Winchester commissioners accept FY2024 audit; auditor warns of tightening budget

Winchester — The City Commission voted to accept the city's fiscal year 2024 audit after a presentation by Tom Sparks of Summers, McCreery & Sparks, who said the audit gave a clean opinion but flagged a tightening budget.

The auditor told commissioners the independent report "in our opinion, the financial statements referred above present fairly," language he explained denotes a clean audit with no findings of fraud or conditions warranting an adverse opinion. He urged closer month-to-month budget monitoring as new revenues are phased in.

Sparks highlighted several figures from the audit: cash and cash equivalents fell from nearly $11 million to about $5.4 million, and the unassigned fund balance decreased from roughly $7.3 million to $5.1 million. Revenues rose overall, the auditor said, by nearly $22 million year over year while expenditures increased about $3.5 million, driven largely by pay increases and higher intergovernmental spending. The audit showed the city's intergovernmental expenditures rose to about $2.1 million from roughly $1.0 million the prior year.

Why it matters: the auditor said those changes leave the city with a "very tight budget situation" for FY2025 until the new revenues the commission approved begin to be received. He recommended regular monitoring of budget-to-actuals and raised the city's continuing commitments such as multiple ongoing infrastructure projects recorded as construction-in-progress on the audit.

Supporting details and findings

- Construction-in-progress: the audit lists about $5.1 million already expended on active projects; when completed these will move to fixed assets, the auditor said. - Federal grants and ARPA: federal and state grant funds reported total about $1.9 million; roughly $1.5 million of that was ARPA money. A meeting participant noted about $300,000 remained obligated but not fully spent since June 30. - Budget timing: the audit shows a total net deficit increase (excess of expenditures over revenues) from about $3.8 million the prior year to about $5.3 million this year. - Audit findings: testing of cash disbursements found instances where purchase orders did not follow the city's internal controls and procedures; the auditors documented the condition, criteria, cause and recommendations in the report. The auditors also noted an absence of documentation showing publication of the tax rates in the local paper, which is required even though the minutes referenced the publication.

Commission response and next steps

Commissioners asked questions about transfers and intergovernmental requests, which the auditor said total about $708,000 in requests from roughly 29 local and quasi-governmental entities that the commission currently funds. Commissioners discussed the need to evaluate how much the city can continue to fund those requests under the tighter budget.

The commission moved to accept the audit as presented; the motion was made by Commissioner Cox and seconded by Commissioner Toole and the motion carried.

Ending

The auditor left commissioners with a recommendation to track the budget-to-actual monthly and said he was available by email for follow-up questions. Several commissioners noted new business activity in Winchester as a positive sign for future revenues but agreed the near-term budget will need close oversight.