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Auditor: Belgrade's 2025 financial statements receive unmodified opinion but uncover material weaknesses
Summary
An external auditor told the Belgrade Select Board that the town's 2025 financial statements earned an unmodified opinion but the audit found two material weaknesses (payroll reconciliations and material audit adjustments), several significant deficiencies (including bank reconciliations and credit-card documentation) and recommended process and control changes.
The town's external auditor reviewed the results of the 2025 audit at the July 7 Belgrade Select Board meeting, saying the financial statements received an unmodified opinion while tests of internal controls turned up material weaknesses and several significant deficiencies.
"The financial statements themselves did receive an unmodified opinion," the auditor said, adding that under government auditing standards the audit also found material weaknesses that the town should address. She told the board the two material weaknesses were related to payroll reconciliations and to the number and dollar size of audit adjustments carried into the 2025 financial statements.
The auditor said payroll reconciliations again produced problems this year: some payroll liabilities were recorded with the wrong sign, the accounting software posted certain liability entries multiple times when months had more than one payroll, and paid-family-leave payments were not consistently offset against liabilities. "Because the liabilities weren't reconciled, it wasn't caught until we started looking at them," she said.
On audit adjustments, the auditor reported the engagement required 36 adjusting journal entries. She attributed much of that work to accounting-software set-up and to beginning-balance restatements that carried forward from 2024, compounded by turnover in the treasurer position.
The audit also reported significant deficiencies, including ongoing bank-reconciliation issues that roll forward month-to-month when prior-month balances are incorrect, and weaknesses in segregation of duties because the town's small staff requires the same person to perform multiple finance functions. The report flagged internal-control gaps around credit-card transactions: auditors sampled 60 card charges and found 11 missing supporting receipts. The auditor recommended reinforcing document-submission rules and using a lost-receipt form when necessary.
The auditor presented fund-level numbers: combined town funds totaled about $8.3 million, with roughly $3.0 million unrestricted in the general fund. She said total fund balances increased by $872,000 in the latest year but cautioned much of that is restricted or committed for specified purposes.
Board members pressed for clarifications about GASB restatements, interfund loan mechanics and the timing of bank reconciliations. The auditor confirmed GASB 101 requirements for compensated-absence estimates contributed to a restatement in prior reporting that affected 2025 opening balances; she said management has submitted responses describing steps to address the findings.
The auditor recommended practical mitigation: cross-train or outsource certain reconciliations, tighten credit-card controls and document internal-control narratives so the written procedures match actual practice. She said those management responses have been discussed with the town treasurer and manager.
The Select Board did not take formal action on the audit report at the meeting but asked staff to follow up on the recommended changes and to involve the budget committee where appropriate. The auditor's presentation materials and the report will be available to the board for follow-up.
