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City auditor gives Daytona Beach Shores clean opinion, flags single significant deficiency
Summary
External auditors gave the city an unmodified opinion on its financial statements for the year ended Sept. 30, 2024, but reported one significant deficiency tied to a sewer fund accrual reconciliation; no instances of noncompliance were reported.
James Malloryn, representing James Moore & Company, told the Daytona Beach Shores City Commission that the firm issued an unmodified opinion on the city's financial statements for the year ended Sept. 30, 2024.
"We have our opinion on your financial statements which is an unmodified opinion," Malloryn said during the presentation, noting the firm also examined internal controls and compliance under government auditing standards.
Malloryn said auditors found no material weaknesses in internal control but did identify one finding classified as a significant deficiency. That finding related to reconciliation of account balances and a missed accrued expense at year-end in the sewer fund. The management letter required by the Florida Auditor General included the city's response to that finding, he said.
The auditor reviewed several other matters in the presentation. Malloryn reported the city holds roughly $27 million in U.S. Treasury notes that generated about $1.6 million in investment income for the year, up from about $1.1 million the prior year. He said the city's unassigned general fund balance and fund-balance policy place it at about the equivalent of more than one year of typical expenditures, a level some local officials consider conservative given the city's coastal location and hurricane exposure.
On pension and postretirement liabilities, Malloryn explained Daytona Beach Shores participates in the Florida Retirement System (FRS) and the health insurance subsidy (HIS) program and summarized funding differences between the defined-benefit plan and the pay-as-you-go HIS portion.
Commissioners asked whether the city should seek outside assistance preparing for potential future financial stress. Malloryn suggested working with city finance staff first and said James Moore would participate if the commission wished.
The presentation concluded with congratulations for meeting the Florida investment statute requirements and a recommendation to monitor the single significant deficiency and the sewer-fund reconciliations.
The commission did not take formal action on the audit beyond receiving the report.
