Council accepts 2025 audit; auditor flags two control findings
Summary
The Prior Lake City Council unanimously approved the 2025 annual financial report and management letter after LB Carlson issued clean opinions on both the financial statements and the federal single-audit but reported two internal-control findings and a corrective action plan.
The Prior Lake City Council on June 9 unanimously approved a resolution accepting the city’s 2025 annual financial report and management letter following a presentation by the independent auditor.
Jimden, principal at audit firm LB Carlson, told the council the firm issued an unmodified — or "clean" — opinion on the city's financial statements and the schedule of federal awards. "We were able to issue an unmodified opinion on those financial statements," he said, adding the single-audit covering federal awards also received an unmodified opinion.
The auditor reported two internal-control findings. First, the city had not consistently performed a required check to determine whether vendors receiving federal funds were suspended or debarred. "That particular process was not occurring," Jimden said, describing the requirement to consult the federal exclusions list when spending federal dollars. Second, auditors found documentation gaps in the city's purchasing process: for some contracts between $25,000 and $175,000 staff had defaulted to preferred vendors without documenting whether the procurement required two or more quotes.
Jimden emphasized the distinction between control weaknesses and noncompliance: auditors found weaknesses in internal controls but did not issue an adverse compliance opinion and reported that the sampled vendors were not debarred. He said the city has drafted a corrective action plan and stressed that follow-up testing next year will check whether the new controls have been implemented.
City officials highlighted the city's improved fund balance and enterprise fund performance for 2025. The auditor noted the general fund ended the year with roughly $900,000 more than expected and a general fund balance equal to about 59.8% of expenditures, above the city's 40–50% target. Enterprise funds (water, sewer, water quality) also showed positive operating trends.
Following the presentation, Council Member Helier moved and Council Member Lake seconded the resolution to accept the audit. The motion passed on a voice vote.
Council and staff said the administration will return with updates as the corrective actions are implemented.
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