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Finance staff flags $539,000 arbitrage liability tied to 2022 bonds
Summary
Audit-related calculations show an unbooked arbitrage liability of about $539,000 due to excess yield on invested bond proceeds; staff said auditors start fieldwork and the item must be addressed before August 15, 2027.
Finance staff told the board that arbitrage calculations related to the Village’s 2022 bond issue produced an excess-yield liability of about $539,000 that the village may owe to the IRS. The arbitrage calculation compares allowable yield to actual investment returns on bond proceeds; staff said the amount had not previously been booked as a liability in the financial statements and that auditors will begin fieldwork the next morning.
Staff said the amount is due and payable before Aug. 15, 2027, and that additional analysis is under way to reconcile prior entries and confirm timing of payment. Trustees asked clarifying questions about the calculation and whether any mitigation or alternative accounting options remained; staff replied the calculation came from the arbitrage service and will be handled as part of audit follow-up.
