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Auditors give Firth a nonmodified opinion, flag accounting controls and system weaknesses
Summary
Auditor Lucas Post told the Firth Village Board the annual financial statements received a nonmodified (clean) opinion but the audit identified a significant deficiency and three material weaknesses tied mostly to staff size and QuickBooks accounting limits; the board approved the audit.
The Firth Village Board approved the village’s annual audit after an HB auditor reported a nonmodified (clean) opinion on the financial statements while outlining problems with internal controls and the accounting system.
"The opinion section — nonmodified opinion — that is the clean opinion you are looking for," said Lucas Post of HB, who led the audit presentation. He reviewed fund statements, footnotes and the treatment of insurance proceeds and loan draws, and said year-over-year totals were largely similar.
The auditor also described internal-control findings. He identified one significant deficiency related to segregation of duties — common in small-staff municipalities — and three material weaknesses. Several material audit adjustments were traced to limitations in the village’s accounting setup; Post said QuickBooks can produce helpful reports but does not translate profit-and-loss-by-class into a class-balanced balance sheet without manual adjustment.
"QuickBooks is not intended for full municipal accounting," Post said, while praising local staff for improvements: "Mike has made things much easier over the three years. We've really made improvements."
Post said the audit found no evidence of fraud or unusual transactions and that required management and governance letters were included. He also noted upcoming changes from the Governmental Accounting Standards Board (GASB) that will alter budget schedule presentation.
The board moved to approve the audit as presented; the motion carried on roll call.
The audit presentation included routine explanations of fund reconciliation, capital assets, and water-and-sewer cash flows. The auditor said one SRF loan drawdown occurred during the year and that some loan forgiveness appeared as revenue; he characterized those items as largely closed out for the current audit period.
Next steps identified by the auditor and the board included communicating any follow-up adjustments through village staff, continuing oversight of bookkeeping and monitoring implementation of GASB-required presentation changes.
The audit was approved by motion at the meeting.
