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Auditor issues unmodified opinion but flags control and reporting issues in Kossuth County FY25 audit
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Summary
Independent auditors gave Kossuth County an unmodified opinion on its FY25 financial statements but reported material adjustments and multiple findings — including segregation of duties, incomplete accounts receivable/deferred inflow records, TIF reconciliation gaps and a sheriff's commissary account not included in county reporting.
Gardner & Company presented Kossuth County's fiscal 2025 audit to the Board of Supervisors, delivering an unmodified opinion on the financial statements while identifying material adjustments and a set of findings the county should address.
"For the fiscal year end . . . we have issued an unmodified opinion," the auditor said, noting that adjustments were required to present account balances fairly. The audit team explained that the audit is sample‑based and that the auditor's role is to opine on the financial statements, not to inspect every transaction.
Key findings the auditors outlined included a recurring segregation of duties issue where single staff members can be responsible for end‑to‑end transactions, which increases risk; material amounts of accounts receivable and deferred inflows that had not been properly recorded and required adjustments; and a disclosure finding because the county does not have a CPA on staff to prepare external financial statements (which requires the auditor to assist and thus creates a required disclosure). The audit also reported a statutory concern over purchases of clothing charged to sheriff's department funds and a long‑standing note that the sheriff's commissary profit account is separately maintained and not included in county accounting.
The firm also flagged a tax increment financing (TIF) reconciliation problem in which amounts reported did not tie to supporting documentation, contributing to a negative certification episode; the auditor advised the county to verify certified debt obligations and to work with the Iowa Department of Management to correct reconciliations. The audit noted that County net position improved by roughly $2 million for the year, about $1 million of which the auditors tied to activity in the farm‑to‑market fund.
The auditors recommended routine internal control improvements (including cross training and oversight of claims), clearer department‑to‑treasurer communication on receivables, better reconciliation of park reservation unearned revenue, and bringing post‑closure landfill financial assurance up to required levels. Board members asked for procedural changes to reduce recurring audit extensions, and the auditors urged earlier preparatory work on capital assets and documentation to avoid timing delays.
Next steps: county staff and the auditor will work to correct the reconciliations and implement recommended control and documentation processes; the board directed staff to follow up on TIF reconciliation and landfill funding issues.
