Newport receives clean 2025 audit; auditors flag late unclaimed-property filing and limited staff segregation of duties

Jim Eichten, an auditor with LB Carl Sun, told the Newport City Council on July 16 that the firm issued an unmodified (clean) opinion on the city's financial statements for the year ended Dec. 31, 2025, while noting a small number of reportable items and one compliance finding.

Eichten said the city’s general fund declined “about $350,000” in 2025, which was close to the budgeted deficit, but that the city’s fund-balance policy target of 40–50% of operations remains well exceeded: “At the end of the fiscal year 2025, the city had roughly 79.3%,” he said. He credited one-time transfers to the economic development authority and sewer-lining projects for much of the movement in fund balances.

The auditors identified two reportable matters related to limited segregation of duties — a common situation in small cities, Eichten said — and one finding for a late unclaimed-property report to the State of Minnesota. “That particular report was not filed on a timely basis this year, and was filed after the deadline,” Eichten said, adding the issue is one of timeliness rather than an error in the underlying accounting.

During council questions, Council member Sumner asked whether the same reportable conditions appear in other small cities; Eichten replied that such conditions are widespread where staff size limits internal segregation and that compensating controls and council oversight are relied upon. On the unclaimed-property filing, he said the corrective action is procedural: “Let's get this filed timely next year.”

Eichten also highlighted positive operating results in the city’s enterprise funds — water, sewer, streetlight and storm sewer — reporting an increase in net position of nearly $3,000,000 year-over-year, aided by developer contributions and access fees. He noted some increases in public-safety costs (about $130,000) and said he will brief the council about an upcoming governmental accounting standard change that affects next year’s reporting.

Mayor Elliott thanked auditors and staff and said the results bode well for the city’s ability to continue infrastructure work. The council did not take formal action on the audit presentation; Eichten closed by emphasizing the smooth audit process and the city’s commitment to addressing the timing of the unclaimed-property submission.