Auditors give Saco a clean opinion, flag federal vendor documentation and school payroll recordkeeping

RKO, the external auditor, presented the city and school district's fiscal year 2024 audit to the Saco City Council on Oct. 20 and said its independent opinion on the financial statements was unmodified, meaning the statements are "fairly stated in all material respects." (RKO).

The audit found no material weaknesses or significant deficiencies in internal control but included two "other comments" the auditors recommended the city address: documenting checks for suspended or debarred vendors on federally funded contracts, and completing payroll wage‑rate approval forms for school employees. (RKO)

Why it matters: an unmodified opinion signals the auditors found the city's and school district's year‑end financial statements reliable for fiscal decision‑making. The non‑material comments relate to compliance and documentation that, if addressed, reduce administrative risk and improve federal grant oversight.

RKO said the federal finding related to vendor checks stems from uniform guidance that applies when a jurisdiction expends more than $750,000 of federal awards in a year and requires procedures to verify vendors are not suspended or debarred. The auditors noted they tested a sample of vendors on sam.gov, did not find prohibited payments, but recommended the city and school adopt a documented process (search record, vendor certification, or contract clause) to show the check was done before payment. (RKO)

On school payroll, the auditors reported that turnover in payroll administration left records incomplete: 14 of 40 tested wage rates lacked a formal approval form in personnel files. RKO said wage rates were otherwise verifiable through collective bargaining agreements and other documents, but recommended restoring and documenting the approval forms to support payroll changes. (RKO)

The presentation also highlighted fiscal performance metrics. RKO reported the city general fund had a net increase in fund balance of roughly $3.4 million for FY2024, driven by revenues outperforming budget by nearly $3.0 million (noted revenue sources included excise tax, state revenue sharing, building permits and recreation fees) and expenditures running under budget by about $1.2 million. The school operations fund recorded a $762,000 increase in fund balance, the auditors said. (RKO)

Councilor Hatch acknowledged the late filing of this audit report and urged moving forward to focus on the numbers; RKO noted findings and recommendations are followed up in the subsequent audit cycle. Interim City Administrator Cole Prescott and staff indicated they will incorporate RKO's recommendations and that management has already addressed some internal controls. (Councillor Hatch; Cole Prescott)

The auditors warned the uniform guidance process could lead to federal follow‑up if findings were material; they characterized the vendor documentation comment as not material and not reported to federal authorities. RKO emphasized that the single audit approach is risk‑based and does not test every transaction, but targets higher‑risk and higher‑dollar grant activity. (RKO)

The council asked staff to monitor implementation and planned that the FY2025 audit will revisit corrective actions. The auditors also pointed councilors toward the Annual Comprehensive Financial Report's management discussion and analysis for more narrative breakdowns and to supplementary exhibits showing fund balance trends and debt per capita. (RKO; Cole Prescott)

Ending: Councilors thanked the auditors and staff for the presentation. No formal council action was taken during the presentation portion; staff will return with follow‑up as part of normal audit tracking and the FY2025 audit process.