County auditor issues unmodified opinion on ACFR; single audit clean with one federal schedule finding

External auditors told the Mendocino County Board of Supervisors that they issued an unmodified opinion on the county's Annual Comprehensive Financial Report (ACFR) and issued unmodified opinions on compliance for the major federal programs tested in the single audit.

At a workshop presentation, auditors said the unmodified—or "clean"—opinion means the financial statements are, "materially free from error or misstatement," and that auditors would also issue the required reports on internal control and compliance under Government Auditing Standards.

The auditors reported one material finding tied to the county's Schedule of Expenditures of Federal Awards. According to the presentation, auditors identified a material adjustment to federal expenditures reported for a disaster grants program and recommended the county seek additional training on that grant's specific reporting requirements.

Auditors described their four-stage audit approach—planning, systems evaluation, testing and analysis, and reporting—and said they completed bank confirmations, account analyses and internal-controls testing. They also said they issued in-relation-to opinions on supplementary information such as the Schedule of Expenditures of Federal Awards and the combining fund statements.

County staff and board members discussed timing and the audit workflow. Auditor staff said the county submitted final materials by late December to meet the Government Finance Officers Association submission deadline. County officials noted the audit reflects about a six-month effort by departments to close the fiscal year and prepare the trial balance, and they thanked departments for timely cooperation.

Board members and county leaders also discussed the ACFR's closing results. County staff said the general fund will show a carryforward of a little over $11 million at the end of the fiscal year; the board heard an early notice that staff will return in February with a consent item to transfer $7 million of that carryforward to cover a behavioral-health wing of the county jail. County leaders said the transfer would come from the general fund rather than previously-budgeted Measure B funds, which were not tapped because of timing.

The auditors identified three accounting estimates they considered significant to the financial statements: claims liability (third-party actuarial reports), net pension liability (actuarial reports) and the solid-waste landfill closure/postclosure liability (engineering estimates approved by the state). Auditors reported no disagreements with management, no consultations with other accountants, and no matters of fraud or legal acts identified during the audit.

The auditors noted a new Governmental Accounting Standards Board standard (GASB Statement No. 101 on compensated absences) effective for 2025 that could change how compensated absences are calculated going forward; county staff said they were already monitoring the update.

Ending: County staff and the audit team said they will present more detail, including required communications to governance, in board materials and that staff will return with the February consent item and any follow-up required by the audit finding.