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Independent auditors give Folsom a clean opinion, flag two significant deficiencies
Summary
External auditors issued unmodified (clean) opinions on Folsom's FY24–25 financial statements but reported two significant deficiencies: improving year-end closing and audit preparedness and ensuring completeness of accrued liabilities; management recorded proposed adjustments and is addressing findings.
The city's independent auditors presented the FY 2024–25 Annual Comprehensive Financial Report at the March 24 meeting and reported an unmodified opinion on the financial statements.
The engagement partner told the council that an unmodified opinion (a "clean" opinion) means the financial statements are presented fairly in all material respects. He explained audit work is sampling-based and noted the auditors identified two less-severe internal control findings they classify as significant deficiencies rather than material weaknesses.
The two significant deficiencies were: (1) year-end closing procedures and audit preparedness, a process the auditors said has improved since the prior year but still requires timely completion; and (2) the completeness of accrued liabilities, which staff are working to remedy. The auditor confirmed proposed audit adjustments were recorded by management.
Auditors also noted recently implemented GASB accounting standards (including Statement 101 on compensated absences) and forecast additional reporting changes ahead. City finance staff said they will continue corrective work on closing procedures and liabilities to address the auditors' recommendations.
The auditors also reviewed federal-award audit processes (single audit) and related deliverables and answered council questions about pension actuarial assumptions and discount rates. Councilmembers thanked finance staff for timely delivery of the reports and noted the clean opinion shows the financial statements are reliable notwithstanding the areas for continued improvement.
