ELY—The city of Ely received an unmodified “clean” opinion on its 2024 financial statements during a recent audit presentation by Tom Kelly of Walker, Giroux & Hahne, the same positive assessment the city has maintained for years.
“That’s the opinion you want,” Kelly told city officials during Tuesday’s city council meeting. “It means the financials are fairly stated, useful to the reader, and that the city is in good shape.”
Due to receiving more than $750,000 in federal expenditures during 2024, Ely was subject to a federal single audit — additional compliance and control testing required for entities with significant federal funding. The city was not subject to single audit requirements in 2023, though Kelly noted Ely has typically met this threshold about 90 percent of the time over the past decade.
“I think this is a good thing because it means the city has a lot of projects happening and is taking advantage of federal programs,” Kelly said.
The threshold for single audit requirements increases to $1 million for 2025, though Kelly expects Ely will likely continue to meet the criteria.
General fund shows
strong position
The audit revealed healthy finances in the city’s general fund, with 97 percent of the fund balance unrestricted and available for spending. However, the general fund shows approximately $1 million owed from other funds, primarily from capital projects.
“This has been the same for years since you’ve had very busy capital projects with a lot going on,” Kelly said, describing this as a standard situation when cities are actively pursuing infrastructure improvements.
The city also had $250,000 in grants receivable at year-end, which Kelly expects have likely been collected by now, improving the cash position.
Ely’s three enterprise funds — water, sewer, and electric utilities — all showed positive results. While the water fund had a small operating loss of about $30,000, both sewer and electric utilities were profitable, with sewer generating approximately $35,000 and electric producing $140,000-$150,000 in operating income.
“Good news is they’re all doing well this year,” Kelly reported. “These should be self-sufficient or at least breaking even.”
The audit identified nearly $962,000 in federal expenditures for 2024, with the largest single program being economic adjustment assistance totaling almost $689,226 — funds used for the Trailhead project slated for a ribbon cutting on Aug. 27. This COVID-era program allowed the city to access new funding opportunities.
Kelly noted that federal expenditure levels are expected to decrease as major projects are completed.
Minor management
recommendations
The audit included only one formal finding related to segregation of duties — a longstanding issue common to small municipalities that lack sufficient staff to completely separate financial responsibilities. Kelly emphasized this doesn’t reflect poor performance but rather the reality of operating with limited personnel.
Two management recommendations were made: improving year-end cutoffs for grant reimbursement requests and addressing reconciliation issues with revolving rehabilitation loan reports from third-party providers.
City Clerk-Treasurer Harold Langowski acknowledged the recommendations, particularly regarding project closeout timing.
“We try to make clean cutoffs, but it’s never going to be perfect,” he said, referencing the challenge of infrastructure work that spans multiple seasons.
Looking ahead
Kelly praised the city’s financial management and staff knowledge, calling the audit process smooth. The auditing firm will return in January for the 2025 audit planning.