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Gaithersburg posts clean audit for fiscal 2024; general fund balance up $4.1 million
Summary
The city's FY24 annual comprehensive financial report received an unmodified opinion from external auditors; revenues outperformed budget and expenses were below budget, producing a larger-than-expected general fund balance increase.
City Finance Director Janice Hartman and external audit partner Chris Lehman told the Mayor and Council on Jan. 6 that the city’s FY24 annual comprehensive financial report was completed on time and received an unmodified (clean) opinion.
Janice Hartman said: “The audit of the city's FY 24 annual comprehensive financial report ... was completed and filed with the state of Maryland by the October 31st deadline.” The city also must complete a federally required single audit for FY24 (because federal expenditures exceeded $750,000); auditors said the single audit work is in progress and is due by March 31, 2025.
Key financial results: In FY24 the general fund recorded an increase in fund balance of $4.1 million compared with a budgeted decrease of $10.8 million. Hartman said the improvement resulted from $9.8 million in revenue overages paired with $5.0 million in expense savings. Notable revenue overage contributors she cited included about $1.2 million in intergovernmental revenue, $600,000 in property tax revenue, $700,000 in amusement and hotel tax, and roughly $7.0 million in investment earnings. Expense savings included approximately $2.5 million in personnel costs tied to vacancies and lower overtime.
Audit opinion and internal controls: Chris Lehman, the city’s audit partner from SBE & Company, said the audit produced an unmodified opinion, indicating the financial statements were “reasonably free of material misstatement.” Lehman told council members the auditors identified no material weaknesses or instances of fraud and that there were no significant proposed journal entries. “We issued what’s termed an unmodified opinion — that’s a clean opinion,” he said.
Recognition: Janice Hartman noted the city received the Government Finance Officers Association (GFOA) Certificate of Achievement for Excellence in Financial Reporting for FY23, the city’s 46th consecutive year to receive that recognition; the FY24 report has been submitted for consideration.
Why it matters: The unmodified opinion and stronger-than-expected fund balance provide the city with more flexibility for capital projects and reserves than what was assumed in the FY24 budget. The auditors said the city’s finance control environment is strong and well-documented.
Ending: Auditors said they expect to complete the single audit for federal awards before the March 31 deadline and will report results to the council when complete.
