City auditor flags internal-control issues and a qualified opinion tied to pension actuarial omission

The city's external auditor, Greg Burkhart, presented the 2023 financial-audit results to the Good Thunder City Council and outlined several recommendations for strengthening financial controls.

Burkhart told the council that, except for one issue involving the city's decision not to commission an actuarial valuation of the Fire Relief pension plan, the auditors could fairly state the financial results for 2023. "You do have a qualified opinion on your governmental activities," he said, explaining the qualification stems from not incorporating an actuary report for the relief association. He warned that a clean federal or state-funded-project audit may require that actuarial work if the city pursues federal dollars through the PFA.

The audit also produced internal-control findings the auditors described as significant: (1) material audit adjustments driven by a number and magnitude of journal-entry corrections (the firm recorded 32 entries, 11 of them material); (2) auditor-prepared financial statements (the auditors prepared statements rather than having the city produce final statements); and (3) limited segregation of duties in the clerk's office, a common small-city challenge when one staff member holds many responsibilities. Burkhart recommended the council take a proactive oversight role (review claims and the claims list and ask questions regularly), consider periodic interim financials or an additional audit visit while staff gain experience, and adopt processes that reduce manual entries (for example, batching utility billing transfers into the general ledger).

Compliance finding: the audit noted one Minnesota statute compliance issue — the city failed in 2023 to obtain a signed annual acknowledgment from its investment broker about statutory investment restrictions; that form was completed for 2024. Burkhart also recommended breaking up CDs into staggered terms for liquidity and to consider using the drinking-water revolving fund as a local-match mechanism if the city accepts PFA financing.

Council response and next steps: Council members discussed practical follow-ups (budget amendments by resolution, separating large project costs into a construction fund for clear reimbursement tracking, and improved documentation of engineering/ project invoices). The auditor offered to provide management-report detail and to continue as-needed assistance while the clerk's office gains experience.

Provenance: topicintro SEG 868, topfinish SEG 2852