External auditor reports clean single audit for Westfield; recommends fraud hotline and construction audits

An external auditor told the Westfield Finance Committee that the city's single audit for the year ended Dec. 31, 2024 produced an unmodified ("clean") opinion and identified no internal control findings or compliance violations tied to federal awards.

Rick Wickrren, a partner with Port Mazar, reported that the Schedule of Expenditures of Federal Awards showed $6.7 million in federal expenditures for the year, and that the bulk of those funds came from Coronavirus State and Local Fiscal Recovery Funds. "Unmodified means clean for auditors," Wickrren said, adding that no material weaknesses or significant deficiencies were reported for either the financial statements or the federal award program tested.

Why it matters: the city exceeded the federal single-audit threshold for the year and therefore was required to undergo a single audit. Wickrren explained that because the COVID program represented more than 90% of federal spending for the city, auditors selected that program for testing and obtained the required coverage. He also said the audit did not qualify as a low-risk audit because the city had not had two consecutive prior single audits, which affects sampling coverage requirements.

Wickrren outlined several recommendations and broader matters for management consideration. He recommended the city evaluate establishing a fraud or ethics hotline, citing industry research that hotlines are an effective means to detect fraudulent activity; he noted that any implementation should be subject to cost-benefit analysis. He also urged use of owner's representatives on major capital projects and suggested construction audits when an owner's technical representative is not engaged, to identify planning risks, review change orders and perform post-project reviews.

On payments and cybersecurity, Wickrren warned about vendor-payment fraud and email compromise schemes and urged staff to verify payment-change requests by calling established vendor contacts rather than relying solely on email. "If there's a request to change wire information, pick up the phone," he said, recounting an example of a client that lost roughly $60,000'$70,000 to a similar scheme.

The presentation closed with a brief discussion of artificial intelligence adoption and upcoming governmental accounting standards board (GASB) disclosure changes; Wickrren said these GASB disclosure updates are primarily presentation and disclosure items and that Baker Tilly will help the city prepare required disclosure language. He said final adjustments to the financial statements were submitted to Baker Tilly and the auditors expected the final report to be wrapped up soon.

Committee members asked follow-up questions about when an owner's representative is engaged and about internal AI policies and training; a staff member said the city has a simple internal AI policy limiting external communications and is developing further controls while leadership has received training.

Next steps: Wickrren will present an abbreviated public summary at a future council meeting; staff will finalize quarterly financial reporting and schedule a fuller revenue review in the May meeting cycle.