Newport News receives clean independent audit for fiscal year 2024; no findings reported

City Manager Alan and Newport News finance officials told the City Council at its Dec. 10 work session that the city's independent audit of fiscal year 2024 resulted in an unmodified opinion and no findings.

The auditors' report, presented by Malef Sheth, audit partner with Terry Becker, concluded the financial statements "fairly present" the city's financial position in accordance with generally accepted accounting principles and provided what Sheth described as "an unmodified opinion" ' the highest level of assurance auditors provide. Virginia Lovell, finance director, said the finance department also produced a condensed Popular Annual Financial Report intended to make the accounting more accessible to residents.

The unmodified opinion followed months of testing across city records. Lovell told council staff processed about 5,000 journal entries, 3,000 purchase orders, 50,000 checks, 7,000 employee pay changes and nearly 200,000 paychecks that were within the audit's sampling scope. She said staff prepared an Annual Comprehensive Financial Report of more than 200 pages, plus the shorter PAFR that was distributed to council seating.

Sheth said auditors tested both financial statement balances and federal-award compliance under the single-audit requirements. "It's an unmodified opinion on the financial statements," Sheth said, adding the single-audit compliance testing identified no instances of noncompliance. He said the auditors tested six federal programs and noted the city receives funds from multiple federal agencies across roughly 30 programs.

Auditors reported no material weaknesses, no significant deficiencies, no instances of fraud identified during the audit and no going-concern matters to bring to the council's attention. Sheth noted that prior compliance findings related to Medicaid had been resolved.

Lovell thanked finance staff by name for coordinating the audit and producing both the ACFR and the PAFR. "The PAFR is a condensed and user friendly version of the ACFR," Lovell said. Controller Kelsey Theiss and financial reporting manager Michael Yankowski were singled out for their roles in the audit coordination.

Sheth also flagged upcoming accounting changes the city should expect: "101 is gonna be implemented next year. It relates to compensated absences," he said, and noted additional GASB items will follow. He said auditors will work with management on those forthcoming adoptions.

Council members asked a brief set of follow-up questions about internal controls and the scope of auditor testing. Sheth and Lovell described the audit's internal-control testing and said auditors would report any control issues that rose to the level of a significant deficiency or material weakness to management and the council.

The presentation concluded without any findings or recommended audit adjustments and with auditors' affirmation of independence and completion of required communications under government auditing standards.