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Independent auditors give Ferndale unmodified opinion; parking fund shows long‑standing deficit
Summary
Manor Cost Harrison delivered FY2025 audited financial statements with an unmodified opinion and noted strong liquidity overall; the Auto Parking Fund remains in deficit and required longer‑term corrective plans under Michigan guidance.
An independent audit of Ferndale’s fiscal year ending June 30, 2025, delivered an unmodified opinion on the city’s financial statements and single audit, but staff and auditors noted material weaknesses and areas for process improvement.
Aaron Stevens, a principal with Manor Cost Harrison, told council the audit expressed "unmodified opinions" — the highest level of assurance — on the financial statements. He highlighted a governmental current ratio of about 3.25 and a general fund fund balance above $10 million, with approximately 33% available relative to expenditures (about four months of operations). Stevens also noted that unrestricted net position is negative because of long‑term liabilities such as net pension and OPEB obligations.
Pension funding varied across plans: the general employee retirement system was reported at 476% funding, police and fire pensions at 83%, and OPEB at 111% funding. Total net position increased in the fiscal year (auditor cited an increase of roughly $20 million overall and $2.5 million in business‑type/enterprise activities).
The audit reported a material weakness related to auditor‑proposed journal entries and several significant deficiencies involving timeliness of bank reconciliations and missing supporting documentation. In the single audit of federal awards, auditors found no material weaknesses for tested federal programs (CDBG and ARPA/CSL FRF).
Council members questioned the Auto Parking Fund deficit, which stems from interfund advances and a long‑standing structural shortfall; staff described proposals such as shifting merchant credit‑card processing fees to end users (estimated ~$150,000/year savings) and exploring write‑offs only if council approves a formal transfer or budget action. The auditor noted state guidance requires a deficit elimination plan when a fund is in deficit for five years.
Next steps: staff and council said they will reinstate more frequent finance‑committee meetings to improve monthly closes and encumbrance control and to address the parking fund’s elimination plan.
