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Auditor gives Del City a clean FY2025 opinion but flags ENCODE reconciliation and post‑close entries
Summary
Auditors reported a clean opinion on Del City’s FY2025 financial statements and a $1,000,000 change in net position, but noted two findings tied to an older ENCODE accounting system and post‑close entries; management outlined steps and expects corrections by the next audit cycle.
Chris Hine, an auditor with HBCCPAs, told the Del City City Council on July 20 that the auditors issued a clean opinion on the city's June 30, 2025 financial statements, meaning the numbers "present fairly in all material respects." Hine said the city recorded a $1,000,000 change in net position for 2025 compared with $473,000 the prior year and that business‑type activity revenues rose to about $9.6 million.
Hine outlined two audit findings for council members. The first—repeated from the prior year—involves budgetary comparison variances in the general fund tied to reconciliation work the current ENCODE software does not fully automate. "There were negative variances in the prior year; those items were corrected," Hine said, adding the issue will continue until the city either upgrades the software or completes manual reconciliations outside the system. The second finding concerns entries posted after bank reconciliation, which the auditor described as a cleanup and internal‑control item.
City staff described corrective steps. The city clerk and finance staff said they are restricting who can post transactions and are working with the software vendor and auditors to reconcile historical journal entries. City clerk (speaker 3) explained that some accounts-payable postings were hitting revenue or expense accounts instead of the cash account and that management will use additional approvals and, when needed, manual journal entries to get cash balances correct. The city manager (speaker 11) said the staff's response and the proposed access restrictions should address the control finding.
Councilmembers pressed the auditor and staff on timing. Hine said he expects the entries will be corrected or addressed for the June 30, 2026 audit cycle but could not guarantee the next audit outcome. Mayor and trustees were given a short Zoom clip explaining the second finding; Hine offered to share it individually to provide more detail.
The presentation also noted that revenues and expenses were roughly even versus the prior year, and the auditor recommended continuing current reconciliation controls and pursuing a software solution or upgrade to eliminate the recurring finding. The council took no separate vote to "accept" the audit during the meeting; staff said they will continue remediation and report progress.
