Auditors give Delray Beach clean opinion; report flags pension gaps and software accounting change

CBIZ auditors told the Delray Beach City Commission on June 3 that the city's fiscal year 2024 financial statements received an unmodified ("clean") opinion and summarized the Annual Comprehensive Financial Report (ACFR) for the commission.

The auditors said unrestricted net position at September 30, 2024, was presented as a positive $86,300,000 and the city reported a positive change in net position of about $59,000,000 for the year. At the same time the General Fund showed a reduction in fund balance of about $5,300,000 at year end. Auditor Moises Arisa said one reason reported "other financing sources" of about $6,610,000 in the general fund relates to a recent Governmental Accounting Standards Board (GASB) requirement to capitalize certain subscription-based software arrangements rather than expense them immediately.

The ACFR includes detailed schedules and noted federal grant expenditures north of $4,400,000, and audit testing of major federal programs including the Coronavirus State and Local Fiscal Recovery Funds and the Homeland Security Disaster Grant public assistance program. CBIZ said it found no items meeting the Auditor General's threshold for reporting a deteriorating financial condition under the applicable rules.

The audit also drew attention to the city's retirement plans. Arisa and his team reviewed the schedules showing changes in total pension liabilities and plan fiduciary net position. For example, discussion at the meeting noted changes in the general employees' plan liability, and reported unfunded positions of roughly $41.3 million for the police plan and about $43.8 million for the fire plan (figures presented by the auditors and staff during the meeting). Commissioners pressed staff for clarity on how those liabilities are funded and how they affect long-term budgeting.

The ACFR contains a management discussion and analysis, statistical tables (including a 10-year property value history) and footnotes. Auditors said the management letter and financial condition memo are included in the report and that CBIZ will make itself available to answer follow-up questions.

Commissioners asked specific follow-ups about the composition of the reported other financing sources and the pension schedules; Arisa explained the subscription-based capitalization treatment, and staff and auditors agreed to provide additional detail if requested. The auditors also told the commission a payroll/time-and-attendance recommendation first raised in fiscal 2021 remains partly open but that most recommended actions have been implemented and the remaining item is expected to be completed by the end of calendar 2025.

Ending

City staff and the auditors said they will provide additional detail to commissioners on the items raised in Q&A. The ACFR and supporting schedules will be available to the public as part of the city's official audit submission and associated materials.