Auditor Tina Cannon said that increases the risk of “collusion, bias and favoritism” in the 180-person town.
She recommended Interlaken overhaul its procurement and hiring policies.
The audit, published Aug. 5, also says the town north of Midway could be out of compliance with federal Internal Revenue Code because it classifies certain roles as contractors, rather than employees.
The auditor’s office began looking into Interlaken after receiving a hotline complaint in June 2025. It reviewed town records dating from 2017 through January 2026 for the audit.
Mayor Greg Harrigan said the town will need at least 90 days to respond to some of Cannon’s findings and recommendations.
“Our town is so small,” he said. “It’s very hard for us to get contractors to bid on small projects up here, and people – they don’t really want to work with a teeny-tiny town. So, it’s been a challenge for us, but we obviously want to meet the requirements of the state.”
Under Utah law, governments must go through a public bidding process before awarding a contract. Cannon found that Interlaken has renewed the town administrator’s annual contract for a decade without following those rules.
The same is true for the public works manager’s contract, which was signed in 2024 and then renewed with little public vetting. The auditor also found a posting for the position was missing some required information, like the terms of the contract.
In both instances, Cannon said Interlaken may be using contracts for people who should be considered employees under federal tax law. She said misclassifying employees could have “significant employment tax implications.”
The auditor recommended Interlaken cancel its town administrator and public works manager contracts and go through the proper procurement process.
She also suggested the town reexamine the job descriptions and decide whether those individuals should be classified as employees, not independent contractors.
And she encouraged the town to adopt a formal procurement policy.
The audit also revealed problems with how the town manages infrastructure repair and other maintenance needs. Since 2023, it has hired a company owned by the public works manager for the tasks – but that work isn’t included in the public works contract and was never put out to bid.
Harrigan said the town will need at least 90 days to create a procurement policy. It will also rebid the contracts for the administrator and public works manager, plus a separate contract for excavation and utilities.
In a letter to the auditor, Harrigan said the town’s attorney believes the administrator and public works manager roles shouldn’t be reclassified as employees. The positions receive an hourly wage but no benefits, training or equipment.
Cannon disagreed.
“Our recommendation remains that the town consult with qualified legal counsel and carefully evaluate the positions,” she said.
The town’s attorney did not immediately respond to requests for comment.
