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Pine City audit: clean opinion, one donation‑recording compliance finding and guidance on reserves
Summary
The city—s auditors issued an unmodified opinion on Pine City—s 2024 financial statements but recorded material audit adjustments and noted one instance where a donation was accepted without the council passing a resolution; auditors recommended routine resolution acceptance of gifts and guidance on reserve targets.
Greg Burkhart, lead auditor for the firm that performed Pine City—s 2024 financial audit, told the City Council the auditors issued an unmodified (clean) opinion on the city—s financial statements but recorded material journal adjustments and noted one compliance finding related to donation acceptance.
"We have issued the city an unmodified audit opinion," Burkhart said, and added auditors posted certain material adjustments that the city approved to bring the financial records into alignment with the audited statements. He told council those adjustments were smaller than in prior years but still required.
The audit review included commentary on the city—s reserves and fund balances. Burkhart reported governmental activities ended the year with about 314 days of reserves (roughly 10 months), and business‑type activities (water, sewer, municipal liquor) showed substantially stronger reserves. He said the firm typically sees utilities holding 12—15 months of reserves and recommended the council consider a similar target for governmental funds as the city moves forward.
Burkhart also described a single compliance finding: "improper acceptance of donations." He said state law requires gifts and grants be accepted by resolution. "During our procedures we noted at least one instance where a donation was collected and there was not a resolution that was passed," he said, and recommended the council ensure donations are accepted by resolution going forward to correct the issue.
During council questions, Burkhart advised that a large general‑fund surplus could be used to retire debt if doing so yields greater long‑term savings than leaving the cash in lower‑yield investments. He said council should compare bond interest rates and the city—s cash returns when deciding whether to prepay debt.
Burkhart closed by noting the audit team found city management cooperative and well prepared for the work and said the firm would provide a management letter with more detailed recommendations for internal control improvements and efficiency gains.
Next steps: the city will finalize posting the audit adjustments already approved and the auditor—s management letter will identify specific recommendations for internal controls and gift acceptance procedures.
