Richfield council accepts 2025 audit showing unmodified opinion and fund balance above policy

The Richfield City Council accepted the City of Richfield’s annual comprehensive financial report for the fiscal year ended Dec. 31, 2025, after auditors reported an unmodified opinion on the financial statements and staff answered council questions about internal controls.

Auditor Carolyn Stutsman, partner on the audit engagement, told the council the independent auditor’s report provides "reasonable assurance that those financial statements are free of material misstatement," and that the firm issued an unmodified opinion on the city’s financial statements. She said the city’s unassigned general fund balance finished the year at 43.4%, above the city’s fund balance policy target of 40%.

The auditor summarized line-item changes in the general fund: total general fund revenues increased about 6.7% and total expenditures rose roughly 2.5% for the year. Stutsman said parts of the revenue growth were driven by higher property tax levies, increased licenses and permits tied to building activity, additional state grants and aids, and higher charges for services including right-of-way permits associated with an internet fiber installation. The audit noted modest budget variances: revenues were about 2.6% over budget and total expenditures about 0.4% under budget.

Because the city spent more than $1 million in federal funds in 2025, the auditors performed the federal single-audit procedures. Stutsman said two federal programs were tested — the Section 8 Housing Choice Voucher Program and an Economic Development Initiative — and "there were no findings related to any of that test work, either." She also said the audit included review of Minnesota legal compliance and found no state compliance findings.

Councilmember Berg asked the auditor to explain a routine audit note about segregation of duties. "What does that mean for the public, and does it affect the accuracy of the records?" he asked. Stutsman replied that fully segregated duties (four distinct individuals handling disbursements, payroll, receipts and reconciliations) are uncommon in smaller municipalities; auditors look for mitigating controls and secondary reviews in those situations. "You do have mitigating controls in place," she said, and confirmed the audit still provided reasonable assurance of the statements’ accuracy.

Following the presentation and brief discussion, the council moved and voted to accept the report.

Next steps: the audit and the accompanying comprehensive financial report are posted for public review, and staff will continue implementing and monitoring internal-control mitigations identified in the audit workpapers.