Iowa State Auditor Rob Sand has released a report detailing nine financial findings against the City of Harper in Keokuk County following an agreed-upon procedures review covering the period of April 1, 2025 through March 31, 2026.
The report, released Friday, October 16, identified issues ranging from a lack of internal financial controls to inaccurate public reporting and overspending beyond the city’s certified budget. Sand provided the city with recommendations to address each finding.
Auditors found that one individual controlled too many aspects of the city’s financial operations, including handling, collecting, depositing, reconciling and recording cash; billing, collecting and reconciling utilities; and processing disbursements from purchasing through check writing. The auditor recommended the city review its control procedures and make use of elected officials to provide independent oversight where possible.
While monthly reconciliations of book to bank balances were prepared, they contained no evidence of independent review. The auditor recommended an independent person review and sign off on reconciliations going forward.
Utility billings, collections and delinquent accounts were not reconciled throughout the year, and no monthly delinquent account listing was prepared. Auditors also found that three of six customers observed were overbilled on their January 2026 water bills. City Ordinance 2018-04 sets the rate for water usage over 2,000 gallons at $2.90 per 1,000 gallons, but those customers were charged $4.11 per 1,000 gallons. State law requires utility rates to be established by city ordinance, and the auditor recommended the city ensure all billing matches those adopted rates.
Minutes from one of four City Council meetings reviewed did not include total disbursements for each fund, a list of all claims allowed with the reason for each, and a summary of all receipts — all required under Chapter 372.13(6) of the Iowa Code.
Disbursements during the fiscal year ended June 30, 2025 exceeded budgeted amounts in five areas: public works, culture and recreation, community and economic development, general government, and business type activities. Iowa law prohibits public money from being spent beyond an annual appropriation without a budget amendment. The auditor found no such amendment was made.
The city’s Annual Financial Report understated disbursements by $61,494. The auditor recommended the city establish procedures to ensure amounts reported in the AFR are accurate and supported by city records.
One of thirty disbursements reviewed included an $8 sales tax charge. As a government entity, the City of Harper holds tax-exempt status and should not be paying sales tax. The auditor recommended the city review payments to prevent similar charges going forward.
At June 30, 2025, the city carried a deficit balance of $13,839 in its Road Use Tax Fund. The auditor recommended the city investigate ways to eliminate the deficit and return the fund to a sound financial position.
The report noted the City Council holds a fiduciary responsibility to provide “watchful and responsible care” over the city’s financial operations. The full report is available on the Iowa Auditor of State’s website at auditor.iowa.gov.
