Marco Island audit: clean opinions but two repeated material weaknesses prompt calls for staffing, monthly closes
July 13, 2026 | Marco Island, Collier County, Florida
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Marco Island City Council reviewed the cityinancial audit for fiscal 2025 at a July 13 special workshop, where CliftonLarsonAllen (CLA) reported clean audit opinions on both the financial statements and state compliance but disclosed two material weaknesses related to audit adjustments and grant accounting.
Chris Kessler, managing principal at CLA, told the council that "your financial statement audit opinion is unmodified," the highest level of assurance, and that the state single-audit compliance review likewise produced a clean opinion. He said CLA proposed numerous journal entries during the audit and recorded two material weaknesses because those entries revealed gaps in the city losing and control processes.
The findings did not indicate fraud or material irregularities, Kessler said. He emphasized that the weaknesses were process-driven: "This is not a the comments just don't go away magically. They will take work," he told councilors, describing the need for sustained attention to internal controls, month-end close discipline, and grant accounting procedures.
Why it matters: an unmodified opinion confirms the city's reported numbers are materially correct, but repeat material weaknesses can undermine public confidence and increase audit workload and costs. Councilors focused their questions on how to remove the repeat findings and avoid last-minute audit work that risks missing statutory deadlines.
Council reaction and staff response
Vice Chair Champagne and other councilors urged a closer, more continuous role for elected leaders during the audit cycle and pressed staff to adopt private-sector practices such as more frequent close and reconciliation routines. Champagne said the council should "stop complaining, start doing" and argued the city should budget for additional skilled finance personnel ahead of the coming budget process.
City Manager Casey described steps already under way: she assigned an administrator to own a master grants spreadsheet, said two new hires were added to the finance team, and scheduled a post-audit/pre-audit meeting with CLA on July 28 to set timelines and deliverables for the next audit cycle. "We're working on reducing the number of transactions every year," Casey said, and emphasized that department heads must share responsibility for grant administration and timely invoicing.
Details, numbers and technical points
- Fund balances: Kessler identified the unassigned general fund balance as the primary source of discretionary funds; councilors noted the financial statements show about $11.0 million in the general fund with roughly $7.0 million reserved for emergencies, and CLA explained that a $6.1 million net figure across governmental funds reflected a timing-related deficit in the grants fund tied to pending FEMA reimbursements.
- Revenue concentration: the audit flagged a material concentration in ad valorem (property tax) revenues, roughly 71% of total revenues; Kessler recommended exploring additional state or federal grant sources and reassessing fee structures where lawfully possible.
- Accounting changes and estimates: the city implemented GASB guidance expanding compensated-absence reporting (including certain sick leave) but CLA said the change was not material to the FY2025 statements; significant estimates called out included pension and OPEB liabilities and claims liabilities.
- Depreciation and capital: deputies noted depreciation for general funds of about $7,800,000 and $8,300,000 in water and sewer; Kessler said depreciation affects the utility fund P&L under GAAP but is a noncash budgetary consideration.
Councilors also asked about specific variances in grant and capital fund revenues and were told staff will follow up with detailed explanations; CLA suggested that some large variances were tied to hurricane payroll and expected reimbursements.
Next steps
Council and staff agreed on concrete follow-ups: a July 28 meeting between CLA and city staff to establish timelines and deliverables for the FY2026 audit cycle; continued emphasis on monthly reconciliations and close discipline; and additional staffing to support grant accounting and month-end processes. No formal motions or votes occurred during the workshop.
The audit advisory committee and CLA were publicly thanked by councilors and staff for completing the audit on time and for the committee's volunteer oversight. The workshop adjourned after public acknowledgement of long-serving advisory members and a short public-comment recognition of Gene Siegel's service.
Chris Kessler, managing principal at CLA, told the council that "your financial statement audit opinion is unmodified," the highest level of assurance, and that the state single-audit compliance review likewise produced a clean opinion. He said CLA proposed numerous journal entries during the audit and recorded two material weaknesses because those entries revealed gaps in the city losing and control processes.
The findings did not indicate fraud or material irregularities, Kessler said. He emphasized that the weaknesses were process-driven: "This is not a the comments just don't go away magically. They will take work," he told councilors, describing the need for sustained attention to internal controls, month-end close discipline, and grant accounting procedures.
Why it matters: an unmodified opinion confirms the city's reported numbers are materially correct, but repeat material weaknesses can undermine public confidence and increase audit workload and costs. Councilors focused their questions on how to remove the repeat findings and avoid last-minute audit work that risks missing statutory deadlines.
Council reaction and staff response
Vice Chair Champagne and other councilors urged a closer, more continuous role for elected leaders during the audit cycle and pressed staff to adopt private-sector practices such as more frequent close and reconciliation routines. Champagne said the council should "stop complaining, start doing" and argued the city should budget for additional skilled finance personnel ahead of the coming budget process.
City Manager Casey described steps already under way: she assigned an administrator to own a master grants spreadsheet, said two new hires were added to the finance team, and scheduled a post-audit/pre-audit meeting with CLA on July 28 to set timelines and deliverables for the next audit cycle. "We're working on reducing the number of transactions every year," Casey said, and emphasized that department heads must share responsibility for grant administration and timely invoicing.
Details, numbers and technical points
- Fund balances: Kessler identified the unassigned general fund balance as the primary source of discretionary funds; councilors noted the financial statements show about $11.0 million in the general fund with roughly $7.0 million reserved for emergencies, and CLA explained that a $6.1 million net figure across governmental funds reflected a timing-related deficit in the grants fund tied to pending FEMA reimbursements.
- Revenue concentration: the audit flagged a material concentration in ad valorem (property tax) revenues, roughly 71% of total revenues; Kessler recommended exploring additional state or federal grant sources and reassessing fee structures where lawfully possible.
- Accounting changes and estimates: the city implemented GASB guidance expanding compensated-absence reporting (including certain sick leave) but CLA said the change was not material to the FY2025 statements; significant estimates called out included pension and OPEB liabilities and claims liabilities.
- Depreciation and capital: deputies noted depreciation for general funds of about $7,800,000 and $8,300,000 in water and sewer; Kessler said depreciation affects the utility fund P&L under GAAP but is a noncash budgetary consideration.
Councilors also asked about specific variances in grant and capital fund revenues and were told staff will follow up with detailed explanations; CLA suggested that some large variances were tied to hurricane payroll and expected reimbursements.
Next steps
Council and staff agreed on concrete follow-ups: a July 28 meeting between CLA and city staff to establish timelines and deliverables for the FY2026 audit cycle; continued emphasis on monthly reconciliations and close discipline; and additional staffing to support grant accounting and month-end processes. No formal motions or votes occurred during the workshop.
The audit advisory committee and CLA were publicly thanked by councilors and staff for completing the audit on time and for the committee's volunteer oversight. The workshop adjourned after public acknowledgement of long-serving advisory members and a short public-comment recognition of Gene Siegel's service.
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