Summary
This packet for the Leelanau Township Board consists of the independent auditor's report and management letter for the fiscal year ended March 31, 2026, prepared by UHY LLP (Cadillac, Michigan), along with the Township's Purchasing Policy (last updated February 10, 2026). The auditor issued an unmodified opinion on the financial statements but identified four material weaknesses in internal control and one instance of budget noncompliance. No disagreements with management arose during the audit.
Financial Summary
Total net position was $8,824,385, an increase of $386,417 for the year; unrestricted net position was $2,583,025. Combined governmental fund balances were $5,183,778, up $43,213, with $1,268,612 unassigned. General Fund balance rose $132,092 to $1,727,232. Fire/EMS Fund balance decreased $161,928 to $2,205,426. Facilities, Roads and Equipment Fund balance increased $143,890 to $969,982. Total revenues were $3,970,150 against expenses of $3,583,733. Property taxes were the largest revenue source at $3,315,369; public safety was the largest expense at $2,001,586.
Auditors noted material weaknesses including: reliance on external auditors for GAAP financial statement preparation; inadequate segregation of duties; untimely recording/processing of accounting data; and multiple auditor-proposed material journal entries. A compliance finding (2026-05) noted the General Fund, Police Fund, and Library Fund exceeded adopted budget appropriations by material amounts (e.g., Library Fund actual expenditures of $306,448 versus a $35,000 appropriation). Management's corrective action plan includes adopting an amended Library Fund budget at the next regular meeting and monthly budget monitoring.
Other findings included: purchases made before Board approval; untimely bank reconciliations; missing credit card receipts; insurance costs not properly spread between General and Fire Funds; two unpaid quarters of police contract services; unresolved status of the Trust and Agency bank account; unclear accounting history for the Cemetery Perpetual Care Fund (recommended Board consult its attorney and consider a resolution); HSA payroll tax treatment questions; a negative cash balance in the General Fund pooled checking account; and a 2024 delinquent special assessment tax payment incorrectly sent to the Village of Northport instead of the 2008 Debt Service Fund.
Capital asset activity included a $37,213 server, $61,457 in fire department turnout gear, a $341,127 ambulance, a $7,486 park trail, and $107,847 in Woosley Airport remodeling (construction in progress, with a remaining commitment of $24,113 against a $131,960 total approval). The Township previously approved a "sketer" brush truck for $325,282. Bonded debt outstanding was $305,465. Subsequent to year-end, the Township approved $60,000 for engineering work on the Cherry Home Subdivision road project.
Infrastructure Projects
The 2008 General Obligation Limited Tax Bonds relate to a sanitary sewer project in Northport, with the Township responsible for 19.9% of repayment and the Village of Northport responsible for the remaining 80.1%; final maturity is April 2028. The packet also notes Board approval, subsequent to year-end, of $60,000 in engineering costs for the Cherry Home Subdivision road project.
Other Business
The packet includes the Township's Purchasing Policy (updated February 10, 2026), which sets procurement thresholds: purchases under $1,500 require no purchase order; $1,500–$5,999 require a purchase order approved by the Township Supervisor; $6,000–$49,999 require three price quotations and Board approval if not budgeted; and $50,000 or more require formal competitive solicitation and Board of Trustees approval. The policy also addresses emergency purchases (capped at $14,999 without Board approval), sole source procurement, cooperative purchasing, professional services exemptions, conflict-of-interest rules (including a bar on current employees doing business with the Township), and bid protest/appeal procedures through the Township Supervisor.
Action Items
- Board to approve bills at each meeting, or at a special/next regular meeting if not approved timely.
- Township to complete monthly bank reconciliations within two weeks of month-end.
- Attach all credit card transaction receipts to monthly statements.
- Properly spread insurance expenses between the General and Fire Funds.
- Develop internal processes to ensure quarterly police contract payments are made.
- Resolve the Trust and Agency bank account issue (close it or obtain a checkbook for delinquent PPT disbursements).
- Board to consult its attorney regarding the Cemetery Perpetual Care Fund, including passing a resolution on future cemetery lot sale proceeds and researching prior years' interest earnings available for maintenance spending.
- Review payroll tax treatment of HSA contributions for accuracy.
- Address the General Fund's negative cash balance, including reallocating Michigan Class investments to the Fire and Facilities, Roads and Equipment Fund.
- Develop internal processes to prevent Township funds (e.g., special assessment payments) from being misdirected to other entities such as the Village of Northport.
- Township to adopt an amended Library Fund budget at its next regular monthly board meeting and monitor all fund budgets monthly.
- Township has hired an outside consulting firm (started May 2026) to assist the Clerk and Treasurer with payroll and recordkeeping.