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Independent auditors give Frostburg an unmodified opinion; single-audit finds clerical reimbursement deficiency
Summary
Hubert Michaels and Company presented the city’s annual audit, issued an unmodified opinion, and reported one significant deficiency on federal reimbursement paperwork; the firm also said it is exiting the audit business.
Keith Bridal, partner at Hubert Michaels and Company, presented Frostburg’s annual financial audit and told the council the firm issued an unmodified (formerly "unqualified") opinion on the city’s financial statements.
Bridal said the government‑wide statements show total assets of roughly $65 million including business‑type activities, and that governmental fund assets were about $31 million. He said the governmental activities’ change in net position was about $2.3 million for the year and the combined total change after business‑type activities was about $3.19 million.
Bridal described the firm’s work approach and explained the two bases of presentation used in municipal accounting (government‑wide accrual and current‑economic focused fund statements). He also reviewed the budget‑to‑actual reports and the proprietary‑fund results, noting the water fund reported net income and some other proprietary funds reported small losses after depreciation.
Because Frostburg expended more than $750,000 in federal funds during the fiscal year (ARPA plus additional CDBG and USDA funds), the city required a single audit. Bridal said auditors tested two major federal programs — the ARPA (COVID) funds and Community Development Block Grant (CDBG) — and found no material compliance issues for those programs.
The audit report did include one significant deficiency in internal control tied to a federal reimbursement request that contained clerical inaccuracies and led to a modest net understatement of $247; the auditors recommended strengthened review procedures to prevent similar errors.
Bridal also told the council that Hubert Michaels will stop performing audits in the area; this presentation will be his last formal audit presentation to the city. He thanked staff for cooperation and offered to assist with questions as the city secures a new auditor.
