New auditors give Broomfield an unmodified opinion; single-audit reveals material weakness and a Medicaid control deficiency

New auditors Eide, Beaty (Eide Bailey) presented the city and county of Broomfield’s fiscal year 2024 audit to council July 8, giving the city an unmodified opinion on its financial statements while citing two emphasis-of-matter items and reporting a material weakness and a significant deficiency in the single-audit results.

Janine Hathcock, engagement partner for Eide Bailey, told council the firm issued an unmodified (clean) opinion over the city’s ten opinion units and commended finance staff for preparing a 245-plus page comprehensive financial report. Eide Bailey noted two emphasis-of-matter items related to corrections of prior-period misstatements (including capital asset disposals and pension adjustments) and required implementation of a new GASB standard on compensated absences; the firm said management recorded correcting entries and those items did not affect the audit opinion.

Britney Burns, audit manager, discussed single-audit results. The auditors gave an unmodified opinion on compliance for Broomfield’s major federal programs (ARPA/COVID-19, the childcare cluster and Medicaid). However, auditors reported: (1) a material weakness arising from material audit adjustments related to corrected items, and (2) a significant deficiency in internal control over compliance for the Medicaid program because required 45-day notices were not always sent timely for selected cases. Burns said program staff have begun implementing corrective procedures.

Finance Director Graham Clark summarized the fiscal results summarized in the MD&A: total city net position was reported at about $1.381 billion for FY2024, an increase of roughly $70 million from the prior year; government-wide changes reflected increased cash and capital assets, ARPA spending, and higher charges for services in business-type activities from rate and usage changes. The auditors also noted the city’s Schedule of Expenditures of Federal Awards (SEFA) was well prepared and that federal awards increased in recent years largely due to ARPA spending.

Mayor Pro Tem Schaff asked staff to provide a status update on three audit findings from the auditors’ governance letter: subscription-based IT arrangements, SEFA/expenditures reporting (marked implemented) and the ongoing Medicaid/TANF finding. Clark and auditors said improvements have been implemented for the SEFA reporting; Medicaid-related corrective actions are in progress. Council requested formal follow-up on outstanding findings for a future meeting.

No formal council action was required on the audit report; council accepted the auditors’ presentation and allowed public comment. The auditors indicated there were no disagreements with management and that management made the correcting adjustments presented in the reports.