DEVILS LAKE – The Devils Lake City Commission held their regular meeting on Monday, Sept. 21, at 5:30 p.m. in City Hall. In attendance were Mayor Jim Moe, and City Commissioners Rob Hach, Joe Knowski, and Lisa Uhlenkamp, as well as Interim Auditor Rob Johnson, Devils Lake Regional Airport Director Dominic Eritano, Police Chief Jason Toso, Fire Chief Nate Bennett and City Engineer/Public Works Director Mike Grafsgaard. Commissioner Jason Pierce was away.
Brian Opsahl of the accounting and advisory firm BradyMartz was present to discuss the 2022 financial audit reports for the Devils Lake Regional Airport and the City of Devils Lake. Opsahl acknowledged the two years spent in finishing the audits since they began in 2024 and appreciated everyone’s patience in getting it done. “When we started this, a lot of things changed between what was required to be done … and then some of our staff members which also delayed the process.”
“A lot of things that we learned during the process, that, once we got it figured out, I don’t think this is going to be a problem going forward, but this first year was a little bit rough,” Opsahl said, adding that one of the factors that caused delays was that prior adjusting journal entries had never been made, so more up-to-date entries will be made going forward. Another issue that caused delays was the increase in cyber fraud via email among various entities, on which he counseled everyone to exercise caution. “Basically, what’s happening is somebody’s stealing somebody’s email, acting on behalf of them, and sending emails to you that look pretty legit, saying ‘Hey, let’s just use a contractor. We changed banks. We need the money by tomorrow for this payment.’ And before you know it, that money’s gone, then it’s very hard to get back. And so, just be very careful.”
Opsahl also advised a continued maintaining of separation of duties, so that everyone’s work is double checked and signed off by someone else in another department to avoid errors, providing a second set of eyes so that proper decisions can be made. “If Dominic (Eritano) puts something together, somebody else, maybe Rob (Johnson), review and approve his work, vice versa,” Opsahl said. “Just helps prevent errors. Sometimes errors look like wrongdoing … so that prevents somebody from making a mistake, an honest mistake.”
Opsahl explained that the reason that the airport required a separate audit was because of their significant funding through federal grants and felt that it was overall a good statement. Retained earnings for the airport authority in 2022 were almost $21 million, with available spending money at the end of 2022 totaling $462,466.
Federal funding for the airport during 2022, also included COVID aid. “You had about $1.95 billion of federal dollars being spent,” Opsahl said. “A lot of this was able to be spent on operating-type activities, so covering salaries, etc., but there was also some projects as well.”
Regarding the 2022 audit for the city, Opsahl reported that the city’s budget for that year totaled over $286 million. “Of that number, about $276 million is basically tied into your infrastructure, capital assets-related activity there,” he said, adding that the general fund at the end of 2022 was a little over $4 million with about $2 million available to spend.
Opsahl also reported that there was a deficit in the 2022 capital projects fund of about $5.4 million. “At some point, either those projects are waiting for funding, maybe some new debt is going to be issued after 2022 … or somebody’s going to have to pay that fund back,” he said, adding that the overall change in the general fund was a deficit of $1.3 million, which included over $500,000 in net transfers that came into the fund. “Something to watch out for, as far as your general fund expenditures are concerned. This year was a COVID year, so all kinds of numbers are kind of goofy.”
Opsahl also observed that the net position of proprietary funds for business-type activities such as water, sewer, sanitation, etc., were positive. “That’s one thing we look at for financial health,” he said. “All the funds unrestricted, which would be your spendable dollars is also positive, so no red flags as far as your enterprise funds at the end of 2022.”
However, he noted there were significant decreases in those proprietary funds at year’s end. “Large reason for those decreases is because transfers are being made into the general fund, etc., to cover some deficits,” Opsahl said. “It’s something to keep an eye on. … At some point, it might require some kind of rate changes or updates to get these funds whole, because at some point the fund balance that you’ve built up is going to be depleted if nothing has happened there.”
Opsahl noted that, given that this report is from 2022, some recommended changes may have already been addressed, but overall there wasn’t a lot of debt which he felt was impressive. He also observed in the cash flow to the proprietary funds, there were no issues with cash balances, and investment balances were healthy at the end of 2022.
The next audit is scheduled for November.