Pitkin County audits close 2024 with recommendations on cash reconciliation, landfill liability and federal grant reporting

Pitkin County officials heard a presentation on the county’s audited 2024 financial statements at a June 24 Board of County Commissioners work session, where outside auditors described generally strong controls but recommended fixes on reconciliations, federal grant capture and landfill liability assumptions.

The audit team from McMahon and Associates found the county’s financial statements to be materially correct and noted no disagreements with management, but recommended prioritized clean‑up of the general cash reconciliation and improved processes to ensure all federal awards are captured on the schedule of federal awards.

“The goal is to make sure that you have adequate internal controls and adequate reconciliations to produce materially correct financial statements,” said Paul Baucus, partner with McMahon and Associates. Baucus described the firm’s audit approach — planning, field work and reporting — and said the county’s annual report (the ACFR) is used by bondholders, insurers, banks and state and federal agencies.

Why it matters: the audited comprehensive financial report is the county’s official, publicly distributed accounting of revenues, expenses, assets and liabilities. Lenders, rating agencies and state and federal reviewers rely on the ACFR when evaluating debt, grants and statutory compliance.

Key findings and next steps - Cash reconciliation: McMahon documented outstanding reconciling items in the county’s general cash reconciliation and recommended a regular monthly close process to prevent variances from snowballing. “There is a very immaterial variance that would be worthwhile adjusting and just get that cash reconciliation dialed in,” Baucus said. County finance leaders acknowledged system transitions and bank changes have prolonged clean‑up. - Landfill closure and post‑closure liability: auditors rely on environmental consultants’ studies to estimate the county’s landfill closure and monitoring liability. McMahon noted the county’s liability is based on consultant Webber’s most recent report and that the estimate must be updated after the landfill expansion and in light of potential regulatory changes. “We are expecting that number to likely change significantly,” Pitkin County finance staff said when discussing the next study due this year or next. - Single audit / federal awards: auditors reported that some federal awards were omitted from the initial comprehensive schedule of federal awards and that missing grants automatically create a reportable finding under the single‑audit rules. McMahon said the county had $12,881,000 in federal grants last year and that the FEMA reporting rules were a principal source of confusion; county staff said they have since documented the FEMA reporting requirements for future years. - Other non‑material recommendations: implement a landfill accounts‑receivable module to strengthen billing controls, ensure contract renewal reminders for airport vendors, and maintain policy documentation for write‑offs in accounts receivable.

County and audit team comments Liz Woods, Pitkin County finance director, thanked staff for their work and described system and bank transitions that contributed to timing and reconciliation challenges. “We’ve been working to clean this all up,” Woods said, noting the county still uses two bank accounts while old flows are closed out.

Baucus described the audit magnitude: “There were 762 different total work papers that are scanned in, looked at, and are part of the 2024 audit,” and said most of the recommendations were about improving processes rather than correcting material errors. He also noted implementation of new government accounting standards (GASB) that changed measurement of compensated absences and other items.

Board process and immediate action Commissioners were told a first‑reading resolution to approve the comprehensive annual financial report would be placed on the next BOCC meeting agenda for formal action. No final BOCC vote on adoption was recorded during the June 24 work session. County staff said the supplemental auditor comments will be tracked and addressed in coming months and that the landfill consultant study due this year should be used to re‑test the closure liability estimate.

What remains unresolved The audit letter identified three journal entries during audit review and several reconciling items for cash; the auditors characterized them as immaterial but recommended they be cleared. The single‑audit finding related to omitted federal awards has been addressed procedurally by staff but remains a note in the audit report for this cycle.

The county and auditors agreed to return next year with an updated audit and to close outstanding reconciling items in finance’s monthly close process.

Ending: County staff said they intend to correct the items flagged and to use the auditors’ recommendations to tighten monthly close procedures and federal grant identification.