Reading’s general fund shows a deficit for the first time in six years, the city’s external audit revealed.
City Council heard an update on the 2024 external audit Monday at its committee of the whole meeting.
City Auditor Maria Rodriguez reported that preliminary figures from the independent audit by Herbein + Company indicate a $1.94 million deficit in the general fund for 2024, leaving a total fund balance of $51.99 million.
The city had last recorded a general fund deficit in 2018, when it was about $2 million, she said.
The city continues to meet its fund balance policy, which requires maintaining reserves equal to at least 20% of the annual general fund budget, or a minimum of $22 million, to cover operating costs and pension contributions, she noted.
Rodriguez said the auditors were pleased with the city’s financial management and cooperation throughout the audit.
“The audit process went well,” she said, noting the independent auditors commended the city comptroller, accounting department and her office for their cooperation and accuracy.
The draft audit report is expected to be presented publicly at City Council’s next regular meeting, she noted.
Maria Rodriguez READING EAGLE
In addition to the external audit, Rodriguez presented the internal audit of the city’s credit card use for the second quarter of 2025.
The review covered 26 active cards and 605 transactions totaling $170,509, about $26,000 more than in the first quarter.
Rodriguez said her office found that 96 transactions exceeded the $500 single-purchase limit, many related to travel and training expenses.
She recommended the city implement a formal expenditure authorization form for purchases over that threshold and update its purchasing card policy, which has not been revised since 2013.
Her report also found continued issues with missing receipts and sales tax payments.
Eight employees exceeded federal per-diem limits on travel expenses, and 83 transactions included sales tax charges totaling $1,130, despite the city’s tax-exempt status.
Rodriguez recommended stronger oversight, additional training and clearer policies to ensure compliance.
City Managing Director Jack Gombach said the administration is already addressing several of those concerns through an update of the city’s employee handbook, which will include new financial control measures.
The project has been underway for several months with a goal of completion before the holidays, he noted.
“There’s a particular focus on financial controls,” Gombach said, adding that the updates incorporate the auditor’s recommendations and other items identified throughout the year.
Gombach said internal training sessions are planned to improve compliance and accountability across departments.
Rodriguez commended the accounting staff for being responsive during the internal audit and noted that recurring findings make policy revisions increasingly important.
“We can see that the same findings continue from one quarter to another,” she said. “I believe the policy should be revised and updated.”
Council members thanked Rodriguez for her report, saying they look forward to reviewing the completed external audit later this month.