Sherman County audit: landfillfinancial-assurance ratios meet KDHE thresholds; auditor flags contract bonding and internal controls

Sherman County commissioners received the countyaudit for the year ended Dec. 31, 2024, and an agreed-upon procedures report on the county landfill at a regular meeting. The presenter said KDHE(Kansas Department of Health and Environment) financial-assurance ratios for landfill closure and post-closure costs were met and that the countyfinancial statements were issued an unmodified opinion on the regulatory basis of accounting.

The auditor told the commission the landfill AUP looks at county cash, revenues, expenditures and debts and computes ratios KDHE requires to demonstrate the county can meet future post-closure care costs. "If for any reason some of your ratios drop below the threshold, KDHE would reach out to you with recommendations," the presenter said. He reported no currently outstanding issues with the KDHE ratios.

Why it matters: KDHE requires local governments that operate landfills to show financial assurance for long-term closure and post-closure monitoring. Meeting those tests avoids additional oversight or corrective steps from KDHE; weaknesses in financial controls, bonding or documentation can lead to follow-up requirements.

Key audit findings and context - Accounting basis and opinion: The auditor explained the county elected the regulatory (non-GAAP) basis permitted by Kansas law. Because the statements are not prepared under U.S. generally accepted accounting principles, the auditor issued the standard adverse GAAP disclosure but an unmodified opinion on the regulatory basis (the Kansas Municipal Audit and Accounting Guide). The presenter said that is the same presentation Sherman County has used in prior years. - Cash-basis law compliance: The auditor said all county funds ended 2024 with a zero or positive unencumbered cash balance, in compliance with Kansas cash-basis law. - Cash and reserves: The presenter reported total cash across county accounts of "a little over 15,500,000" as of Dec. 31, 2024, held across checking, savings, certificates of deposit and cash on hand; much of that balance is restricted by fund (road and bridge, special purpose levy funds, etc.). - Public-works bonding exceptions: The audit noted a statutory issue: several public-works contracts entered during the year exceeded $100,000 without the public-work bond required by state statute. The presenter explained the bond protects the county if a contractor fails to pay subcontractors or material suppliers. - Debt and related entities: The audit included county debt schedules and noted the countylease with a senior living facility (via the public building commission) and debt for a landfill compactor; the PBC activity is included in the countyreporting entity because county staff act as treasurer for the PBC. - Internal control recommendation: The auditor recommended improving documentation and reviewer signoffs on adjusting journal entries entered into the countyaccounting system (CIC), suggesting preparer and reviewer signatures so changes have audit trails.

Other details mentioned at the meeting included schedules for individual funds (general fund, road and bridge, special machinery), special-purpose funds (alcohol program, parks and recreation), and the post-closure landfill fund held for eventual closure obligations. The presenter noted the ARPA-related grant fund had to be spent by Dec. 31, 2024 and that the countyis finishing that closeout.

Quotes "To meet those (landfill) financial-assurance tests, they look at your Sherman County financial statement," the auditor said, describing the AUP review of cash, revenues, expenditures and debt. "If for any reason some of your ratios drop below the threshold, KDHE would reach out to you and say we need recommendations."

What commissioners asked and next steps Commissioners asked procedural questions about funds and whether the large cash line represented unrestricted money; the auditor clarified much of the cash is restricted to specific funds such as road and bridge, 911, special machinery and other levy funds. The auditor said he will provide five hard copies of the audit and the landfill AUP at the county's request.

Speakers quoted or heard on the record for this topic were the audit presenter (identified in the record as the auditor) and county staff including Ashley (treasurer's office staff) and Katrina (county official involved in finance). No formal commission vote was recorded on the audit itself during the session.

Ending County staff will receive the formal audit report copies and follow the auditor's recommendation on documentation and reviewer signoffs. KDHE follow-up would occur only if financial-assurance ratios later drop below regulatory thresholds.