Milford Finance Audit Committee Meeting: Fiscal 2024 Audit Presentation - March 25, 2026

On March 25, 2026, the City of Milford Finance Audit Committee met to review the fiscal year 2024 audit. Chairman Jason James presided, joined by Councilman Danny Perez and Councilwoman Laurie Connors (online). The audit firm Zelenkowski Axelrod (ZA) presented the audit results, including an unmodified opinion on the financial statements, two material weaknesses in internal controls, and an unmodified opinion on federal grant compliance. City finance staff responded to findings and outlined corrective actions.

Public Comments & Testimony

• No public comments were made; the period was closed after confirming no attendees in person or online wished to speak.

Discussion Items

• Audit Presentation Overview:
  • Kim Stank (partner), Kayla Damar, and Joe Tokar of ZA presented the governance letter, management letter, and financial statements.
  • Governance letter: identified significant risks (management override, improper revenue recognition) inherent to all audits; all proposed adjustments were adopted.
• Material Weaknesses in Internal Controls:
  • 1. Timing and account close process: the FY2024 audit (ending June 30, 2024) was presented in March 2026, indicating a delayed closing process. Finance staff acknowledged the recurring issue and aim to resolve it by FY2026.
  • 2. Bank reconciliations: significant delays (2–3 months) were noted in performing bank reconciliations. Staff confirmed new procedures and staffing improvements have brought reconciliations current, completed within days of receiving bank statements.
• Liquidity and Cash Presentation:
  • The general fund reported zero unrestricted cash and cash equivalents due to interfund loans and fund consolidations. Lou Vitola (Finance Department) and Kevin Gaborio (Acting Finance Director) explained that the city’s pooled cash is sufficient, and the zero balance is an accounting artifact from the consolidation of 43 funds into 18, plus a year-end working capital squeeze of $1.8 million. The city’s investment policy and reserve policies are managed to meet liquidity needs.
  • ZA suggested evaluating the allocation of investments between funds to improve the general fund’s apparent cash position.
• Operational Efficiency Observations:
  • ZA noted the labor-intensive allocation of transactions across funds and recommended a cost-benefit analysis. Staff acknowledged this ongoing discussion.
• Financial Statements Highlights:
  • Total net position increased for both governmental and business-type activities.
  • Bonds and notes payable rose due to the police facility loan ($7.4 million in current liabilities).
  • New investment disclosures added (commercial paper, U.S. government treasuries, bonds); most investments have maturities under two years, except those tied to long-term debt defeasance.
  • Pension net liability increased (flipped from a prior-year asset) due to market fluctuations and actuarial assumption changes.
  • Single audit: $958,515 in ARPA expenditures tested with no findings; unmodified opinion on federal grant compliance.

Key Outcomes

• The committee accepted the FY2024 audit report without objection.
• Audit opinions: unmodified on financial statements; unmodified on single audit compliance; two material weaknesses identified in internal controls (addressed in the schedule of findings and questioned costs).
• Committee members and staff expressed appreciation for ZA’s professionalism and the finance team’s diligence in addressing prior recommendations.
• Management committed to further improving timeliness of future audits, aiming to complete FY2025 shortly after close and eliminate the timeliness finding by FY2026.
• No further business; the meeting adjourned.