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City audit returns clean opinion; auditors flag long-running special-assessment issue
Summary
The city’s independent auditors gave Lincoln an unmodified (clean) opinion for fiscal year 2025 while noting a repeat material weakness tied to special‑assessment debt accounting that they expect to resolve next year. Finance staff and council praised improved controls and fewer audit adjustments.
Justin, managing partner at Mun LLP CPAs, told the City Council the audit for the fiscal year ended June 30, 2025, produced an unmodified (clean) independent auditors’ opinion and a clean single-audit on federal funds. “We have an unmodified or clean opinion, which is definitely good news,” Justin said during the presentation.
Why it matters: A clean opinion signals the auditors believe the city’s financial statements are fairly stated and presented under GASB standards. Council members and staff said the result reflects work to improve internal controls and to implement prior audit recommendations.
The audit team described the scope of their work—confirmation of third‑party balances, cutoff testing around the June 30 year end, detailed tests of transactions and analytical procedures—and noted four audit adjustments and a handful of management recommendations. Justin characterized the management letter items (accounts receivable classification, inventory adjustments and accrued benefits corrections) as minor and expected them to be addressed by finance staff.
A repeat material weakness: Auditors reported a repeat material weakness tied to reconciliation of special‑assessment debt proceeds that traces back to 1999. Justin said the issue has involved complex adjustments to prior years and that staff expects the finding to be eliminated in next year’s audit. “This will go away next year,” Justin said.
Council and staff reaction: Finance staff emphasized the transition to a new financial system (Tyler Technologies) and ongoing workforce adjustments as factors during the audit year. Council members commended staff for progress; one council member said the city had gone from many findings in prior years to a much smaller set of issues. Zoom participant Stella Greenhouse also thanked staff and the auditors for the improved report.
Next steps: Staff said it will act on the management-letter recommendations and continue implementing controls. The city plans an RFP to select auditors going forward; staff expects to bring a recommendation at a future meeting but emphasized that changing firms is a routine best practice, not a requirement.
The council received the audit report; no council action was required at the meeting.
