Danbury audit committee recommends Council adopt FY2024 audited financial statements

The Danbury City ad hoc audit committee voted Nov. 20 to recommend that the City Council adopt the city’s audited financial statements for the fiscal year ending June 30, 2024, after external auditors from RSM summarized the audit and seven findings.

RSM partner Scott Bassett told the committee the city received what he described as a “clean opinion, unmodified, unqualified” for the current year and added that the firm identified seven findings during audit procedures. “We had 7 findings,” Bassett said, noting a mix of technical issues, human error and items management corrected during the audit.

Why it matters: The audit’s findings touch on controls and reporting the council oversees, and one issue carries direct financial risk for the school district. Auditors and finance staff said management will circulate corrective-action plans and the committee asked that the auditor letters and the detailed internal-control communications be provided earlier in future cycles so members can review them in advance.

Key findings and financial highlights - RSM listed seven findings ranging from technical classification issues to control weaknesses. The report cites an IT/network incident tied to the Danbury Public Schools (July 2023), grant revenue recognition that required reclassification, and approximately $2.0 million of sewer costs that should have been capitalized rather than expensed. - A material control item involves the defined‑contribution payroll process for the public schools: employee withholdings were reportedly deducted but not remitted to a provider, producing an estimated $2.1 million in missed deductions and related lost earnings that remain under calculation. “Those were being withheld from the checks, but it wasn’t being sent anywhere,” said Mike Weaver of DPS administration. - Management reported healthy fund balances: unassigned general fund balance was listed at 18.86 percent of the following year’s budget (about $58.8 million), total general fund balance $75.1 million, and reported net positions in proprietary funds—water $72.4 million, sewer $99.4 million, ambulance $1.4 million. General fund expenditures were reported at $279 million.

Responses and next steps Auditors said many of the adjustments identified during fieldwork were corrected by management before issuance; other misstatements were judged immaterial and left uncorrected but disclosed in the auditor communications. RSM and finance staff told the committee they will provide the detailed communication and internal-control letters and said management will prepare corrective-action plans for each finding.

On the payroll remittance issue, finance staff and DPS said a contract with MissionSquare will now receive deductions and that the city is working with counsel to determine whether penalties or other filings are required; the lost-earnings and any potential penalties have not been finalized and remain an estimated probable liability in the financials.

Committee action and closing Committee member Ben Chienese moved that the ad hoc audit committee recommend the City Council adopt the audited financial statements for the fiscal year ending June 30, 2024, as prepared by RSM; the motion was seconded and approved by voice vote. The committee then moved to adjourn.

The auditors and staff told members they expect to complete the federal single audit shortly and to start the FY2025 audit earlier, with the goal of a faster turnaround next year. The committee requested that all auditor letters and supplemental communications be circulated to members as soon as they are available so members can review them before meetings.