Fredonia auditor issues clean 2024 opinion but flags segregation-of-duties weakness

The Village of Fredonia received a clean, unmodified opinion on its 2024 financial statements, auditor Wendy Unger told the Board of Trustees on July 17, but the audit identified material weaknesses in internal controls and noted the village’s unassigned fund balance is below policy.

Unger, the principal responsible for the village’s 2024 audit, said the clean opinion is the highest level of assurance the village can receive and indicates the audited financial information is "believed to be materially accurate." She highlighted that new governmental accounting standards (including GASB 100) affected presentation of certain funds in the 2024 statements.

The auditor summarized key results: the general fund recorded about $1,600,000 in revenue compared with a $1,550,000 budget (roughly $53,000 favorable, driven largely by approximately $39,000 in omitted tax receipts and about $12,000 in higher investment income). Expenditures in the general fund were roughly $1,500,000 versus a budget of approximately $1,380,000, an overrun of about $140,000.

Unger identified the largest expenditure variances: public works came in about $92,000 over budget (including roughly $75,000 for unplanned street maintenance) and parks and recreation ran about $31,000 over budget (including about $15,000 in higher salaries and roughly $12,000 in village-event expenses).

The village ended 2024 with a total general fund balance of about $223,000. Of that, $22,000 was restricted impact-fee revenue and roughly $201,000 was unassigned — approximately 12% of the operating budget. Unger noted the village’s written policy calls for unassigned fund balance between 25% and 35% of the operating budget, so the current level is below policy and "something to look at" in the next budget cycle.

Unger also reviewed other funds: the fire and ambulance fund showed roughly $410,000 in charges and $476,000 of expenses in 2024, with the general fund contributing to cover shortfalls; the capital projects fund included about $100,000 in ARPA proceeds and spent the bulk on road projects; TID 3 recorded substantial road and infrastructure spending accompanied by borrowing; and a new lab fund and paramedic fund combined to add roughly $97,000 to fund balance.

On utilities, Unger said the water utility reflected the full-year effect of a January 2024 rate increase but showed changes driven by absent 2023 capital contributions and higher expenses; sewer net position declined due to increased wages, outside services and interest costs. She emphasized that some utility balances represent infrastructure (net position), not cash available for routine spending.

The audit report also includes a new disclosure tied to the village’s participation in the Wisconsin Retirement System (WRS): under full-pool reporting, the village reports a proportionate share of pooled WRS liabilities. Unger said that footnote showed roughly a $50,000 liability as of Dec. 31, 2023, and that the amount will fluctuate with market performance.

Regarding internal controls, Unger said the firm reported material weaknesses around segregation of duties and that the audit required material audit adjustments; she added this is common for organizations the village’s size but should be addressed through strengthened procedures. Unger closed by offering to discuss specifics with staff and trustees.

Next steps discussed included considering additions to the unassigned fund balance during the 2026 budget cycle and staff follow-up on internal-control improvements recommended in the reporting and insights document.