City auditor issues qualified opinion, flags internal‑control weaknesses

Lane, an auditor with ABDO, told the New Richland City Council on July 8 that the firm's financial‑statement audit resulted in a qualified opinion because the firm "opted not to implement Fire Relief Actuarial standards," a decision taken on cost‑benefit grounds. Lane said auditors found five internal‑control issues, including time‑limited segregation‑of‑duties gaps and adjustments requiring preparation assistance from the auditors.

The auditor said the city's unassigned general‑fund balance grew in 2023, rising from roughly 37% to a little over 53% of budgeted expenditures, which exceeds the council's 50% fund‑balance policy and gives the city more fiscal flexibility. Lane attributed much of the year‑over‑year cash increase to a $1.4 million tax‑credit item recorded in the nursing‑home fund; excluding that amount, overall cash balances were described as steady around $2.5–$2.6 million.

Lane reviewed other fund details: the TIP (tax‑increment) District No. 1 still showed an approximate $350,000 deficit though it collected about $45,000 in tax increment during the year; the city reported roughly $114,000 in ARPA funds that must be spent by the federal deadline in 2024; and three debt issues are scheduled to mature between 2024 and 2026, which the auditor said could free capacity for new borrowing if the council chooses.

The auditor recommended that the city develop more formal internal‑control documentation and written policies to reduce turnover‑driven risk and to address recurring findings (for example, prior findings related to sales‑tax remittances and timely bank reconciliations). Lane said some issues reported for 2022 were corrected in 2023, such as compensated‑absences treatment and timing of fire‑related entries.

After the presentation the council moved to accept the audit report. The motion carried on a voice vote recorded in the minutes as "all in favor."