Agenda Item:
title
Presentation and Acceptance of the Draft Annual Comprehensive Financial Report and Management Letter from Lauterbach & Amen, LLP for the Calendar Year ending December 31, 2025memo
Staff Contact: Nikki Larson, Deputy Village Manager/Chief Financial Officer, Margaret Schwarz, Assistant Chief Financial Officer
Purpose and Actions Requested: Presentation and Acceptance of the Draft Annual Comprehensive Financial Report and Management Letter from Lauterbach & Amen, LLP for the Calendar Year ending December 31, 2025
Budget Impact: Budgeted
Strategic Priority Addressed: Workplace of Excellence, Reliable Infrastructure, Economic Vitality, Community Resilience
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BACKGROUND AND ANALYSIS
The Village's audit firm, Lauterbach & Amen LLP, has completed the Draft Calendar Year 2025 Annual Comprehensive Financial Report (ACFR), which can be found on the Village's transparency portal: https://cms6.revize.com/revize/glencoe/government/transparency_portal.php#undefined
The audit remains in draft form because the Illinois Municipal Retirement Fund (IMRF) is in the process of updating its financial reporting information for the Village, as well as for other participating municipalities. This matter is not unique to the Village of Glencoe and is affecting multiple IMRF clients.
The auditing process began in the last weeks of 2025 when Village and audit staff set forth a timeline for completing the audit, continued with preliminary fieldwork in early January and final fieldwork at the end of February and early March. The process culminates in Village Board acceptance of the annual financial report at a public meeting on June 18, 2026.
This was the 19th year that Lauterbach & Amen LLP conducted the annual audit for the Village, and their current contract was renewed following a competitive bidding process four years ago. Overall, the report provides a great deal of information about the Village, its financial condition and the sound financial policies that govern the use of funds appropriated by the Village Board. Included in the document is a report from the auditors expressing their opinion that the report fairly presents the financial condition of the Village as of December 31, 2025 and is in conformity with accounting principles generally accepted in the United States. For the last 40 years, the Village has received the Certificate of Achievement for Excellence in Financial Reporting from the Government Finance Officers Association of United States and Canada (GFOA). Staff anticipates that this document will also receive that award.
The draft annual financial report includes the unqualified opinion of the auditor. An unqualified opinion is the best opinion possible. Representatives from Lauterbach & Amen will be in attendance on June 16 to present the report to the Finance Committee and June 18 to present to the entire Village Board.
As of December 31, 2025, the draft ACFR reflects the Village's net position as $74.6 million, representing an increase of $2.0 million over the prior year. This increase is primarily driven by:
* Revenues in excess of budget in both the Water and Golf Funds;
* Several large capital expenditures that were delayed or deferred;
* A transfer of assets to the Golf Club Fund for the construction in progress related to the Glencoe Golf Club Clubhouse project.
It is also important to note that most net assets are invested in capital infrastructure and are not readily expendable funds.
The following table shows the unassigned ending balances since Calendar Year 2021 of the Village's operating funds (General Fund, Water Fund and the Glencoe Golf Club). Since Calendar Year 2021 the unassigned fund balance in the General Fund has grown from $11,052,844 to $14,042,105, an increase of $2,989,261.
Unassigned Fund Balance - Operating Funds
Ending Balance
Ending Balance
Ending Balance
Ending Balance
Ending Balance
Fund
12/31/2021
12/31/2022
12/31/2023
12/31/2024
12/31/2025
General Fund
11,052,844
13,631,635
15,125,361
15,848,206
14,042,105
Water Fund
3,219,092
4,585,565
7,223,871
4,311,007
4,994,330
Golf Club Fund
911,480
1,433,387
2,584,166
3,397,383
3,605,778
TOTAL
15,183,416
19,650,587
24,933,398
23,556,596
22,642,213
$ Change
3,494,461
4,467,171
5,282,811
1,376,802
914,383
% Change
29.90%
29.42%
26.88%
-5.52%
-33.59%
The General Fund ending balance has decreased from 7.2 months of operations in Calendar Year 2020 to 6.2 months in Calendar Year 2025. This factor represents how long the Village could operate if all General Fund revenue were to stop. The following table provides information about the change in ending fund balances from Calendar Year 2020 as compared to Calendar Year 2025.
Unassigned Fund Balance Percentage - Current and Five Years Ago
Fund
Ending Balance 2/29/2020
FY 2021 Operating Exp.
Fund Balance as a % of Expense
Ending Balance 12/31/2025
CY 2025 Operating Expense
Fund Balance as a % of Expense
General Fund
10,025,067
16,750,531
59.85%
14,042,105
27,607,282
50.86%
Water Fund
1,770,475
1,806,021
98.03%
4,994,330
3,998,403
124.91%
Golf Club Fund
-106,587
1,376,467
-7.74%
3,605,778
2,865,373
125.84%
TOTAL
11,688,955
19,933,019
58.64%
22,642,213
34,471,058
65.68%
Other Communications:
Attached to this memorandum is the draft Management Letter from the Village's auditors. Below are descriptions of the documents the auditors provide with the audit report:
Draft Management Letter - A draft letter including any comments or suggestions from auditors that arose during the audit. There is one general comment this year regarding IT Security Awareness and Monitoring of Emerging Risks. The auditors noted the increasing importance of information technology (IT) security for local governments. There was not a specific security breach incident that was identified during the audit; the auditors noted increased risks to local governments in numerous areas of IT security.
* Ransomware and Phishing Attacks - Increasingly targeted at local governments due to limited IT staffing and valuable public data.
* Multi-Factor Authentication (MFA) - This is now considered a minimum standard of protection for access to email, financial systems and remote logins.
* Vendor and Third-Party Risk - Cloud service providers, software vendors, and contractors may present risks if not adequately monitored.
* Data Backup and Recovery - Secure, tested backups are critical to minimize downtime and financial loss in the event of an incident.
* Staff Awareness and Training - Many breaches in local government occur due to human error; regular training and simulated testing can help reduce exposure.
The recommendation from the auditors to the Village is to continue to increase awareness around IT security issues by:
* Engaging in ongoing monitoring or cyber security trends affecting local governments.
* Incorporating regular staff training on phishing and other social engineering tactics.
* Periodically reviewing policies for password strength, MFA, and incident response.
* Ensuring vendor contracts address security standards and data protection.
* Testing data backup and recovery plans on at least an annual basis.
By increasing awareness and preparedness, the Village can reduce the likelihood of security incidents,
protect sensitive constituent and financial data and help to ensure continuity of operations.
Representation Letter - This is a letter to the auditors making representations about Village duties, responsibilities and acknowledgements related to the December 31, 2025 financial position of the Village. This letter will not be provided until the audit is finalized.
At the time of this report, the Calendar Year 2025 Popular Annual Financial Report (PAFR) remains in draft form and will be presented later. Both staff and representatives from Lauterbach and Amen will be available at the meeting to answer questions.
RECOMMENDATION
Staff recommends the Board review and discuss the Draft Calendar Year 2025 Annual Comprehensive Financial Report and Management Letter.
ATTACHMENTS
1. CY 2025 Draft Management Letter