Independent audit finds restatement and documentation weaknesses; city fund balance remains strong

Crow LLC audit partner Michelle Blackstock presented the city’s FY audit and highlighted a clean (unmodified) opinion with an emphasis of matter related to a correction for previously unrecorded contributed infrastructure.

Key points from the audit presentation: - The auditors issued an unmodified (clean) opinion on the financial statements but included an emphasis of matter related to the restatement of contributed capital assets; the correction increased capital assets and net position. - The audit recorded eight corrected journal entries (primarily reclassifications) and one immaterial uncorrected item related to GASB 101 implementation. - The firm reported a material weakness tied to insufficient written documentation and approvals when recording contributed infrastructure and two significant deficiencies related to bank reconciliation review and debt-service monitoring. - The general fund ended the year with about $9.6 million in fund balance, representing roughly 64% of the general fund’s 2025 expenditures, a reserve the auditor described as a strong position.

Auditor recommendations and council action: Auditors asked for improved written documentation and supervisory approvals and recommended better internal controls around capital asset recognition and bank reconciliations. Management acknowledged the documentation issue and said steps were already taken to add required approvals and a new capital asset tracking system.

Next steps: Council accepted the audit presentation; staff will implement strengthened sign-off procedures, finalize a capital-asset tracking system, and account for one-time audit costs in a budget amendment approved later in the meeting.