The Iowa State Auditor’s Office has released its annual audit of Henry County, identifying a series of financial management and internal control concerns while also noting the county received an overall clean opinion on its financial statements.
The audit covers the fiscal year ending June 30, 2025, and found eleven issues related to the handling of public funds and county operations. Nine of the eleven findings are repeated from the prior year.
According to the audit, “The County Board of Supervisors and other elected officials have a fiduciary responsibility to provide oversight of the County’s operations and financial transactions. Oversight is typically defined as the “watchful and responsible care” a governing body exercises in its fiduciary capacity.”
Among the most common concerns cited by auditors was a lack of segregation of duties in several county offices. Auditors noted that because of limited staffing, some employees are responsible for multiple aspects of financial transactions, increasing the risk that errors or irregularities could occur without detection. The Treasurer, Recorder, Sheriff’s Office, Secondary Roads Department, and Conservation Department all acknowledged the challenge and cited staffing limitations while pledging to continue improving oversight procedures.
Auditors also identified a financial reporting issue that required a material adjustment to the county’s financial statements. The finding stemmed from payables that were improperly recorded at the end of the fiscal year. The audit report stated that county policies did not require an independent review of year-end transactions, increasing the likelihood that reporting errors could go undetected. In response, the County Auditor’s Office said it will continue reminding department heads annually to review expenses and ensure all payables are properly reported.
Auditors reported the Sheriff’s office does not currently maintain a formal accounting policies and procedures manual. The report noted such manuals help ensure continuity, consistency, and accountability in financial operations, particularly during staff turnover. The Sheriff’s Office responded that it is currently working on developing a policies and procedures manual.
A separate Sheriff’s Office finding involved inmate room-and-board billing. Auditors found the county lacks formal procedures for collecting, recording, and reconciling room-and-board charges assessed to inmates. The report noted there were no reconciliations performed between amounts billed and amounts collected. Auditors recommended creating written procedures and requiring independent reviews of billings, collections, and deposits. The Sheriff’s Office again responded that development of a formal policies manual is underway.
The audit also identified concerns within Henry County Public Health. Auditors found that billing reconciliations were not consistently matched to accounts receivable records, creating the possibility of misstated revenues or uncollected balances. Public Health officials indicated future monthly reconciliations will include all invoices generated through the department’s billing system.
Another finding involved the Henry County Conservation Department. Auditors reported bank reconciliations were not being prepared for a conservation account, creating the potential for unrecorded transactions or undetected errors. Conservation officials responded that they will work to prepare and review monthly reconciliations going forward.
Payroll procedures also drew attention from auditors. While timesheets were being completed, the audit found there was no documented independent review of timesheets submitted by department heads. Auditors recommended an approval process involving someone independent of the employee submitting the time record. The County Auditor’s Office responded that it will continue implementing policies requiring review and authorization of payroll records.
The report additionally cited budget compliance issues. Auditors found certain county departments exceeded their appropriated spending authority before budget amendments were approved and that some expenditures exceeded appropriations at year-end. Auditors recommended county officials carefully monitor expenditures throughout the year to ensure compliance with Iowa budget law.
Despite the findings, the audit also showed Henry County’s overall financial position improved during the fiscal year. County revenues increased to just over $25 million, while expenses totaled approximately $21.2 million. The county’s net position increased by nearly $3.8 million, reaching more than $55 million at the end of the fiscal year.
Auditor Rob Sand’s office noted that county officials have a fiduciary responsibility to provide oversight of public funds and recommended continued attention to internal controls and financial management practices. County departments generally agreed with the findings and outlined corrective actions intended to address the issues identified in the report.