Auditor gives Lake Elmo a clean opinion, flags segregation‑of‑duties oversight

Ryan Schmidt, partner with Schleiner Winter & Company, presented the city’s 2025 comprehensive financial report and told council the audit yielded an unmodified opinion — the highest level of assurance. "The opinion we've given this year is what's called an unmodified opinion, which is the best you can achieve," he said.

Schmidt summarized key figures: revenues exceeded budget by about $2,282,000 and expenditures were under budget by roughly $97,000, producing an actual general‑fund increase of nearly $2.3 million versus a budgeted increase of roughly $35,000. Schmidt said part of year‑over‑year increases in noncash position stem from developer‑contributed infrastructure being recognized as revenue when turned over to the city.

On internal controls, Schmidt said the audit found no significant audit adjustments or legal compliance issues but recommended attention to segregation of duties in some accounting functions (for example bank reconciliations and high‑access system privileges). "Most of the accounting functions in the city…there is good segregation of duties. But there's just a few areas…where there's just people who have kind of complete access," he said.

Council members asked follow‑up questions about the composition of nonoperating revenues, restricted net position on utility funds and how developer contributions are treated; auditors and staff explained connection fees are cash receipts while developer asset contributions are noncash infrastructure recognized as revenue and that committed/restricted balances may not appear if funds have been spent or reclassified.

Schmidt and staff offered to follow up with more detail on restricted versus committed balances if council wanted further review.