Hortonville auditors give unmodified opinion, warn of negative unassigned fund balance

Amber of accounting firm Hawkins Ash presented the Village of Hortonville’s 2026 audit and said the firm issued an unmodified opinion, meaning the financial statements are presented fairly. She told trustees there were 41 adjusting journal entries this year (17 material) and 11 management advisory comments; only one advisory comment was new. "Everything is presented fairly and materially correct," she said.

The audit showed the general fund had a net decrease of about $194,000. Amber reported the unassigned fund balance decreased about $227,000 and now sits at approximately -5% of expenditures; by contrast Hawkins Ash recommends an unassigned balance near 17% of expenditures. She attributed the shortfall to a combination of large planned-project reserves and cash used to fund some TID projects instead of borrowing, noting about $156,000 was set aside for general government projects, $45,000 for public safety, $130,000 for public works and $177,000 for capital projects.

Trustees asked how the village could correct the percentage. Amber explained the percentage reflects net fund balance (assets minus liabilities), not necessarily cash on hand. Remedies include reducing amounts earmarked for planned projects, shifting project timing, increasing revenues, or using borrowed funds for capital projects rather than paying cash; she said a percentage cut across reserve accounts could improve the unassigned balance. "It might just be a couple several years until things start to even out," she said, recommending the board prioritize the next five years of projects and reallocate lower-priority items.

The audit also reported fund-level changes across other funds: the debt service restricted portion increased about $9,000; certain special revenue funds had mixed results (Wisconsin Development Fund grant decreased about $152,000; subdivision park fees decreased about $24,000); library fund unassigned increased about $28,000; the ARPA fund was closed to zero. Water and wastewater net investment increased roughly $566,000 while debt retirement and unrestricted balances changed due to planned activity.

The presentation closed with a policy note about closing the ARPA fund and an FYI that the firm expects a new version of the Gatsby financial reporting model next year that will change some reporting lines. Trustees had follow-up questions about budget amendments, how budgeted planned projects interact with cash flow, and whether future TID borrowing would replenish reserves. No formal action was required at the meeting beyond receiving the audit.

The board heard the presentation and asked staff to examine project prioritization and fund allocations ahead of future budget work sessions.