Smithville audit: unmodified opinion, auditors flag recurring material weakness in accounting adjustments

Kevin Smith, CPA of CliftonLarsonAllen LLP, presented the City of Smithville’s audit for the fiscal year ended Oct. 31, 2025, and said auditors issued an unmodified opinion — the highest level of assurance under the City’s chosen modified cash basis of accounting.

Smith told the Board that while the audit resulted in a clean opinion, the auditors reported a material weakness related to the “volume and complexity of journal entries required during the audit process to properly align the financial statements with the modified cash basis.” He said many entries involved converting cash records to accrual‑type adjustments and that this matter had appeared in prior audits.

The presentation noted the City’s key revenue sources — property taxes, sales and use taxes, and franchise taxes — and described increased intergovernmental revenues driven by a Missouri Department of Transportation grant. Smith said the general fund’s current balance could fund roughly eight months of operations, which he characterized as a healthy range for a municipality of Smithville’s size.

Auditors also reported generally positive operating trends in enterprise funds (water, wastewater, sanitation). Late in the fiscal year the City issued about $8 million in Certificates of Participation tied to enterprise funds; because much of those proceeds were unspent at year end, restricted cash balances increased while unrestricted cash rose only modestly.

Smith emphasized the cooperation of City staff during the audit and reiterated that the material weakness pertains to the accounting adjustments and not to a restatement of audited amounts. The transcript does not record a staff response that modified the audit language during the session.