Harper Woods council accepts 2024 audit; auditors issue unmodified opinion

Harper Woods — City auditors presented an unmodified opinion on the City of Harper Woods’ 2024 financial statements, and the City Council voted to receive and file the audit and a related management report.

The audit partner, Jamie Rivett of Yo and Yo CPAs, told the council the unmodified opinion is the “highest level of assurance,” meaning the auditors found no material misstatements requiring modification. Rivett said the city recorded about $14.7 million in general-fund revenue in 2024, about 71% of which came from taxes, and reported an unassigned general fund balance of roughly $3.2 million, or about 24% of general fund expenditures.

The presentation addressed an outsize reporting change in 2023 tied to a one-time state pension grant of about $8.7 million. Rivett said the grant increased both revenues and expenditures in 2023 and that auditing rules led to different reporting effects across the general fund and the water-sewer fund. “That was a one time grant from the state,” Rivett said, explaining why 2023 figures appear elevated.

Council members asked questions about whether water and sewer operating expenses might outpace revenues in future years and whether the 2024 decrease in water and sewer expenses was sustainable. Rivett said her audit work covered only fiscal 2024 and that a significant recorded decrease in water-sewer expenses — roughly $1.7 million — was related to the accounting for the pension grant and a reduction in the net pension liability recorded in 2024. She cautioned that the pension and other long-term liabilities rely on actuarial estimates.

Councilman Tucson and Councilwoman Sawicki pressed staff about long-term effects and whether rate increases would be expected; City Manager John Szymanski said the administration will analyze allocations and seek to avoid raising water rates if possible, suggesting the general fund could absorb some allocations to relieve pressure on the utility fund. Rivett reiterated that her audit focused on operations and that nonoperating state grants (about $1.5 million in 2024) are recorded separately.

Rivett closed by calling council’s attention to a governance letter stapled to the audited statements that lists one clerical budget overage and a few small, immaterial audit adjustments. She characterized those as not material to the overall financial statements and thanked city staff for cooperation during the first audit year with Yo and Yo.

The council voted, by voice, to receive and file the presentation and audit report.