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Auditors deliver unmodified opinion on 2024 city finances; note contract compliance finding and arena accounting impact
Summary
Hoffman, Phillip & Martel presented the 2024 audit to the council, issuing an unmodified opinion, noting strong fund reserves but flagging a new contract-compliance finding and explaining that arena depreciation and bond payments affect operating results.
The city’s independent auditors, Hoffman, Phillip & Martel, presented the City of Thief River Falls’ 2024 audit and reported an unmodified (clean) opinion on the financial statements.
Auditor Crystal Phillip (Hoffman, Phillip & Martel) told the council the report shows the city’s net position increased by about $3.4 million from the prior year and highlighted that the general fund reserve was about 53% of expenditures — ahead of the commonly-cited 30–50% guideline. She recommended that council members review the management’s discussion and analysis on pages 5–13 of the audit for context.
The auditors identified routine GASB items affecting year-to-year adjustments, including GASB 68 pension adjustments and the incoming GASB 75 standards for other post-employment benefits (OPEB). They also noted one new finding for contract compliance where some checklist items were not completed and reiterated the recurrent finding on segregation of duties and internal controls — a common issue in small governments.
Council members pressed on arena finances after auditors noted large non-cash depreciation and consolidated multiple funds into arena accounting. The auditors said the arena figures include bond payments, capital project costs (including the ice plant), depreciation and other non-cash charges; these accounting treatments can produce a larger reported loss in the statement of activities even where cash flow is less negative. The auditors noted the arena had substantial depreciation (about $386,000) which explains much of the difference between operating results and cash flow.
Auditors pointed to the debt schedules in the notes section that run through 2044 and encouraged council review of supplementary information, including ten-year trends in the statistical section. Council members also noted population declines shown in the report and expressed interest in strategies to attract residents.
The council took no formal vote on the audit presentation but thanked the auditors and accepted the report as presented.
