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Auditor flags unreconciled bank difference and $156,000 sewer fund shortfall in 2024 audit draft
Summary
Auditor reported a $17,456 unreconciled bank difference at Dec. 31, 2024, and a $156,000 cash-basis deficit in the sewer fund, recommending transfers and improved segregation of duties ahead of a software implementation.
HARRINGTON — Auditors presenting the draft 2024 audit to the City Commission on June 3 cited an unresolved bank reconciliation difference and a significant deficit in the sewer enterprise fund.
Alex Larson of Limburg, Vogel, Pierce & Ferris, the auditing firm working on the city’s audit, said the firm found an unreconciled variance of $17,456 at Dec. 31, 2024, down from $24,362 at the end of 2023. Larson said the variance likely results from items dating back several years — voided checks, missed deposits or bookkeeping timing — and that the city’s planned software implementation offers an opportunity to bring balances to zero and start with a clean slate.
Larson also reported a cash-basis deficit of roughly $156,000 in the sewer fund, driven by unbudgeted capital outlays and an additional employee. The auditor recommended the commission consider a transfer or budget amendment resolution to offset the cash-basis violation and noted existing equipment and capital improvement reserves were small.
City staff and department leaders said the sewer shortfall resulted from several factors: significant unplanned maintenance and repairs at the wastewater plant (including full rebuilds of three large pumps), capital outlays tied to plant work, a roughly $23,000 revenue shortfall from underbudget collections, and benefit costs for a newly hired position that may have been larger than anticipated.
Next steps: auditors suggested staff prepare transfer or budget-amendment resolutions to correct the cash-basis violation; staff indicated they will prepare those items in the coming weeks for commission action. Larson also reiterated the longstanding recommendation to improve segregation of duties — given a small finance staff, the commission and city manager should maintain active monthly oversight of financial reports until system changes allow more robust internal controls.
Implementation timeline: staff told the commission the city plans to go live on the new financial system in October (financials), add payroll in December and have utility billing on the new system by January, which auditors said should streamline reporting and support monthly financial reviews at commission meetings.
No formal vote was required on the audit presentation; commissioners asked staff to bring transfer resolution(s) back for formal consideration.
