present accurate, auditable totals.

Council action: A motion to accept the audit presentation passed by voice vote; the motion included a request that staff work with the auditor on the remediation steps and bring progress back to council.

Background details and notable findings

- General fund: Total revenues were about $11.2 million and expenditures about $8.6 million in the year, leaving an operating surplus. However, the capital projects fund had significant spending that exceeded available cash during the year, producing a deficit that should have been mitigated by general-fund transfers. - Business-type funds: Water, sewer and sanitation funds held sizable cash balances overall, though sanitation’s cash fell during the year and the fund exceeded its legally adopted budget on one line item. - Long-term debt: The city added capital-lease obligations for vehicles; auditors cautioned managers to review lease structures because imputed interest and residual values can cause payments to rise later in lease schedules.

The city approved acceptance of the audit and asked staff to report back with corrective steps and improved monthly financial reporting.