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Auditors report material weakness and adverse government‑wide opinion; council accepts 2023 audited financial statements
Summary
Bonadio Group presented the city's 2023 audit: an adverse opinion on government-wide statements tied to the city's choice not to depreciate capital assets, an unmodified fund-level opinion, and a material weakness due to untimely reconciliations. Council voted to accept the audit unanimously.
The Bonadio Group presented the 2023 audited financial statements and related reports to the Troy City Council on March 6. Alan Walther, a partner at Bonadio, told the council the audit produced an adverse opinion on the government-wide financial statements, an unmodified opinion on the fund-level financial statements and a qualified opinion on certain component units.
"The city receives an adverse opinion on those," Walther said, explaining Bonadio attributes the government-wide opinion primarily to the citys longstanding decision not to depreciate capital assets for government-wide reporting. He emphasized the fund-level statements, which the city uses for budgeting, received the highest-level (unmodified) opinion.
Walther also reported a material weakness in internal control stemming from reconciliations and book-closing processes that were not performed timely. He told council members the city has hired a controller and is working with consultants to resolve outstanding reconciling items and expects the 2024 audit to be completed on a normal timetable if work continues.
Key figures Walther cited included a reported increase in net position of $22.4 million for the year, current assets reported at about $98.4 million and significant long-term liabilities related to pension and other post-employment benefits. He said the capital projects fund shows a deficit (driven by bond anticipation notes that will be redeemed or converted into long-term debt) and stressed the accounting treatment differs between government-wide and fund-level statements.
Council members pressed auditors about a roughly $30,000 variance between bank reconciliations and the ledger; Walther described that variance as immaterial but recommended action to resolve it. The auditors also described prior-year posting errors and federal-aid classification adjustments that were corrected during the audit.
After the presentation and Q&A, the council voted to accept the audited financial statements and associated single-audit reports prepared by Bonadio (Resolution 23). The acceptance vote was recorded as unanimous.
