Iowa State Auditor Rob Sand has released an agreed-upon procedures report on the City of Libertyville covering the period of January 1st through December 31st, 2025, identifying 16 findings related to the receipt and disbursement of taxpayer funds, according to a press release from the Office of Auditor of State.
The report is available on the Auditor of State’s website. Sand provided the city with recommendations to address each of the findings. The City Council has a fiduciary responsibility to provide oversight of the city’s operations and financial transactions. Sand noted that many of the findings indicate the City Council needs to exercise additional fiduciary oversight, defining oversight as the “watchful and responsible care a governing body exercises in its fiduciary capacity,” according to the report.
Among the findings, the report identified significant concerns with the city’s bank reconciliations. Reconciliations prepared by the auditor for June and December 2025 found the general ledger balance was $14,613 and $20,754 more than the bank balance, respectively, and no outstanding check listing was prepared. The city also did not perform an overall bank balance to general ledger reconciliation that included all bank accounts and investment balances.
The report also flagged issues with the city’s Annual Financial Report, which was not filed by the December 1st deadline as required by state law. Beginning fund balances did not agree with ending balances from the prior year’s report, and ending fund balances were understated by $81,263 compared to the city’s own records.
Financial reporting concerns extended to the monthly City Clerk’s report as well. Disbursements for June 2025 reported in that document did not agree with the city’s general ledger, with a variance of $15,319. Additionally, two receipts totaling $4,721 were deposited into the city’s bank account but never recorded in the general ledger, and one of 30 disbursements reviewed had no invoice or supporting documentation.
Segregation of duties was another area of concern. One individual has control over multiple financial functions including cash handling, investments, receipts, disbursements, payroll, utilities, and financial reporting — a situation the report said creates internal control risks and maximizes the potential for error or dishonesty.
The report noted several additional deficiencies. The city has not adopted a written investment policy as required by state law, and the City Council has not adopted a resolution naming official depositories. The city also did not maintain an accurate accounting record for each investment. A change fund maintained at City Hall was not authorized by City Council through resolution and was not maintained on an imprest basis. Utility billings, collections, and delinquent accounts were not reconciled throughout the year, and a delinquent account listing was not prepared monthly. The city also had a credit card used by various employees but no formal policy governing its use or the accounting of charges.
Payroll issues were also identified. Five of five timesheets reviewed were not approved by an independent person prior to payroll preparation, the city did not provide an ordinance establishing compensation for the Mayor and City Council members as required by state law, and City Council meeting minutes did not document approval and hourly rates for a hired employee.
The report also found that disbursements during the year ended June 30th, 2025 exceeded budgeted amounts in public works, culture and recreation, general government, and business type activities without the required budget amendments. The city’s water revenue bond resolution requires water user rates to produce net operating receipts of at least 110 percent of the principal and interest due in the same fiscal year, a requirement the city did not meet during the year ended June 30th, 2025.
Finally, the report found that the Community Center and Faces of Libertyville maintain bank accounts separate from the City Clerk’s accounting records. Although these accounts are part of the city, their transactions and balances were not included in the city’s accounting records, annual budget, monthly financial reports, or Annual Financial Reports, and were not reported to or approved by the City Council.
A full copy of the report is available at auditor.iowa.gov. Those with questions can contact the Office of Auditor of State at 515-281-5834.
