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Auditor warns of material weaknesses in Gregory's draft FY2024 single-audit
Summary
A visiting auditor told the Gregory City Council the draft FY2024 audit shows the city's balances are roughly stable but flagged problems with interfund transfers, unreconciled due-to/due-from entries, and bank reconciliations that together could be a material weakness for federal reporting unless corrected.
The city's external auditor presented a draft audit for the year ending Sept. 30, 2024, and highlighted both sound financial results and serious internal-control defects. "You brought in $1,600,000 in revenue. You spent $1,600,000 in expenditures," the auditor said, noting a modest $24,000 increase in the general fund but warning that bookkeeping weaknesses could put federal awards at risk.
The auditor described three recurring findings: inconsistent recording and reconciliation of interfund transfers and related "due to/due from" balances; lack of formal, documented accounting policies and independent review of journal entries; and untimely bank reconciliations that are not being updated when prior-period adjustments are made. "These three findings individually are significant deficiencies, but these three findings combined is a material weakness," he said, adding that the city's use of QuickBooks complicates fund accounting and recommended conversion to a municipal fund accounting system and written procedures.
Council members asked for more time and for the auditor and staff to work through corrections before the final report is issued. The auditor said he expected to return with a revised report and urged the city to prioritize written policies and reconciliation procedures; he warned that unresolved issues could lower grantor confidence or trigger additional federal scrutiny in 2025 when larger federal programs come into play.
