Independent audit gives Kossuth County an unmodified opinion; report flags recurring internal-control and drainage accounting issues

An independent audit presented to the Kossuth County Board of Supervisors on Thursday returned an unmodified opinion on the county's fiscal 2024 financial statements, but the auditor identified several findings the county must address.

A representative from audit firm Gardner & Company reviewed the audit highlights, saying the firm had issued an unmodified opinion after testing and noted material adjusting journal entries were required and had been posted to the county's records. The audit covered the county's full-accrual statements, the modified-accrual (GAS) report, and the cash-basis budget comparisons the county files with the state.

The auditor flagged a group of recurring and new findings. The report lists segregation of duties concerns in small offices (a common finding for rural counties), deficiencies in the county's capacity to prepare full-accrual financial statements without outside assistance, and material adjustments during year-end that required management action. The audit also called out several statutory and reporting items: budget appropriations that were not formally adopted before July disbursements, discrepancies in tax increment financing (TIF) reconciliations and the annual urban renewal report, and transfers that had not been recorded in the minutes.

Specific to drainage and other long-running items, the audit noted drainage districts with deficit fund balances driven by outstanding drainage warrants; the auditor recommended reconciling those drainage balances and confirming how older project bills were assigned across new reclassified lateral schedules. The report also repeated a long-standing administrative concern: the sheriff's commissary/profit fund is maintained outside of county accounting and recommended the county centralize that activity in the treasurer's department to improve internal controls.

The auditors also performed agreed-upon procedures on the county's American Rescue Plan (ARP) spending because combined federal spending triggered single-audit thresholds; the auditors concluded the ARP expenditures were compliant with program requirements and advised the county to file the report with the U.S. Department of the Treasury.

County leaders said they and staff would act on the audit findings. The auditor emphasized the need for cross-training, routine reconciliation, and a second set of eyes for complicated reconciliations such as TIF and drainage accounting.