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City auditor gives Warren an unmodified opinion, flags record-keeping for comp-time and ERP timing
Summary
Plant Moran presented the city's ACFR and issued an unmodified opinion but reported two internal control matters, including difficulty documenting historical use patterns for compensated absences under new GASB guidance; auditors said a single audit will follow by March 31.
Josh Eady, principal at auditor Plant Moran, told Warren City Council on Feb. 10 that the city's Annual Comprehensive Financial Report received an “unmodified opinion,” meaning the financial statements conform to accounting standards and can be relied on. He said the city’s continued effort to publish an ACFR “is above and beyond what is required by the state.”
Eady said auditors recorded two internal control matters. The first reflects audit entries Plant Moran identified to bring the statements into compliance with GAAP. The second was a significant deficiency tied to implementation of a new accounting standard for compensated absences (referred to in the presentation as GASB 101), which requires the city to estimate how much vacation and sick time will be used, paid out or forfeited. “The city was unable to provide historical records to support that estimate,” Eady said; he added auditors were able to reach a materially correct result but urged the city to begin accumulating usage records to support future estimates.
City Controller Richard Fox and the auditors also explained timing effects from the city's new ERP system and use of American Rescue Plan (ARPA) funds. Eady said ARPA-driven recognition adjustments moved previously unearned grant balances into revenue when expended; he noted the city finished the year with approximately $117,000,000 in total fund balance and about $24,300,000 unassigned in the general fund.
Council members pressed auditors and Controller Fox on grant-fund timing, landfill post-closure liabilities and insurance reserves. Fox described the city’s insurance layers, saying the city pays the first $1.5 million of a claim and that coverage layers extend beyond that; he also noted a reserve in fund balance for large hits. Regarding a referenced landfill liability, auditors said that obligation relates to a closure in the northern part of the county and remains an estimated contingent liability until work completes.
Eady said the single audit that often accompanies federal funds is technically due March 31 and “we will be issuing that actually very shortly,” adding his team anticipates an unmodified opinion on that review as well. He told council the auditors document prior findings and include a schedule summarizing the status of previous recommendations but do not supervise management’s corrective actions.
The council accepted the audit presentation and voted to receive and file the materials.
