Audit report shows City of Harlan maintains stable finances
HARLAN — The Iowa Auditor of State Rob Sand released the audit report for the City of Harlan for the fiscal year ending June 30, 2025, showing stable finances alongside areas for improvement in oversight and internal controls.
According to the audit, the City’s total receipts for the year were $8,710,602, a less than 1% increase over the previous year. Disbursements totaled $8,398,131, a decrease of less than 1% from the prior year.
The audit identified six findings, four of which were repeated from the prior year, primarily involving segregation of duties and disbursements exceeding budgeted amounts.
City staff have already taken steps to address some issues, dividing responsibilities among two Administrative Assistants, the Deputy City Clerk, the City Administrator, and the City Clerk to better monitor cash collections and deposits. The audit, however, recommended that employees who collect cash not also record transactions to further strengthen internal controls.
Limited staffing also affected the Harlan Firefighters Association and the Harlan Community Library Foundation, where one individual in each organization controlled the collection, recording, and disbursement of funds. Both groups have committed to reviewing procedures to improve oversight.
The audit reported budget overspending in several areas: Community and Economic Development, Debt Service, and Business-Type Activities. Adjustments for Employee Benefit Systems caused Community and Economic Development disbursements to exceed the budget, while the City’s utility operations, which are managed by Harlan Municipal Utilities, exceeded budgeted amounts due to reporting discrepancies.
Other findings included a $1,110 employee recognition meal, which prompted the City to adopt stricter documentation to demonstrate public benefit for such expenditures. Additionally, the City transferred $607,435 from the Employee Benefits Fund to the General Fund, exceeding actual benefits paid by $229,935; the report stated steps are being taken to correct excess transfers in the future.
The audit also reviewed business transactions with City officials. A contract with a Council member’s husband’s company for garbage hauling totaled $5,995, below the legal threshold, and not considered a conflict of interest. Minor reporting issues were noted in the Annual Urban Renewal Report, which understated TIF debt by $96,787; the City plans to correct this in future filings.
Overall, the audit confirms that Harlan’s finances remain stable, with receipts slightly exceeding disbursements. While the report highlights opportunities to strengthen internal controls, budget management, and oversight, City officials are already taking proactive steps to address these areas, demonstrating a commitment to transparency and responsible financial management.
The full audit report is available on the Iowa Auditor of State website under Audit Reports.
