Larson & Co. gives Santaquin an unmodified audit opinion; council discusses audit committee and insurance coverage

Larson & Co. presented the independent audit for fiscal year 2025 and issued an unmodified opinion on the city's financial statements, the firm's partner John Hatterley told the council.

"Unmodified or unqualified is a clean opinion," Hatterley said, explaining that the auditor's work is performed using sampling and that materiality limits absolute assurance.

The auditor also reviewed additional reports required under government auditing standards, including internal-control testing and a state-compliance opinion. Hatterley told the council there were no significant deficiencies or material weaknesses and no findings for state compliance.

Council members pressed the auditor and staff about internal controls and a separate audit committee. Hatterley said an audit committee is good practice but not common among smaller Utah cities; it would typically include one council member, one management member (not finance), and independent community members. "We're looking at your internal controls to make sure that, a, you have controls in place, and, b, they're functioning the way they should," he said.

The council also asked whether the city's $5,000,000 insurance coverage is adequate. Hatterley recommended consulting the trust or insurer for actuarial guidance: "Get your attorney and talk to the trust and say, these are the types of things that we're facing on an ongoing basis," he said. Staff and council did not adopt a change to coverage during the meeting.

Finance staff reported that the city's general fund balance rose to 27.5% from 21.5% year over year, a move staff said was in line with planned debt and reserve management. The finance director and city staff noted they have been in regular contact with the auditors throughout the year and said they are implementing controls and review processes the auditors test.

The presentation concluded with auditor offers to answer follow-up questions about bond compliance and other engagement-letter items outside the council meeting.

Evidence for this article comes from the auditor's opening remarks, the internal-controls discussion, and staff fund-balance comments during the Larson & Co. presentation at the meeting.