Iowa State Auditor Rob Sand has released the annual financial and compliance audit report for Henry County, covering the fiscal year ending June 30, 2025. The report identifies eleven findings related to the receipt and expenditure of taxpayer funds, nine of which are repeated from the prior year. Despite the findings, the county received a clean opinion on its overall financial statements.
Henry County’s revenues totaled $25,021,905 for the fiscal year, a 13.6% increase from the prior year, driven primarily by increased capital contributions from the Iowa Department of Transportation. Expenses totaled $21,236,059, a 7.4% increase, and the county’s net position grew by approximately $3.8 million during the year to more than $55 million.
Donation to Private Nonprofit
Among the most notable findings was a $7,500 donation made by the county to Main Street Mount Pleasant, a private nonprofit organization. Auditors cited Article III, Section 31 of the Iowa Constitution, which prohibits governmental bodies from making gifts to private nonprofit corporations, and noted that at least six Iowa Attorney General opinions since 1972 have consistently held that public funds cannot be donated to private entities — even for charitable or educational purposes.
Auditors recommended the county immediately cease such donations unless the nonprofit is providing a specific contracted service to the county in exchange for the funds, and noted that if the payments are considered economic development tied to job creation or retention, the county would need to follow the requirements of Chapter 15A of the Code of Iowa. The Henry County Board of Supervisors responded that it discussed the matter with the county attorney and believes the donation provided value to the county, but agreed to cease future donations in compliance with the Iowa Constitution.
Other Findings
The most commonly cited concern across the report was a lack of segregation of duties in several county offices, including the Treasurer, Recorder, Sheriff, Secondary Roads Department, and Conservation Department. Because of limited staffing, some employees handle multiple aspects of financial transactions, increasing the risk that errors or irregularities could go undetected. Each office acknowledged the staffing limitations while pledging continued improvement.
Auditors also identified a financial reporting issue requiring a material adjustment to the county’s financial statements due to payables that were improperly recorded at fiscal year’s end. Additional findings addressed the Sheriff’s Office lack of a formal accounting policies and procedures manual, inadequate procedures for collecting and reconciling inmate room-and-board charges, billing reconciliation concerns in the Public Health Department, missing bank reconciliations in the Conservation Department, and a lack of documented supervisory review of department head timesheets. Several departments also exceeded their budgeted appropriations before amendments were approved.
County departments generally agreed with the findings and outlined corrective actions intended to address the issues identified. The full audit report is available on the Auditor of State’s website.
