Auditors report clean cash-basis opinion but flag motor-vehicle ledger and budget issues for Montgomery County

Emily Franks of the audit firm presented the county's fiscal 2023 audit, saying auditors issued an adverse opinion on GAAP-based statements but an unmodified opinion on the county's regulatory (cash-basis) financial statements and an unmodified opinion on federal awards.

Franks told commissioners that the county's reported cash balance at year end was about $21,615,000, but she flagged two funds that were not in compliance with Kansas cash-basis law: the motor vehicle operating fund (which ended with a negative balance) and a JJA-related grant fund. She said the motor vehicle finding was a repeat issue from 2022 and that it represented a material weakness in internal control because the motor vehicle activity was not maintained on the county's general ledger.

"The motor vehicle fund is not maintained on the general ledger," Franks said, describing it as a repeat finding that required corrective action. She explained some of the year-end adjustments were driven by a payroll-software transition (Bamboo/Comtech) that disrupted reconciliations and required multiple journal entries to present the statements as shown in the packet.

Auditors walked through fund-level changes: a $1,105,000 decrease in the general fund cash balance between 2022 and 2023, a decline in tax dollars that contributed to that change, and specific notes about net pension liability (noted from CAPERS-related GASB reports as approximately $8,669,000). Franks also explained the county qualified for a single audit in 2023 because it spent more than $750,000 in federal funds and described which federal award programs were tested; she said no federal-award findings were required to be reported.

County commissioners and staff asked follow-up questions about the motor vehicle fund reporting, the special rural fire equipment amendment that had a budget violation, and whether the audit packet and management representation letter could be finalized for submission to the federal clearinghouse. Franks said the auditors would need a signed management representation letter on county letterhead and expected delivery of loose internal reports to the commissioners for internal review.

The auditors recommended that county staff incorporate the motor vehicle activity into the general ledger or adopt procedures that ensure accurate, timely reconciliations and encumbrances going forward. Commissioners acknowledged the size and complexity of the packet and said they would review details and provide the signed documents as requested.