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City audit: Des Moines receives clean opinion but auditors flag federal grant documentation gaps
Summary
New auditors Eide Bailly reported a clean, unmodified opinion on Des Moines’ FY2025 financial statements but identified two accounting classifications and three federal‑award documentation findings; one federal program received a qualified opinion. Auditors called most items easy to fix and recommended formalized sign‑offs.
The city of Des Moines received a clean, unmodified audit opinion for its fiscal 2025 financial statements, auditors from Eide Bailly told the City Council at a work session April 20. The presentation, delivered by partner Brian Stavenger, also flagged a small number of findings—including one qualified opinion on a federal program—that staff will address before the audit is finalized.
Stavenger said the firm had focused its federal‑awards testing on the city’s four largest programs. "Three of them had that clean unmodified opinion. One of them had a qualified opinion," he said, adding the issue appears "easily correctable." He told council the city spent just under $26 million in federal awards in FY25, which triggers single‑audit requirements.
Why it matters: a clean opinion means the auditors believe the financial statements are presented fairly under accounting standards. The qualified federal finding relates to documentation and internal‑control evidence rather than disputed spending, and auditors emphasized they found no instances of funds spent improperly.
The auditors cited two findings on the financial statements: an old cash‑on‑deposit item that lacked supporting documentation dating back to 2014 and a fund‑balance classification the auditors said should have been supported by a council resolution. Stavenger described those as reclassification and cleanup items that management corrected after discussion.
On federal awards the auditors identified a common root cause: inconsistent written evidence of independent review and approval of grant reports and submissions. Stavenger said reviews appear to be occurring informally in some programs but are not consistently documented. "When it comes to federal awards, it has to really be written evidential documentation," he said, recommending a formal sign‑off process or electronic approval to create an audit trail.
Council members asked whether internal review could satisfy the requirement; Stavenger replied that internal review is acceptable if it is documented and that the inconsistency across programs led to the findings. He and staff said the auditors are close to issuing the final report; the council was told the formal audit report will be placed on the next council meeting agenda to receive and file.
The presentation also included multi‑year graphs drawn from the ACFR showing governmental and enterprise fund trends. Auditors noted the city’s general fund reserves provide roughly 125 days of operating coverage at June 30, 2025—about four months—which exceeds the council’s 20 percent (73‑day) policy minimum and is within common municipal practice.
Next steps: staff will finalize corrective documentation and return the audit report to council for receipt and filing at the next meeting. The auditors and staff indicated most findings can be remedied by formalizing review procedures and completing the agreed reclassifications.
Speakers quoted or relied on in this article are limited to those listed in the meeting record.
