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Auditor says Ainsworth’s finances are sound despite utility operating losses
Summary
An independent auditor told the Ainsworth City Council that the city received an unmodified audit opinion and holds strong cash reserves, while water and sewer funds show operating losses largely driven by depreciation and capital spending.
An independent auditor reported to the Ainsworth City Council that the city's financial statements received an unmodified opinion and that overall cash reserves are healthy, though utility funds showed operating losses driven largely by depreciation and recent capital projects.
Michael, the auditor presenting the report, told the council the independent auditor’s report was “an unmodified opinion,” meaning the financial statements were presented fairly with no material misstatements. He highlighted major capital outlays during the year: about $22,000 for a fire-alarm system, $104,000 for pickleball courts, $60,000 for an excavator and roughly $2.1 million on the Main Street project, which consolidated street, water and sewer work.
The auditor said the city’s outstanding debt rose to just over $3.4 million at Sept. 30, 2025, up about $670,000 from the prior year because of loan advances for the Main Street project. The general fund held about $1.6 million in cash, with roughly $723,000 unassigned and the remainder restricted or assigned for parks, budget stabilization and other uses.
He noted differences in presentation between governmental funds (modified cash basis) and the utility funds (accrual basis). The water fund recorded an operating loss of about $67,000 but ended with a net positive change in net position after grant income; the sewer fund had an operating loss of about $110,000; and the garbage fund roughly broke even. Michael said those operating losses reflect depreciation and that current rates are not generating substantial replacement reserves.
On internal controls, the auditor summarized two letters to management: a recurring comment that full segregation of duties is infeasible in a local office with limited staff; a recommendation to report interest earned on certificates of deposit; and a request to document seasonal-employee wage authorizations. He called the audit “pretty clean” overall and recommended continued council oversight of financial reporting and monitoring of utility rates going forward.
The council asked clarifying questions about cash reserves, grant proceeds and the timing of next budget work; the auditor said staff would return in August for budget discussions. No formal action followed the presentation.
Ending: The audit presentation closed with council agreement to review budgeting timelines and to continue monitoring utility fund performance and reserve targets.
