OAG review finds Wayne County Land Bank financial statements fairly presented; auditors identify material weakness and $535,686 settlement accrual

The Office of the Auditor General recommended the Wayne County Commission receive and file its limited review of the Wayne County Land Bank Corporation audited financial statements for the year ended Sept. 30, 2024, after noting an unmodified audit opinion and one material weakness in internal control.

Sandra Allen, legislative auditor 3 with the OAG, told the Wayne County Commission Audit Committee that external auditor Plante Moran issued an unmodified opinion on the Land Bank's financial statements for the year ended Sept. 30, 2024, and provided a report on internal control and compliance. Allen said the OAG review identified one deficiency that the external auditor characterized as a material weakness—a failure to ensure identification and recording of all year-end closing entries before the audit commenced.

Anthony Cartwright, executive director of the Wayne County Land Bank Corporation, described the underlying issue as a settlement related to ongoing litigation with Highland Park Water that required an accrual for fiscal year 2024. Cartwright said the case began in February 2018, the parties reached a settlement in November 2024 (fiscal year 2025), and the first payment was made in February 2025; after discussion with the external auditors, management posted a journal entry to record the related expenditure and liability of $535,686 for the fiscal year ended Sept. 30, 2024. Allen said if the land bank had not recorded the auditor-identified entry, the financial statements would have been misstated.

The OAG reported the land bank's assets exceeded liabilities, producing total net position of $12,028,099 for the year ended Sept. 30, 2024, compared with $7,729,781 for 2023. The net position increased by $4,298,318 between years (computed from figures presented to the committee). The OAG attributed the increase primarily to the land bank's purchase of multiple right-of-refusal properties recorded at true cash value; non-right-of-refusal properties are carried at $250 per parcel for internal records.

The review showed total revenue increased by $5,336,375 (about 277.4%) in 2024 and program expenses rose by $1,513,093 (about 104.5%). The governmental fund ending balance for fiscal 2024 was $12,028,099; OAG noted the majority of that balance is nonspendable inventory recorded at true cash value, with roughly $9 million of the balance identified as nonspendable and the remainder—about $3 million—available for operations such as maintenance, insurance and payroll.

Cartwright described existing controls and recent changes to prevent a recurrence of the year-end closing omission, including discussions with the external auditor and steps to ensure accruals are recognized when an obligation exists even if a payment is made in a subsequent fiscal year. Allen said management agreed with the finding and would document additional processes and procedures and discuss the issue with responsible officials.

Committee members also discussed the land bank's maintenance funding and intergovernmental agreement with the Wayne County treasurer. Cartwright said the treasurer provides a per-parcel maintenance transfer tied to the land bank's inventory: $550 per new acquisition annually and $350 per parcel retained in inventory, amounts the land bank uses to pay for grass cutting, snow removal, boarding and other emergency maintenance. Committee counsel asked about the legality of the county using county funds to maintain property no longer held by the county; committee members noted the land bank is a legally separate entity and that the land bank's budget sensitivity report includes details of treasurer transfers and related expenditures.

The committee voted to accept the OAG recommendation and forward the limited review for the Wayne County Land Bank Corporation to the full commission for receipt and filing. Commissioner Garza moved the acceptance; Commissioner Wilson supported the motion, which the committee recorded as carried.