The Iowa Auditor of State’s Office is urging the City of Early to tighten its financial oversight after a new agreed-upon procedures report identified 16 findings tied to internal controls, budgeting, and compliance with state law.
Eleven of those issues have appeared in previous audits, prompting Auditor Rob Sand to again remind city leaders of their fiduciary duty to exercise “watchful and responsible care” over public funds.
One of the most significant concerns centers on segregation of duties. According to the report, a single employee handled multiple steps in key financial processes—from collecting cash to preparing disbursements, managing payroll, and entering utility billing information. Auditors say concentrating so many responsibilities with one person increases the risk of errors or misuse of funds and urged the city to involve elected officials in independent reviews.
The audit also flagged problems with bank reconciliations, including an unresolved $11,675 variance between the city’s general ledger and its reconciliation system as of June 30, 2025. Outstanding transactions on the city’s cash report were also $306 higher than the supporting register, and the person reviewing reconciliations did not document the date of review.
Financial pressures were also evident. Three city funds—Economic Development, Debt Service, and Water—ended the fiscal year with deficit balances totaling more than $59,000. Auditors recommended the city take steps to restore those funds to a sound financial position.
Compliance issues extended to the city’s Local Option Sales Tax revenue. Early voters approved a formula requiring 20 percent of Local Option Sales Tax receipts to support property tax relief and 80 percent for any lawful purpose. But auditors found the city transferred only 9.8 percent to the General Fund and failed to transfer the required $15,000 to its Capital Projects and Equipment Replacement Fund.
Other findings included an inaccurate Annual Financial Report, which overstated the city’s ending balance by $59,258, and a failure to deliver August 2024 council minutes to a local newspaper within the 15‑day window required by Iowa law. The city also allowed disbursements to exceed budgeted amounts in several categories and published its budget hearing notice just one day before the meeting—far short of the 10‑day minimum required.
Additional issues involved missing documentation for some disbursements, a payroll timesheet lacking supervisory review, improper coding of receipts, and the city’s use of a debit card, which auditors recommend discontinuing due to limited fraud protections.
The Auditor’s Office provided recommendations for each issue and emphasized the need for stronger policies, independent reviews, and more cons
