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Crookston audit: clean opinion but five internal-control issues and two compliance findings
Summary
Auditor Miller McDonald reported an unmodified 2023 audit opinion for Crookston’s financial statements but flagged five internal-control deficiencies and two Minnesota compliance items; city staff acknowledged staffing turnover and said steps are under way to address the problems.
John Roscoe of Miller McDonald told the Crookston City Council that the firm issued an unmodified opinion on the city’s 2023 financial statements, meaning the statements were presented "fairly in all material respects." He said materiality was applied by fund, with sample thresholds such as $77,000 for the general fund and $100,000 for the water fund.
Roscoe listed five internal-control deficiencies identified during the audit: timeliness of bank reconciliations (a new finding), classification and monitoring of bond/fund balances (repeat), incomplete documentation for some journal entries, inadequate segregation of duties related to staffing shortages, and weaknesses in fixed-asset identification and monitoring. He also said the state-statutory review turned up two compliance matters, including long-outstanding checks that should have been remitted to the Minnesota Department of Commerce and missing bid documentation for some procurements.
"The city did receive an unmodified opinion on each one of their opinion units," Roscoe said, while urging corrective action on controls and record retention. City staff acknowledged recent turnover in the finance department and told council members they will sit down with the finance team to identify and implement safeguards. One council member asked whether restricted funds could have been used improperly; Roscoe said miscoding is possible when reconciliations are late and recommended remediation and monitoring.
Staff also summarized fund balances: the 2023 general-fund balance was reported at about $6.1 million, but Roscoe said roughly one-third of that was related to internal receivables tied to capital projects (for example a $1.9 million street-construction receivable), leaving an operating fund balance closer to $4.0 million if internal transfers are excluded.
City staff told the council they plan follow-up meetings with finance staff and outside contractors to reduce turnover effects and strengthen reconciliation and documentation practices. The council directed staff to provide additional detail where requested and to return with implementation steps.
What’s next: staff will complete corrective-action planning, deliver requested budget and trial-balance details to council members, and monitor whether 2024 procedures close the gaps Roscoe identified.
