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City receives clean audit but auditors note internal-control weaknesses and documentation gaps
Summary
Miller McDonald reported an unmodified opinion on Blackduck’s 2023 financial statements but identified findings: missing retained quotes for some purchases, reconciliation issues (credit-card receipts), segregation-of-duties weaknesses tied to staffing, and continued single-audit compliance due to federal-funded maintenance-facility debt.
Miller McDonald presented the city’s 2023 audit to the Blackduck City Council, reporting an unmodified (clean) opinion on all opinion units while flagging several governance and documentation items for council attention.
"The city did receive an unmodified opinion on all of its opinion units," auditor John Rosco told councilors, explaining that the firm’s review focused on material balances across funds rather than every individual transaction.
The auditor drew council attention to one formal finding (2023-6) concerning the bid/quote process: two purchases reviewed during the audit lacked retained documentation of alternate quotes required by state statute. Rosco recommended that the city retain both the selected quote and the other quotes analyzed to meet statutory requirements.
Rosco also highlighted common internal-control limitations in small governments, notably segregation-of-duties constraints related to limited staffing. He emphasized that robust monitoring by elected officials is a key compensating control. The audit team identified a reconciliation issue involving credit-card receipts that had been posted to the wrong fund (a liquor/golf deposit posting), advising monthly reconciliations to detect similar errors earlier.
Because the city received federal assistance related to a maintenance-facility project that pushed federal expenditures over the $750,000 threshold, Miller McDonald noted the city will be subject to single-audit compliance requirements; the auditor reported no findings specific to that federal-compliance review for the maintenance project.
Councilors asked for follow-up work on reconciliations and transfer-account monitoring; the auditor said staff should ensure transfer transactions net to zero and suggested strengthening monthly monitoring procedures. The auditor will provide the communication letter and work with staff on adjustments and next steps.
