Cortland Development News

2024 Audit Reveals Split Opinion, Financial Reporting Challenges, and Budget Overspending

The 2024 audit report revealed a split opinion, with a disclaimer of opinion issued on operating statements due to insufficient evidence regarding revenues, expenditures, and fund balance changes. This was largely attributed to issues with beginning fund balances from 2023 and subsequent error corrections that did not fully resolve concerns. However, an unmodified, clean opinion was issued on the balance sheets for both fund-basis and government-wide statements, indicating comfort with assets, liabilities, and ending balances. The audit also highlighted findings related to budget overspending, particularly in functional areas where grant funding increased the budget and associated spending without proper adjustments, leading to a total general fund budget overspend of approximately $1.8 million. Significant audit adjustments were made, including nearly $4 million in the sewer fund and $750,000 in the capital projects fund, due to delayed or un-reconciled financial reporting. The report identified recurring issues in financial reporting, capital project tracking, and cash flow reconciliation, some of which have been present since 2021. The audit also noted an increase in debt, with $8.42 million in new debt and $14.5 million in paid debt, bringing the city close to its constitutional debt limit (just over 91% at the time of the audit). A March bond for $7.9 billion for DRR was passed to meet bill requirements, which, if not passed, could have indicated substantial doubt in the city's ability to maintain operations, though this was not formally reported due to the timing of the audit. The city is also transitioning away from the unsupported AS400 system and the cashbook method to a single system, Munis, to improve financial reporting accuracy and efficiency. The general fund ended with a deficit of around $400,000, while the sewer fund had a balance of approximately $4.9 million.