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Auditor: FY2021 shows clean opinion but large deficits, TIF compliance issues
Summary
Wipfli presented the Village of University Park's 2021 audit, issuing a clean opinion on financial statements but highlighting liquidity risk, a $57 million unrestricted net position deficit on government-wide statements, TIF compliance findings and several internal-control deficiencies.
Sarah McKenna, senior manager at accounting firm Wipfli, told the University Park Village Board on Tuesday that the village's fiscal year 2021 audit received an unmodified (clean) opinion but included an emphasis-of-matter paragraph flagging liquidity concerns and other recurring issues.
The audit showed a government-wide net position of $13.6 million and an unrestricted net position deficit of about $57,000,000; on a governmental-fund basis the village's total fund balances were $22.9 million with an unassigned fund-balance deficit of approximately $33,000,000. McKenna reported a net increase in fund balance for FY2021 of about $1,900,000 but said much of that increase was tied to restricted funds and did not materially reduce the unrestricted deficit.
The auditors also issued a separate compliance report for the village's TIF (tax increment financing) funds, required by the state of Illinois. McKenna said the TIF report received a clean financial-statement opinion but included two compliance findings: insufficient joint review board meetings (the state requires at least one annually) and an untimely filing of the 2020 TIF report with the Illinois Comptroller's Office. She added a third finding related to significant interfund loans from TIF funds to non-TIF operations.
McKenna described three significant internal-control deficiencies identified in the required-communications letter: lack of formal approval for journal entries, insufficient monthly budget-to-actual reviews, and inadequate segregation of duties in payroll. She framed the management-letter comments as business best-practice suggestions and said some documentation problems were linked to the village being behind on its audits.
"We did issue a clean, unmodified opinion," McKenna said. "However, we included an emphasis-of-matter paragraph because of the financial condition of the village at that time. There was a liquidity risk; the general fund had a large deficit fund balance." The audit also recorded restatements to prior-year amounts tied to missing TIF payables (about $1.9 million) and a corrected calculation of accrued compensated absences (about $600,000).
Board members pressed staff and the auditors about remedies. McKenna recommended a plan to reduce general-fund expenditures and to adopt a multi-year repayment schedule for interfund loans. Village staff (identified in the meeting as Chris) confirmed fund financial statements and monthly budget-to-actual reports are available and listed on finance-agenda packets; trustees requested clearer presentation of the general fund separate from capital and pension items to make liquidity clearer.
No formal action was taken on the audit at the meeting; trustees asked staff to follow up with specific fund-level reports and said they expected to see repeated findings disappear only after changes are implemented and reflected in subsequent audits.
Next steps: staff will provide additional fund-level reporting to the board and the village has a joint review board meeting scheduled related to TIFs; auditors said some management-letter items could recur until the village completes implementation of internal-control improvements.
