Auditors give Benton County clean opinion; internal-control items and GASB changes noted

Benton County officials were told Friday that outside auditors issued an unmodified (clean) opinion on the county's 2024 financial statements, but raised recurring internal-control items and outlined upcoming accounting standard changes that could affect future reporting.

The county's external audit presentation reviewed required communications, internal controls, legal compliance and the federal single audit. Auditors said two areas remained on the written report: audit adjustments (including accrual entries such as pension entries and reclassification of certain loan activity into a custodial fund) and the financial-reporting process (auditors drafted statements that management reviewed). A separate, less severe, significant deficiency related to segregation of duties was also noted.

The auditors told commissioners the county sat at just over six months of unrestricted fund balance at year end, above the Office of the State Auditor's recommended three to five months. Revenues exceeded expenditures by roughly $5.6 million and overall governmental fund balance rose by about $6 million, driven in part by taxes and federal intergovernmental receipts for highway planning and construction and ARPA spending.

The presentation flagged volatile investment results driven by mark-to-market adjustments. "We do adjust them to what the market says at 12/31," the auditor said during the presentation, noting some portfolios showed positive changes of about $2 million this year while other years can be negative.

Auditors also reported one Minnesota legal-compliance deficiency carried from the prior year: several ditch accounts held deficit cash balances; management agreed to address the practice by not using advances. The county was required to have a federal single audit after spending about $8.7 million in federal funds; auditors tested two federal programs (highway planning & construction and the Coronavirus State and Local Fiscal Recovery Funds/ARPA) and reported no material weaknesses or significant deficiencies for those programs.

Commissioners asked several technical questions about the audit adjustments and the timing of payments and receivables. The auditors said the pension and other accrual entries and the custodial-fund reclassification were part of standard year-end adjustments. The presentation recommended monitoring upcoming Governmental Accounting Standards Board guidance (discussed as GASB 102 and GASB 103 in the packet) because future reporting requirements will expand management's required discussion and explanation of budget-to-actual variances and other presentation matters.

The audit team closed by noting the county's overall debt is declining as GO bonds are paid, and that compensated-absence liabilities remained essentially flat for the county in the year under audit.

Commissioners thanked auditing staff for the work and the board moved on to other agenda items.