Rocky Mount audit: clean opinion, but auditors flag low fund balance and utility accounting problems

Auditors from Martin Jenkins told the Rocky Mount City Council at a May work session that they issued an unmodified (clean) opinion on the city’s fiscal year ended June 30, 2024, financial statements but identified several findings and financial-performance indicators that require management attention and a response to the North Carolina Local Government Commission.

The audit opinion matters because a clean opinion means the financial statements are presented, in all material respects, in accordance with generally accepted accounting principles; the nut of the auditors’ concerns is that some internal controls and accounting practices produced large audit adjustments and exposed the city to risks in utility and general fund reporting.

Tim Lyons, engagement partner for Martin Jenkins, said, “We did render an unmodified or clean opinion on the city's financial statements.” He also warned that the city’s unassigned general fund balance had fallen “quite significantly” and would prompt follow-up from the Local Government Commission (LGC). “The LGC will require a response from the city,” Lyons said, adding that the audit has already been submitted to the LGC and the commission will review and accept the audit or ask for clarifications.

Most important findings

- Fund balance and LGC reporting: The auditors reported the city’s unassigned general fund balance at about 6% of annual expenditures, down from the council’s 2015 fund-balance policy target of 10%. Lyons said the LGC uses a 25%…