State auditor briefs St. Paul council: city audit clean but single‑audit found two missing suspension checks

Julie Blaha, Minnesota state auditor, told the St. Paul City Council organizational committee on a morning session that her office oversees roughly $60,000,000,000 in mostly local government spending and provides examinations, support and analysis to local governments.

Blaha led an interactive presentation designed to explain what audits do and do not do. “We oversee approximately $60,000,000,000 in local spending,” she said, describing the office’s role in examinations, training and comparative data tools for cities and counties.

Deputy State Auditor Chad Struce then summarized St. Paul’s most recently completed audit: the fiscal year ended Dec. 31, 2023. “The city had an unmodified opinion on its financial statements,” Struce said. He told council members an unmodified opinion means the auditors found the statements to be materially correct and suitable for use by the public, bondholders and rating agencies.

Struce also reviewed the city’s single audit of federal programs, which examines compliance for major federal funding streams. For 2023 the office designated the American Rescue Plan / Coronavirus State and Local Fiscal Recovery Funds (sometimes called SLRF or COVID recovery funds) as a major program for testing. The auditors found no material weaknesses in internal control over financial reporting or in compliance for major programs, but reported a significant deficiency tied to subrecipient/vendor screening: in a sample of eight covered transactions the city did not perform required suspension‑and‑debarment checks for two beneficiaries.

“That was two of the eight transactions we tested,” Struce said, adding that similar sampling‑based findings were common nationwide during COVID‑era programs because agencies created systems quickly and documentation was sometimes incomplete. He cautioned against extrapolating the sample directly to a population percentage, saying the audit’s sampling is not designed for that kind of projection.

Struce and Blaha also spoke about timeliness and staffing. By federal guidelines an entity’s audit should be completed by Sept. 30 following the fiscal year end; staff noted the city has used extensions when materials arrive late. The deputy auditor and Blaha emphasized workforce shortages in local finance offices and urged councils and managers to consider capacity and succession planning. “We’re seeing real public‑finance workforce shortages across the country,” Blaha said, noting fewer experienced accountants and rising turnover.

Council members used the opportunity to ask about practical steps. Auditors recommended earlier preparation of financial statements and supporting documentation, clearer staffing plans, and use of the state auditor’s training and online tools. The office also reminded council members that an audit can identify risks and recommend fixes but cannot perform operational work for an entity while maintaining independence.

The auditors said the FY2024 audit work was underway and remains confidential until the office completes the audit process and issues the report. Council members thanked Blaha and Struce for the presentation and the state auditors left time for questions from council members about deadlines, single‑audit complexity and technical assistance.