City presents FY2024 financial results; outside auditors give clean opinion but flag control weaknesses

Wilmington — The city said its finances strengthened in fiscal 2024, but outside auditors urged continued fixes to internal controls.

Brett Taylor, director of finance, told the Finance and Economic Development Committee that the FY2024 Annual Comprehensive Financial Report (ACFR) shows a general fund balance of $110.3 million, up about $13.5 million from FY2023, and a water/sewer net position of approximately $211 million. Taylor said the city "run[s] approximately 433,000,000 through our system," and cautioned that a notable portion of the general fund balance reflects non-liquid items such as $29.4 million in accounts receivable and $17 million in bond-bill proceeds earmarked for community programs.

The report and presentation emphasized that the fund balance includes a budget reserve of $19.4 million required by city code and a tax-stabilization reserve that officials said should not be treated as fully liquid cash. Taylor explained the difference between book assets and cash, noting the city ended the year with about $86 million in cash and cash equivalents at the balance-sheet date but that other receivables and due-from amounts reduce immediately available liquidity.

Auditors from Belfant, Lyons & Schumann said they completed the financial audit and issued an unmodified (clean) opinion on the city's financial statements. Auditor George Veneras told the committee the independent audit concluded "in our opinion that your financial statements... are fairly stated," meaning the statements can be relied on for decision-making and public reporting. The auditors also said the federal single-audit report (the uniform guidance audit of federal programs) remains in progress and is expected by the end of February.

Despite the clean opinion, the auditors reported five internal-control findings: one material weakness related to the year-end financial reporting close and four significant deficiencies. The material weakness reflects a need for improvement in the close process; auditors said 10 material adjusting entries were required this year (down from 44 the previous year), a marked improvement but still evidence of control gaps. The significant deficiencies included: HR system super-user access that creates limited audit trails, time-card approval and payroll controls, repeat issues with bank reconciliations (reduced from prior year after mid-year fixes), and underbilling in police and fire extra-duty staffing (about $500,000 reported as not fully billed in FY2024).

Taylor and auditors said the city has taken steps to address many issues: management initiated monthly soft closes to catch adjustments earlier, finance is improving procedures for bank reconciliations, and the police and fire departments have contracted an outside vendor in FY2025 to manage scheduling, billing and collections for extra-duty services. Taylor said technology improvements are planned, including a future HR system upgrade as part of a multi-year capital program.

On federal funding, auditors reported the city spent about $27 million in federal awards in FY2024 across four major programs, including HOME, Coronavirus recovery funds, the Clean Water State Revolving Fund capitalization grant, and the Emergency Solutions Grant. The auditors said the single-audit report for those programs was pending at the time of the committee meeting.

Why it matters: The ACFR is the authoritative, audited snapshot of the city’s fiscal condition; the clean audit opinion is important for bond-rating agencies and creditors, but the control findings show the city must keep investing in operational and technological fixes to reduce audit adjustments and strengthen ongoing financial transparency.

Taylor and the auditors invited committee members and the public to review the full ACFR posted on the finance website; Taylor said printed copies will be delivered to council offices in the coming weeks.

Reuters-style ending note: The auditors also summarized upcoming Governmental Accounting Standards Board (GASB) changes that will affect presentation and note disclosures in future years, including a FY2026 effective date for one prominent change affecting budget-to-actual reporting placement.