Council accepts 2024 audited financial statements; auditors report material weaknesses

Crookston City Council voted March 16 to accept the city’s 2024 audited financial statements after a presentation by Baker Tilly.

Sheen Hediger, principal at Baker Tilly, told the council the firm issued an unmodified opinion on Crookston’s financial statements — a clean audit — while noting a restatement that moved a $360,000 note payable out of the municipal land and building fund to align with accrual reporting. Hediger said the report also identified material weaknesses involving segregation of duties, the financial statement close process, bank reconciliations and fixed‑asset records, and recommended corrective steps.

Hediger summarized key financial metrics: a general fund balance of about $6.4 million with roughly $2.46 million unassigned, representing roughly five months of operations; utilities results showing modest water operating income and a sewer operating loss. She said the audit involves sampling procedures and that auditors rely on related‑party audits where appropriate (for example, the Housing and Economic Development Authority roll‑up).

Why it matters: an unmodified opinion indicates the financial statements present fairly in all material respects under U.S. GAAP, but the reported material weaknesses point to internal control gaps that could affect financial reporting accuracy and timeliness. Council members asked auditors for clarification on sampling and specific fund‑balance figures; Hediger said auditors perform risk‑based sampling and confirmed the presented figures.

Next steps: the council accepted the audited financial statements by motion and roll call. Staff and the auditor recommended addressing the internal control matters identified in the reporting and insights letter; earlier and improved reconciliation processes and fixed‑asset record cleanup were noted as priorities.