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Auditors give Smithville a clean FY2024 opinion but flag two repeat material weaknesses
Summary
CliftonLarsonAllen gave Smithville an unmodified (clean) FY2024 audit opinion but reported two repeat material weaknesses: preparation of financial statements and audit adjusting entries; city staff said they will work with auditors to reduce those risks.
CliftonLarsonAllen issued an unmodified, or "clean," opinion on Smithville's FY2024 financial statements but identified two repeat material weaknesses that the city and auditors said they will work to address.
Adam Pulley, principal in charge of the audit for CliftonLarsonAllen, told the Board of Aldermen on May 6 that the firm "did issue an unmodified or clean audit opinion" and that "nothing surfaced that was alarming" during the audit process. Pulley said the firm also provides a governance letter and internal control communication to inform the board about disputes with management, significant delays or similar matters; none were unusual this year.
Why it matters: A clean opinion signals the auditors believe the financial statements fairly present the city's financial position under accounting standards, but the material weaknesses—areas where city processes increase the risk of errors—mean staff must strengthen procedures to reduce future adjustments and reliance on external assistance.
Pulley and CLA staff identified two repeat findings: first, preparation of the financial statements (CLA assisted the city in compiling statements and footnote disclosures, and auditors said small staffs can struggle to keep up with Governmental Accounting Standards Board changes); and second, audit adjusting entries, where CLA made adjustments needed to align records with accounting standards. Pulley emphasized that, "as external auditors, they cannot be considered part of the City's internal control structure," which is why those items are reported as findings.
Alderman Dan Hartman asked how Smithville compares with similar Missouri municipalities. Pulley said the firm commonly sees insufficient segregation of duties in smaller governments because of limited resources and varying daily practices, and he characterized Smithville's issues as comparable. He noted he works with roughly "40 to 50 governmental entities a year." Mayor Boley observed that separation-of-duties was a past finding and that the city has added some controls since then.
City staff acknowledged the work ahead. Cynthia Wagner, a city staff member involved in the process, thanked Finance Director Rick Welch and others for their time compiling materials. Wagner described the audit timeline—auditors arrive on-site in December and follow up through February or March—and said staff will continue efforts to improve internal controls and reduce risk going forward.
Next steps: CLA and city management said they will collaborate on strategies to address the identified weaknesses in coming years; staff indicated continued updates to budget and reporting formats are planned to improve transparency and internal controls.
