Ad hoc committee recommends Danbury accept 2023 audited financial statements despite material weaknesses and school cyber incident

The ad hoc committee reviewing Danbury City’s fiscal year ended June 30, 2023, audit voted Tuesday to recommend the City Council accept the audited financial statements, including management letters and adjustments.

Scott Bassett of RSM, the city’s external auditor, told the committee the firm’s work produced "an unqualified, unmodified opinion" on the financial statements and on the federal and state single-audit areas they tested, while cautioning that the numbers and disclosures are management’s responsibility. He said audit work faced delays because trial balances and working papers arrived late, which required additional adjusting entries during the engagement.

The auditor reported several control-related findings. RSM flagged a material weakness tied to "audit readiness" — the city’s processes and timing for producing audit-ready records — and a separate material weakness related to required federal-award documentation. Bassett said the cyber incident that affected Danbury Public Schools in 2022–23 increased audit planning risk in certain areas and required additional IT and legal consultations during the engagement.

City finance and school officials said they are working to address those issues. The school superintendent, Cara Casimiro, described steps the district has taken since the incident: "We stopped storing social security numbers in certain places," added new cybersecurity layers including multi-factor authentication, and reorganized IT roles to add an assistant director who focuses on security. She said the district is still evolving its defenses and training staff to reduce exposure.

Committee members and finance staff also reviewed financial highlights presented by RSM. The presentation cited the city’s cash and investments (presented at $580,000,000 in the audit materials), capital assets, outstanding bond anticipation notes of $110,000,000, and bonded debt of roughly $132,000,000. RSM noted a reported net OPEB liability of about $307,000,000 and net pension liabilities of approximately $156,000,000; the firm emphasized that those actuarial figures are driven by assumptions such as the discount rate.

Despite the control findings and the prior-year restatements tied to the implementation of GASB 96 and OPEB allocation adjustments, RSM said the city’s general fund and overall financial position remain strong and that rating agencies gave favorable commentary when the city recently sold bonds. Committee members asked for the formal management letter and journal entries; RSM said the management letter and related communications would be issued within days and that journal entries had been communicated to management.

Officials described temporary use of outside consulting firm CLA to supplement staff while the city and Board of Education hired additional personnel and built templates and processes to prevent future audit delays. City finance staff said the CLA engagement serves as a bridge until internal staffing reaches sustainable levels, and they described work to export and analyze transaction data more efficiently.

After the discussion, a committee member moved that the council accept the audited financial statements and related materials. The motion was seconded, approved by voice vote, and the committee then moved and seconded to close the ad hoc committee; the meeting adjourned at 7:06 p.m.

What’s next: the committee forwarded the audit and management letters to the full City Council for formal acceptance and said staff would supply the committee and council with the forthcoming management letter and the supporting journal entries.