Audit firm issues clean opinion, flags collateral and reporting controls

Riley Kudson, an auditor with Cohen Resnick, told the Harmony Town Council the firm "did issue a unmodified or clean opinion on 20 25 financial statements." He summarized the review of revenues, expenditures and multiple funds, noting a clean audit opinion alongside findings council should address.

Kudson said the auditors tested seven areas of Minnesota legal compliance and found one material issue: insufficient collateral for the city's deposits above FDIC insurance. He also described common annual financial reporting findings tied to segregation of duties and preparation of financial statements, which he characterized as widespread among small cities. "That's a very common one," he said.

The presentation broke down major revenue and expense drivers. Kudson reported total property tax revenue for the year around $956,000 and said property taxes represented roughly 34% of total revenues; he noted local government aid (LGA) remained flat at about $380,000, increasing only "a whopping $200" from the prior year. He highlighted growth in ambulance charge revenues—about a $90,000 increase—and a continuing operating deficit trend in the sewer fund, which has operated at a deficit for six years.

On reserves and debt, the auditor said the general fund unassigned balance was about $1.1 million (roughly 155% of annual general fund expenditures), capital reserves were about $907,000, and the town is meeting current debt service obligations. He cautioned that high fund balances can be drawn down quickly for projects such as street work and recommended continued attention to collateral and internal control improvements. "It shows good health of the city," he said of the fund balances.

The council asked follow-up questions about whether excess reserves could be used to pay down bonds early; Kudson recommended consulting the finance officer for payoff logistics. The council voted to accept the audit presentation.