City audit shows clean opinion, $12.2 million net position increase and $9M deferred outflow for college agreement

Mister Avery, the external auditor, told the Enterprise City Council on July 15 that the city's fiscal-year 2024 financial statements received an unmodified audit opinion and that the auditors reported zero findings. The audit covered the primary government's governmental and business-type activities and included discretely presented component units such as the Industrial Development Board, the city Board of Education and the library enterprise.

The auditor highlighted several financial results. On a full-accrual basis, total assets for governmental activities were reported at nearly $172 million and just under $76 million for business-type activities as of Sept. 30, 2024. The city recorded non-depreciable capital assets of about $42.0 million — roughly $38.5 million of that was construction in progress for projects including parks and recreation, city hall renovation, an airport hangar and streets work. Investment earnings for the governmental activities totaled about $2.9 million for the year. The change in net position for governmental activities was about $8.6 million and for business-type activities about $3.6 million, a combined increase of roughly $12.2 million for the primary government.

A new item in the fiscal 2024 statements is a $9 million deferred outflow and a corresponding liability tied to an economic development agreement with Enterprise State Community College. The auditor said the agreement, originally executed in October 2022 for $10 million payable over 20 years, only became an obligation of the city in FY2024 after required conditions were met; the deferred outflow and liability will be reduced at $500,000 per year over the remaining term.

On a fund basis, the general fund's total fund balance at Sept. 30, 2024, was just under $35 million, and the unassigned fund balance was approximately $13.0 million. The auditor noted that the Government Finance Officers Association's (GFOA) guideline for a city of this size would be about two months of operating expenditures (approximately $8 million for FY24), so the city exceeds that benchmark on the unassigned balance. The audit also included single-audit reporting for federal awards and the auditor reported no findings on major federal programs.

Council members and the mayor praised the finance team for the clean report. Mayor Mary Cooper and multiple council members credited the finance office for stronger internal controls and improved reporting, and the council acknowledged the statements and the supporting information the auditor presented. The auditor and council discussed that the large capital-project spending drives fund-level deficits while the overall net position remains positive when assets and liabilities are measured on the full-accrual basis.

No formal council action on the audit was recorded in the transcript of the meeting; the presentation concluded and councilmembers asked follow-up questions about accruals, the timing of bond proceeds and the fund-basis presentation.

The audit report pages referenced by the auditor include long-form note disclosures (pages 40'094 in the bound report), schedules for pension and OPEB required supplementary information, the schedule of expenditures of federal awards, and the independent auditor's report on internal control (which contained no reportable deficiencies this year). The auditor thanked the finance staff for addressing prior-year findings and for providing required communications and management representation letters to the audit team.

Looking forward, the auditor noted ongoing capital projects and commitments at Sept. 30, 2024, and the council discussed the effects of bond proceeds and capital outlays on fund balances. Council members expressed satisfaction that investment earnings on unspent bond proceeds had helped offset debt interest costs in recent years.