Pella council accepts 2024–25 audit; auditor flags segregation‑of‑duties weakness

The Pella City Council on Jan. 20 accepted the city’s fiscal year 2024–25 audit after an independent auditor reported a clean opinion but identified a material weakness in internal controls.

Mr. Andy Grace, a shareholder with Bergen KDB, told the council the firm issued “a clean unmodified opinion” on the city’s financial statements but noted a material weakness stemming from a lack of segregation of accounting duties, a common issue for cities of Pella’s size. He also summarized four findings under Iowa legal compliance related to deficit fund balances, expenditures exceeding budgeted amounts, missing documentation for some disbursements, and transfers without a formal resolution.

The audit showed the general fund balance increased by about $127,000 to roughly $4,152,000 for the year ended June 30, 2025. Grace said the city’s unassigned fund balance equaled 32.2% of general fund expenditures, slightly below the city policy target of 35%.

Councilors pressed the auditor on practical fixes. Grace said having more staff and stronger review practices — for example, a secondary review of material adjustments — would help mitigate the risk that errors or misstatements go undetected. “That material weakness level means there’s a reasonable possibility that a material misstatement could occur and be undetected,” he said while explaining how additional review controls can help.

Council approved the audit by roll call. Following the vote, Mayor Idon Deard and council members thanked the auditors for their work and noted staff’s cooperation in addressing the findings.

What’s next: staff will receive the auditor’s management letter specifying corrective steps and the city will consider incremental control changes (two‑person review for material journal entries, additional segregation where feasible) as resources allow. The council recorded acceptance of the audit as resolution 6994 at the meeting.