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Meade County commissioners accept state audit after report flags internal-control gaps and large unassigned reserves
Summary
The Meade County Commission accepted the South Dakota Department of Legislative Audit’s 2021–22 report, which found internal-control weaknesses, unreconciled custodial accounts tied to the 24/7 program, and an unassigned fund balance that exceeded statutory limits by several million dollars. The commission pledged follow-up steps and an explanatory response for the final audit.
The Meade County Commission voted July 23 to accept the Department of Legislative Audit’s audit of the county’s 2021–22 financial statements after a two-hour presentation by Al Shaffer of the audit office.
Shaffer told the board that auditors issued an unmodified opinion on the county’s financial statements but listed several control deficiencies that “did not rise to material weakness.” Key problems included lack of a formal fraud-reporting procedure, unreconciled custodial fund subsidiary records (including a growing balance in the county’s 24/7 program account), overdue general ledger reconciliations and bank reconciliations, and examples of negative cash balances in restricted funds. Shaffer said the auditors recommended monthly follow-up and reconciliations by the auditor’s office.
The audit also called out the county’s unassigned fund balance, noting that by December 2023 the county held roughly $10 million in reserves where a statutory maximum would be about $6 million, creating an estimated excess in the millions. Shaffer said the law allows commissions to assign fund balance for specific purposes (software upgrades, motor graders, gravel or road projects), and recommended that the commission make formal assignments in the general fund when appropriate to avoid the appearance of excess reserves.
Commissioners acknowledged the report and the staffing transitions that overlapped the audit period. Commissioner Creed said the audit reflected a period of turnover and asked that the commission include a transitional context and a commendation for auditors in their public response. The commission asked the county auditor and the chair to draft a response explaining the use of ARPA funds and the staffing transition before the report is published.
Chair Pat West praised the auditor’s office for its responsiveness and said the county will act on the audit recommendations. "We want it to be transparent and to get the reconciliations done," West said. The board then voted to accept the audit report by voice vote.
Next steps the commission discussed include monthly follow-up on reconciliations, the auditor’s office reconciling subsidiary records for custodial funds, and considering formal assignments of fund balance where projects or capital needs justify retention.
The audit presentation and the commission’s acceptance do not create new legal requirements beyond existing statute, but they trigger recommended corrective work and an optional response from the county to be included with the final audit publication.
