Orange County auditors issue clean opinions but flag material weaknesses; commissioners approve contract amendment

Auditors presented Orange County's fiscal year 2024 financial and single-audit results to the Board of County Commissioners, delivering unmodified (clean) opinions on the county's financial statements and federal and state single-audit reports while documenting several material weaknesses in accounting and reconciliation processes.

Leanne Bagasala, audit director at Moxdens and Jenkins, told the board the firm issued four clean opinions — on the basic financial statements, the Yellow Book report on government auditing standards, the federal single audit and the state single-audit report — but identified material weaknesses and required audit adjustments that delayed finalization of the statements.

“We issued an unmodified opinion or a clean audit opinion,” Bagasala said. She and audit manager Chad Jackson described a software issue that produced one-sided posting errors and late reconciliations; auditors posted approximately $1.7 million in trial-balance entries to correct bank-reconciliation errors and about $900,000 in beginning-balance adjustments tied to erroneous journal postings. Auditors also recorded roughly $6.3 million in adjustments related to debt accounting and $1.1 million to capital assets after testing.

County finance staff described steps already taken to resolve the system issues and to strengthen oversight. Gary Donaldson, county finance leadership present during the presentation, said corrective actions and additional review procedures are in place and that the county will provide periodic updates to commissioners.

Auditors also noted a compliance finding for the Section 8 housing program’s required HUD report, which was late in 2023 due to turnover; county staff submitted the missing report and said they will institute a checklist to ensure timely filings going forward.

During discussion, commissioners pressed for clarity that the audit adjustments reflected accounting and reconciliation corrections, not missing funds. Commissioner McKee asked for stronger management oversight; Bagasala and county staff emphasized the issues were process and system related and not indicative of theft or missing cash.

The board then approved an amendment to the county’s audit services contract to cover additional audit time needed because of the reconciliations and prior-period adjustments. The motion carried 7-0.

The auditors also highlighted several near-term GASB standards the county will need to implement, including GASB 101 on compensated absences (effective for year ending June 30, 2025) and GASB 103 (effective June 30, 2026), and offered training resources for county staff.

The county manager and finance staff said they will provide commissioners the corrective-action plan already included in the audit report and periodic progress updates to the Local Government Commission as required by state oversight rules.

Auditors recommended procedural and technical changes to the financial-close process to prevent future material adjustments and to reduce audit delay; county staff said they have begun implementing those steps.