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Signal Mountain auditor reports overall profit but issues adverse opinions, lists multiple control findings
Summary
The town auditor presented the fiscal year 2023–24 report showing overall government-wide profit and strong liquidity, while issuing adverse opinions on some funds and listing repeated internal-control findings; the town manager and council outlined corrective actions and a plan to submit the audit to the state comptroller.
Jennifer Waycaster, the town uditor with Waycaster LLC, told the Signal Mountain Town Council at its March 24 work session that the town—inished the fiscal year ending June 30, 2024, with a government-wide increase in net position of about $2.1 million and an ending net position of roughly $29.4 million.
Waycaster said the audit showed healthy liquidity in operating funds: cash and investments totaled roughly $4.6 million each and the town reported about $6.2 million in property taxes receivable for the coming year. The general fund produced an operating surplus of about $428,000 and an ending general fund balance of approximately $6.5 million, which Waycaster said is roughly 74% of annual expenditures.
At the same time, Waycaster said, the audit included adverse opinions for the general fund and the water fund because of material misstatements in certain cash line items and unresolved interfund loan balances. "The general fund and the water fund were given an adverse opinion," she said, attributing the issues to errors that emerged at fiscal year end amid a midyear software conversion and key staff turnover.
The auditor reviewed the formal findings (beginning on the audit—indings pages) and told council members the report lists repeated and new deficiencies: budgeted expenditures in excess of appropriation, a deficit restricted fund balance in State Street Aid (reduced from $481,000 last year to about $190,000 this audit), failures to reconcile subsidiary ledgers and close accounting records within 60 days, failure to formally declare surplus property before disposal, untimely tax remittances, and errors in updating some water rates.
Town Manager Matt (first name used in the meeting transcript) said the report includes a management corrective-action plan that details how the town intends to address the findings and that staff already have begun implementing corrections. "After the findings, these next few pages are management's corrective action plan," Waycaster said; the plan will be filed with the state comptroller when the signed management letter is returned.
Council members and staff sought to put the technical findings in context for residents. Mayor Elizabeth Baker and Council Member Andrew Garner emphasized that the town ppears solvent and liquid despite the adverse opinions on individual funds. "You're definitely making profit, you definitely have enough money to cover everything, and you've got very liquid assets," Waycaster said.
Matt said the town will post the signed audit and management letter to the state comptroller's website and make the documents available to residents. Councilors stressed that many of the problems dated to staffing and leadership changes during the audited year and that new finance leadership should help prevent recurrence.
The town and auditor did not report any formal penalties arising from the findings; Waycaster said the typical next step is the comptroller's letter that requires the town to document corrective actions.
