Auditors issue unmodified opinion for City of Montrose’s 2024 financials, flag internal-control and compliance issues

Abdo audit partner Andy told the City of Montrose council at the May 12 workshop that the firm issued an unmodified — or "clean" — opinion on the city's 2024 financial statements. "We gave a unmodified opinion," he said during the presentation.

Andy said the audit team also reported three internal-control findings and one legal-compliance finding under Minnesota rules. The first two findings — preparation of financial statements by the auditor and limited segregation of duties — are common in small governments, he said, and have been present in prior years. The auditors reported a separate legal-compliance finding tied to testing across about seven areas such as cash, investments, contracting and debt service.

Among operational issues identified, Andy said auditors found that commercial water-rate increases approved by the council were not implemented for commercial accounts while residential rates were applied. He also noted two purchases for which only one vendor quote was retained, contrary to procurement requirements that generally call for multiple quotes and retention of documentation. Andy recommended the city document required quotes and maintain records of procurement decisions.

The audit team invited questions and said the unmodified opinion reflects the auditors' highest-level assurance. When the Chair asked, "Can you remind me of the unmodified opinion? What does that mean again?" Andy responded that it is equivalent to a "clean" opinion and that a modified opinion would indicate material issues preventing a full clean opinion.

The auditors thanked city staff for their cooperation in the process. The report and presentation emphasized both the favorable overall opinion and the operational items the city may wish to address through internal controls and documentation.