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City audit shows mixed fund changes and a payroll tax setup error; auditor accepted city’s corrective actions
Summary
The city's annual financial audit reported revenue increases and fund shifts, noted several fund deficits tied to project timing, and identified an internal-control payroll setup error affecting FICA withholding; the city filed corrected W-2s and Form 941-Xs and implemented changes, and the council accepted the audit.
The auditor presented the City of Carroll’s annual financial statements and told council the receipts for government funds increased about 8%—roughly $1,353,000—driven largely by capital grants and contributions, while overall cash-basis net position for government activities decreased about $3,341,000 and business-type activities increased about $2,044,000.
Key details in the audit included declines in some fund balances and timing-driven deficits: the water utility cash balance decreased by approximately $228,600 to about $1,331,400; the sewer fund decreased by about $337,000 to $2,267,000; capital projects and parks/recreation showed timing-related deficits that staff said are expected to be addressed by planned future financing or receipts. The audit reported total governmental cash balances declined from an earlier high but that budgetary control measures and future debt issuance are part of the planned financing strategy.
The audit also included a single internal-control finding related to payroll: two employees had been set up incorrectly in the payroll system and required FICA withholdings (employee and employer portions) were not withheld and paid for a three-year period. The city identified the error, corrected employee records, filed corrected W-2 forms and Form 941-X returns, and implemented new controls to ensure correct payroll setup and to reconcile quarterly reports against individual pay registers. The auditor said the city’s response was accepted.
Council action: the council moved to accept the audit report on the record; the motion passed on roll call following a brief discussion about timing and the desire of some members to receive audit materials earlier for review.
Representative quotes from the audit presentation included the auditor’s summary of the payroll finding and the city’s corrective steps; the auditor concluded, “Our conclusion was that we accept their response.”
