Audit identifies high-risk hinancial reporting issues for the Town of Huntsville

Huntsville's latest audit flagged high-risk financial reporting issues, including unrecorded asbestos-related retirement costs

Huntsville Council was notified about high-risk financial reporting issues related to the Town’s asset retirement obligations (ARO), during the July 28, 2026, meeting.

During its audit, BDO Canada LLP found the Town’s review did not adequately identify and measure all potential asset retirement obligations, particularly those that could arise from asbestos in Town-owned buildings.

According to the report, “It was noted that the analysis was not sufficient to effectively identify and quantify any asset retirement obligations that may exist. Notably, the scoping process failed to sufficiently address the likelihood of asbestos in Town buildings which would result in recognition of an Asset Retirement Obligation (ARO).”

As a result, BDO said it could not confirm that all of the Town's future asset retirement costs had been identified and recorded in the financial statements.

The audit also reported that the Town's investment in Lakeland Holding Ltd. had been accounted for incorrectly under Public Sector Accounting Standards (PSAS).

It indicated, “BDO noted that Town does not control Lakeland and therefore it should not be accounted for as a GBE [Government Business Enterprises] using the modified equity method. Under PSAS the investment is considered a portfolio investment and should be accounted for at cost.”

They added, “The prior year financial statements were restated to reflect the correct accounting treatment under PSAS.”

BDO noted that the Town will need to identify and quantify its AROs so the qualification can potentially be removed from a future audit.

Despite those findings, BDO reported no fraud affecting the Town and found no evidence of inappropriate management override of financial controls. The auditors also reviewed grant revenue and found it had been recognized appropriately.

The presentation also outlined new public sector accounting standards that municipalities will be required to implement beginning with fiscal years starting on or after April 1, 2026. The changes will affect the presentation of financial statements, require some prior-year figures to be restated and introduce new reporting requirements intended to improve transparency and comparability.