An independent fiscal year 2025 audit of Grand Rapids’ internal financial processes identified multiple “material weaknesses” in the city’s production of financial records, according to a report by auditor Plante Moran.
The city received an “unmodified clean opinion” from the audit, meaning that the city’s financial were free of significant errors or omissions.
The audit, completed in December 2025, evaluated how the city produces accurate financial statements and complies with regulation. Plante Moran’s findings were recently published on the city website.
In evaluating internal control, auditors said they identified a reasonable likelihood the city may not be able to detect or prevent inaccuracies in its financial statements.
One such weakness came when Grand Rapids failed to prepare timely cash reconciliations, which compare internal city financial statements to those kept by its bank. These reports, due in June 2025, were not completed until December 2025 and contained “immaterial unreconciled amounts,” auditors wrote.
Auditors linked this delay to staff turnover and an internal accounting system turnover, requiring “substantial time and resources” by both the city and its bank.
“The audit process was delayed, increasing the risk of errors or omissions in financial reporting and reducing the City’s ability to provide timely financial information,” auditors wrote.
The report went on to recommend the city “strengthen its reconciliation and financial close processes.”
“The City acknowledges this material weakness and recognizes the importance of timely reconciliations and completion of year-end closing procedures in supporting accurate financial reporting and an efficient audit process,” the report reads. “Efforts are underway to enhance internal procedures, improve oversight, and address remaining system-related challenges to support more consistent financial operations.”
Another weakness came from Grand Rapids’ decision to make debt payments toward the Acrisure Amphitheater and Amway Stadium on behalf of Kent County and the Convention Arena Authority. In doing so, the city failed to create a “receivable,” or a record of the roughly $52.7 million it must be reimbursed by the county.
Auditors acknowledged the “complex arrangements” behind the transaction, but called on the city to reevaluate similar deals to ensure compliance with regulations.
“The receivable has since been recorded, and the City has implemented measures to continue monitoring this balance as it increases over time to reflect the drawdown of bond proceeds,” auditors wrote. “The City remains committed to strengthening its financial reporting processes, maintaining accurate financial statements, and preventing recurrence of this condition.
Comptroller Max Frantz told The Grand Rapids Herald these oversights threaten public trust in the city’s management of its tax dollars and pose potential problems to future city development projects.
“The public deserves and should expect accounting and financial reporting that is both timely and accurate,” he wrote. “Grand Rapids has been managing more projects and a growing volume of accounting activity in recent years. Not only do financial controls and accounting governance have to keep pace with that growth but so do the resources and personnel that put them into practice.”
Frantz said the findings are especially concerning given the city’s ballooning budget and increased spending.
“Resource constraints impacting accounting and reconciliation of public money may not send the right signal about priorities when the city is carrying a surplus of money and increasing spending,” he added. “It’s reasonable for the public to expect that as city spending increases, so should our commitment to accurate accounting and strong financial controls – these should remain an unwavering priority.”
When reached for comment, a city spokesperson directed The Herald to a recording of a February City Commission meeting in which Plante Moran Principal Marie Stiegel explained the material weaknesses to the body. She explained that the city received an “unmodified clean opinion,” meaning that the city’s financial practices are in line with federal regulations.
This opinion signaled there were no internal errors in city finances other than the material weaknesses which require fixing. Also speaking was Plante Moran Partner Bill Brickey, who said the city would receive an award from the Michigan Government Financial Officers Association for “quality financial reporting.”
Deloitte, a widely recognized business management consultant firm, wrote in a February blog post that “few phrases in finance and accounting will make your heart race like the words material weakness.”
“More than just a minor headache, a material weakness can pose significant risk to a company’s reputation and investor confidence, which is why it demands quick action,” the post reads.
Write to jackson@grherald.com