St. Clair Shores receives clean FY2025 audit; auditors flag slow bank reconciliations

Ali Barnes of audit firm Yo and Yo told the St. Clair Shores City Council that the city had received an unmodified, or "clean," opinion on its fiscal 2025 financial statements, calling that the outcome "you want." She said the general fund grew by about $1,000,000 and the city ended the year with roughly $18.6 million in total fund balance.

Barnes said general fund revenues totaled about $55.3 million for the year, an increase of roughly $9.5 million from the prior year driven largely by federal grant receipts, including ARPA awards that raised federal grants to about 16% of total revenue. She told council the city recorded about $54.3 million in expenditures and transfers and that transfers out (about $9.1 million) reflected capital project funding for public safety buildings.

The audit presentation also reviewed long-term liabilities: a net pension liability of about $28 million for the general employee pension plan and about $78 million for police and fire plans. Barnes said pension funds were above the 60% funding threshold, and that OPEB (retiree healthcare) liabilities stood at roughly $26 million for general employees (funding about 35.6%) and about $41 million for police and fire (funding just over 44%).

On federal reporting, Barnes said the city recognized nearly $12 million in federal expenditures for single-audit purposes and that ARPA expenditures accounted for about $9.9 million of that amount. "Within all of the testing that we do within the ARPA program, we did not have any findings," she said, adding there were no material weaknesses, significant deficiencies, or material noncompliance in that program.

The auditors did identify internal-control and compliance items for improvement. Barnes emphasized bank reconciliations had been taking longer than the state-recommended period (about 30 days to six weeks after month end) and that unreconciled differences appeared on some reconciliations. "Sometimes people think that when there's a finding it's because something is only happening in one particular fiscal year, but that's not always the case," she said, and urged improved cross-department communication, clearer month-end processes and targeted training to reduce turnover impacts.

Council questioned whether turnover in the reconciliation position contributed to delays; staff acknowledged three different people had held the role over three years and said they are consolidating cash accounts, streamlining processes and focusing training to reduce future delays. The council voted to receive and file the fiscal year 2025 ACFR and related reports (motion passed 6-0). The auditors said remaining edits would be non-substantive footnote changes.

What happens next: council directed staff to implement procedural changes and training to strengthen month-end close and bank-reconciliation timeliness; auditors will provide final, non-draft bindings for council records.