External auditor issues unmodified opinion for Athens-Clarke County, flags declining general fund balance and control weaknesses to address

Sam Latimer, the audit partner on Athens-Clarke County's engagement, told the commission at its February work session that the county's external audit resulted in an unmodified opinion on the financial statements and an unmodified report on federal expenditures.

"We issued the report before Christmas," Latimer said, and added that auditors found "no material weaknesses, no significant deficiencies" and no material noncompliance in the reports issued under Government Auditing Standards and the Uniform Guidance.

The audit presentation also flagged a downward trend in the county's general fund balance. Latimer said the ratio of fund balance to expenditures and transfers fell from about 32% in the prior year to about 22% in the most recent year. He noted the county's fiscal policy target of 16.67% (two months) remains met but pointed out that roughly 8 percentage points of the fund balance are already assigned to next year nd therefore effectively committed for projected FY2025 spending.

Latimer and finance staff discussed the drivers of the change. The audit showed large transfers out of the general fund for capital projects: transfers totaled roughly $7.5 million in 2022, about $14 million in 2023 and about $26 million in 2024, with prior-year transfers near $10 million and the most recent year about $21 million. Latimer and Mr. Holden of the finance department identified specific transfers, including a $4,000,000 transfer from the general fund to the capital projects fund for the purchase referenced in the presentation as "440 College F" and about $3,000,000 for fire equipment.

The auditors also reported positive budget-to-actual performance: general fund revenues were higher than budgeted (budgeted about $168,000,000 versus actual about $181,000,000) and general fund expenditures were about $163,000,000 (about 99.6% of budget). Latimer noted a roughly $2,300,000 increase in personal services driven by filling vacancies and overtime in public safety.

On internal controls the audit found no matters reaching the level of reportable findings, but Latimer listed a set of repeat comments and opportunities for improvement. The recurring issue most emphasized was segregation of duties in several constitutional offices: the tax commission/probate function and some court offices have the same individual handling custody of assets, cash disbursement or receipt transactions and bank reconciliations. Latimer said such patterns are common in smaller jurisdictions but recommended management perform a cost-benefit analysis and, where feasible, add mitigating controls or staff support.

Other auditor recommendations and test results cited in the presentation included: delays in depositing receipts (auditor suggests weekly deposits and a seven-day target during normal operations); missing activity in an online cash bond account after an employee departed in April 2024; inventory-count discrepancies (12 of 100 items counted had quantity discrepancies and one had a price discrepancy); and documentation gaps for manual journal entries (3 of 30 lacked supporting documentation) and for evidence of approval (14 entries lacked approval evidence, distributed across municipal court (4), the tax commission (4), sheriff's office (3), property tax area (2) and probate court (1)).

Latimer also reported that customer-account adjustments lacked complete supporting paperwork in testing: 6 of 30 adjustments had no customer request on file and 5 of 30 lacked a confirmation letter from the customer. He recommended a formal documented approval process for water-account adjustments and similar customer-facing changes.

Commissioners asked several follow-up questions during the presentation. One request from the commission was for staff to provide a longer historical trend of fund balances (back to about 2015) so the body can better assess multi-year patterns; the finance team agreed to supply that information. Commissioners also raised the recurring concern that reimbursements to nonprofits have at times been delayed; Latimer said that while his team's audit did not find clear evidence of systemic delayed payments beyond cases where the nonprofit lacked required documentation, the Housing and Community Development (HCD) audit scheduled in the next audit cycle will look specifically at that department and should provide more detail.

Latimer closed by reminding the commission that GASB accounting changes will affect future financial statements: finance staff implemented GASB 100 this year and the auditor highlighted that GASB reporting changes (for example, future compensated-absence guidance) may require retroactive restatements and changes to liability reporting.

The auditors said they will follow up on the items discussed when they return for the next audit cycle and will report on the status of the comments.

Ending: The audit presentation left the county with an unmodified opinion and several action items for management: evaluate and document segregation-of-duties risk and mitigations, tighten documentation and approval processes for manual entries and account adjustments, improve timeliness of cash deposits, and provide the commission with a multi-year fund-balance trend and updates from the upcoming HCD audit.