Navasota council approves FY2024 audit; auditors issue clean opinion, flag control fixes

The Navasota City Council on a unanimous vote approved the annual financial report for the fiscal year ending Sept. 30, 2024, accepting auditors' findings and recommendations.

Auditor Louis Breedlove, senior audit manager with Brooks Watson, told the council "the city did receive an unmodified opinion," meaning auditors gave a clean opinion on the city's financial statements. Breedlove said timing issues tied to a staff change and a systems conversion delayed the audit but did not affect the opinion.

The audit showed several year-to-year fund changes and operating results: the general fund's fund balance rose about $399,000 for the year; the debt service fund decreased about $128,000; and consolidated special revenue funds increased about $297,000. Proprietary (utility) fund operating results included operating income figures the auditor summarized as roughly $1.2 million for water, $600,000 for sewer and $25,000 for gas; water's change in net position was reported at about $1.5 million, sewer about $511,000 and gas about $582,000. The city reported an unassigned fund balance at about 47% (the council's target is a minimum of 25%, or roughly 90 days of reserves).

Breedlove and Finance Director Heaven Dominguez described a single-audit requirement triggered by federal expenditures above the $750,000 threshold. The auditors also reported recommendations to formalize controls: a written policy and holder agreement for p-card (procurement card) users, consistent departmental sign-off and coding of card transactions before finance processes them, and consistent use of the city's purchase-order workflow in the new financial software.

Breedlove told councilors that auditors found a higher-than-expected number of year-end journal entries and classified that as a finding, noting those entries were cleanup and not the result of error. Dominguez and City Manager Robert Hemminger told councilors many of the recommended procedures already are being implemented since the audit period (which covered activity through Sept. 30, 2024).

After brief public questioning about audit communications and the audit schedule, Councilmember Mr. Gessner moved to approve the audit and Mr. Fultz seconded; the motion passed with all voting in favor.

Staff and the auditor said they expect the city to implement the recommended controls and that many items were already in progress at the staff level.