Audit finds improvements but flags $13.6M disputed liability with Fulton County and late filings

External auditors presented East Point—s fiscal 2023 audited financial statements and accompanying reports to council on Oct. 6, offering a clean audit opinion on the financial statements but identifying material weaknesses and management recommendations.

The audit team said overall net position rose year over year and the city received an unmodified ("clean") opinion on its GAAP financial statements. But auditors flagged two material weaknesses in the single-audit schedule: (1) material budget-control findings, including expenditures related to the Camp Creek Tax Allocation District (TAD) that were not formally amended into the budget (items identified included $5,521,000 for the Camp Creek TAD winding-down and $103,000 for the Corridors TAD), and (2) the city—s single-audit and federal reporting were not filed on time. Auditors said the FY2023 audit was substantially delayed and must be filed with the federal clearinghouse within required deadlines.

The audit presentation included a list of prior-year findings and the status of corrective action. Auditors said management had improved several items (adjusting-entries documentation, interfund transfers reporting, capital-asset tracking) and confirmed completion of many corrective steps. But they continued to recommend enhanced reconciliations, pooled-cash equity checks, better payroll-account controls (use an imprest model), and more active collections and lien processing for past-due water accounts.

A notably large item discussed at length was a disputed liability the auditors recorded for water and sewer services charged by Fulton County. Auditors reported a balance of roughly $13.6 million classified as a noncurrent, disputed liability in the water and sewer fund. City staff explained the dispute centers on charges Fulton County seeks for capital improvements and construction costs tied to historical agreements; the city is paying the operating-and-maintenance portion while negotiations continue over capital-related charges. The water and sewer director said the 50-year agreement with Fulton County expired in 2008 and the county is billing higher rates and capital charges that the city disputes; earlier city managers and attorneys have negotiated with the county and the city is pursuing resolution.

Auditors also reported a prior-period adjustment tied to capital-asset records and contract accounting that reduced enterprise net position; the city contracted an inventory specialist who found and recommended removing surplus or obsolete assets from the capital module. Auditors said management and the finance team performed extensive adjustments during the audit, requiring more than 100 correcting journal entries. The firm recommended that the city continue to invest in experienced finance personnel and external support to accelerate monthly close and audit readiness.

Ending — Council did not vote on formal action arising from the audit presentation, but members asked for the final, filed audit once it is submitted to the federal clearinghouse and requested follow-up on the Fulton County dispute and timing for the FY2024 audit. Auditors said they expect the 2024 audit work to begin and aimed to complete 2024 before year end; a new auditor firm (Marlon & Jenkins) was noted for work on future years.