East Grand Forks audit: clean opinion but several funds flagged for review

The East Grand Forks City Council heard a presentation of the 2025 financial audit on July 7. Auditors reported an unmodified (clean) opinion on the citys financial statements but flagged several fund-level stresses and internal control considerations.

"We issued an unmodified opinion on the financial statements," said Bridal Martz, the audit lead partner, who delivered the report after city staff introduced the review. The auditor said management remains responsible for the statements and characterized the audit as performed in accordance with generally accepted accounting principles.

The audit noted the citys overall net position totaled $205,532,746, including roughly $162 million in capital assets. The auditor identified an unrestricted portion of approximately $33,000,000 and described that unrestricted balance as the number they watch for overall financial health.

At the fund level, the auditor urged attention to several specific items: the current city projects fund showed a deficit tied to timing of project revenues and debt; the refuse fund had a negative unrestricted balance of about $398,000; and the cemetery fund carried a material deficit (the auditor cited an amount in documentation and noted old receivables tied to reserved plots). The auditor said these conditions are often explained by timing differences in grant receipts or planned project spending, but recommended staff ensure plans are in place to restore fund balances and to follow collection policies for outstanding receivables.

The auditor also highlighted the internal service benefit accrual fund, which had an approximate $120,000 deficit that decreased year over year. On compliance, the auditors reported no findings in their Minnesota legal compliance testing and said there were "no disagreements with management, no difficulties performing the audit." The audit report also included a cautionary note about recent cyber and phishing attempts that can affect vendor payment details; the auditor urged double-checking routing/account changes by phone before accepting them.

City staff said they appreciated the audit and would follow up on the flagged items. The presentation concluded with an offer by the audit team to return to address any follow-up questions the council may have.

The council took no formal action on the audit itself during the meeting; staff and auditors indicated next steps would be internal review and follow-up reporting if changes are required.