External audit finds recurring bank‑reconciliation weakness, $200,000 grant write‑off and $400,000 budget timing gap in Lake Alfred

Mike Bridal, the city’s external auditor, told the commission on June 20 that the audit for the year ended Sept. 30, 2025, carried an unmodified (clean) opinion on the financial statements but identified several ongoing control problems and timing issues.

"You got an unmodified opinion," Bridal said. "That's the highest level of an opinion we can give you." He said the audit included five reports, including internal control and compliance testing and a management letter that lists less‑severe recommendations.

The most serious recurring issue is a material weakness in bank reconciliations stemming from a large, unsupported 308‑line journal entry posted during a software conversion on May 31. Bridal described the entry as "millions of dollars with no backup," and said it complicated reconciliation work across cash accounts and was a primary reason the finding remains open.

City management acknowledged the conversion challenges and told the commission staff reverted to the prior system (ADG) to restore reliable records. The city manager said staff has been addressing timing and reconciliation backlogs and expects the finding to be corrected in the next audit cycle.

Auditors also reported a grant receivable that had to be written off after the reimbursement period expired. "That was a pure miss," the city manager said, describing the grant (a FIRDAP recreation grant) as competitive and noting management has adjusted grant administration so multiple staff share responsibility for deadlines and reporting. Bridal said similar federal grants on the books require careful extension paperwork and compliance if reimbursements are to be preserved.

A third consequential item was a roughly $400,000 budgetary over‑expenditure in the general fund, Bridal explained. Because Florida statutes limit when budgets can be amended, expenses posted after the November closeout caused a technical over‑expenditure even though revenues were higher than planned. "You budgeted to perfection," Bridal said, adding that leaving a small cushion at year‑end reduces the risk of technical violations.

Bridal closed by noting the city's reserve position: combined unrestricted reserves were about $3.4 million, representing roughly three months of governmental spending, and that timing differences in enterprise‑fund reimbursements temporarily produced a negative enterprise balance that reverses once reimbursements are received.

Next steps: the commission heard staff describe policy and process changes — including increased deposit requirements for development reviews, additional grant oversight and software/tool evaluations — and was told the city will continue working with auditors to clear outstanding items.