Lake County accepts 2023 audited financial statements after auditors cite material weaknesses and federal reporting lapses

Lake County commissioners on Jan. 13 accepted the county's 2023 audited financial statements after external auditors issued an unmodified opinion while identifying material weaknesses in the county's financial reporting and compliance issues with federal grant reporting.

Dimitri Churniak, an auditor with DMC Auditing and Consulting LLC, told the board the firm issued a clean (unmodified) opinion on the county's financial statements and on the county's single-audit compliance work but found a "significant number of misstatements" and a material weakness in controls over financial reporting. "You do have an unmodified opinion, which is considered a clean opinion of the financial statements," Churniak said, adding the firm also performed the single audit required because the county spent more than $750,000 in federal awards in 2023.

The auditors identified two main areas of concern that delayed the audit and required corrections: a set of significant accounting misstatements (including amounts that required a restatement of 2022 figures) and incomplete federal-award listings that complicated the single-audit planning. Churniak said the auditors also found that reporting required for the American Rescue Plan Act (ARPA) funds was not filed on time, creating a compliance finding. "We identified a material weakness in controls related to financial reporting," Churniak said. "There were significant corrections that we had to make."

County finance staff acknowledged turnover and recordkeeping problems in 2023 and said many of the audit's recommendations are already being addressed. Tim (Lake County finance staff) told commissioners the county has reorganized the finance team, hired new staff and is developing a grants policy to improve tracking and documentation of federal awards. "A lot of the findings we have already worked a lot on correcting," Tim said, citing adoption of a grants policy and staffing changes.

Auditors recommended that management maintain a complete inventory of federal awards, centralize bank-account records in the county accounting system, and strengthen controls around financial reporting and grant documentation. The audit report and a separate governance letter also noted several bank accounts that appeared not to be recorded in the county accounting system and urged consolidation or better accounting treatment to improve internal controls and accountability.

Votes at a glance - Motion to accept the Lake County 2023 audited financial statements: passed (unanimous). The board accepted the audit after the presentation and discussion of findings and corrective steps. - Motion to approve the consent agenda (multiple meeting minutes): passed (unanimous).

The board's acceptance of the audit does not remove the findings. Auditors warned that compliance findings related to federal awards and late ARPA reporting could draw federal inquiry or further action, though Churniak said the specific federal response is uncertain. Commissioners closed the special meeting at 4:07 p.m.