Moorhead auditors give city a clean 2025 audit; council unanimously receives report

Moorhead — Auditors told the Moorhead City Council on June 22 that the city’s 2025 annual comprehensive financial report earned a clean (unmodified) audit opinion and that the audit of federal awards likewise received an unmodified compliance opinion. The council voted unanimously to receive and file the report.

The audit presentation, given by Paul Kaine, an audit partner with ID Bailey, summarized the firm’s work and results. "The city received a clean audit," Kaine said, adding that the opinion means the financial statements are "prepared in accordance with generally accepted accounting principles in the United States and are fairly presented in all material respects." He emphasized that an audit provides reasonable — not absolute — assurance.

Why it matters: a clean audit and no reported findings reduce near-term legal and compliance risk, bolster the city’s financial credibility with lenders and grantors, and confirm that reported balances reflect the auditors’ judgment.

Auditors reported the city spent about $10.3 million in federal awards during the year and that they tested two major programs: highway planning and construction (about $4.3 million) and an outdoor recreation acquisition, development and planning program (about $3 million). Kaine said the firm’s federal‑program testing exceeded the typical coverage requirement.

On operations and fund balances, auditors highlighted several points: the city’s general fund produced net revenues of roughly $2 million; higher-than-expected investment income (about $460,000 of the noted $581,000 in "other income") contributed to favorable variances; refunds and reimbursements added roughly $161,000; and charges for services were about $114,000 above budget. Police expenditures were cited as roughly $750,000 under budget, largely because of unfilled positions, a factor council members said they expect to change as staffing is restored.

The presentation also reviewed a 10‑year trend of liquidity and fund balances. Auditors reported the city’s unassigned general-fund balance rose from about $13 million ten years ago to about $23 million in the most recent year. The city’s fund-balance policy targets a combined level of 60% (committed, assigned and unassigned), and auditors said Moorhead’s unassigned percentage remained within the city’s policy range.

Utility funds were discussed separately. Auditors reported that electric, water and wastewater funds generated net income in the year (reported increases of about $4.2 million for electric, $2.3 million for water and $1.7 million for wastewater) while storm-water had a small decrease (about $17,000). Overall, the presenter described the utility funds as largely self-supporting.

Council action: Council Member Deb White moved and Council Member Nicole Matson seconded a resolution to receive and file the 2025 ACFR. The chair called for the vote; the motion carried unanimously.

What’s next: City staff and the auditor closed the presentation with a short question-and-answer period; no corrective actions or findings were reported. The council proceeded to other agenda items and later entered an executive session to discuss lease negotiations for specified downtown property.