Iowa Auditor Rob Sand has released a new audit of Palo Alto County, outlining a year of declining revenues, rising expenses, and several repeat concerns involving the county’s financial reporting and oversight. Sand issued the report on March 23.
According to the State Auditor’s Office, Palo Alto County brought in just over $18.6 million during the fiscal year that ended June 30, 2025—a 13‑percent decrease from the previous year. The report says the drop was driven largely by a reduction in Iowa Department of Transportation contributions for road infrastructure, though drainage assessments increased during the year.
Expenses moved in the opposite direction. County spending climbed nearly 20 percent, totaling more than $20.7 million. Auditors attribute the increase to higher accrued expenses tied to compensated absences, rising pension costs, increased depreciation, and additional drainage district project work. With revenues falling and expenses rising, the county’s overall net position declined by about $2.1 million, or 3.4 percent.
Beyond the financial trends, Sand’s office identified five audit findings related to the receipt and expenditure of taxpayer funds. Four of those findings were repeat issues from the prior year.
The most significant involved segregation of duties in several county offices, including the sheriff, recorder, and treasurer. Auditors noted that one or two employees often controlled multiple steps in key financial processes—from opening mail and handling receipts to preparing deposits, posting transactions, and preparing or signing checks. The report warns that concentrating so many responsibilities with so few people increases the risk of errors or misuse of funds.
Another finding involved financial reporting. Auditors determined that material amounts of receivables, payables, and capital assets were not properly recorded in the county’s financial statements. The county had to make adjustments after the audit identified the errors.
A third finding focused on payroll, where the board of supervisors approved salary increases based on percentages but did not document the actual wage amounts in its minutes.
Sand’s office reminded county officials that the board of supervisors and other leaders have a fiduciary responsibility to provide consistent oversight, noting that oversight requires “watchful and responsible care” in managing public funds.
The audit also outlines specific recommendations for each issue.
For segregation‑of‑duties concerns, auditors urged county officials to strengthen internal controls by involving additional staff—including elected officials or personnel from other departments—in reviewing receipts, reconciliations, and financial reports, and to document those reviews with initials and dates.
For the financial reporting errors, the Auditor’s Office recommended implementing procedures to ensure all receivables, payables, and capital assets are properly recorded at year‑end, including independent review of cutoff transactions. And for payroll, auditors advised the board to document actual hourly rates or salaries in its minutes rather than approving increases only by percentage.
A full copy of the Palo Alto County audit is available on the Auditor of State’s website.
