Heath council accepts FY 2024 comprehensive financial report after auditors give clean opinion

The Heath City Council on July 8 received and acknowledged the City of Heath’s Annual Comprehensive Financial Report for the fiscal year ending Sept. 30, 2024, after a presentation by its auditors and staff and a short round of council questions. The motion to receive and acknowledge the report passed unanimously.

City finance staff and the auditors told council the audit returned an unmodified opinion. “The audit received an unmodified opinion, which is a clean audit. No material misstatements were found,” said Jay Ayers, finance staff, summarizing the audit findings and staff’s action plan to address internal control items flagged by the auditors.

The audit firm Brooks & Watson, represented at the meeting by Austin Henderson, CPA, told council the engagement included planning, field work and concluding procedures and emphasized that audits are risk‑based, sampled reviews. Henderson said auditors look back at the fiscal year (in this case Oct. 2023–Sept. 2024) and focus on material items. He offered a frank aside about the timing of reviews: “Auditors come in after the battle’s over and shoot the wounded,” Henderson said.

Why it matters: the report gives the council and the public an audited view of city finances and identifies process improvements staff plan to implement. Staff described steps intended to reduce future auditor‑reliant adjustments and strengthen year‑end reconciliations.

Key details and findings presented at the meeting: - Audit result: unmodified opinion (clean audit) and no material misstatements reported. - Unspent bond proceeds: staff reviewed prior bond issuances and identified unspent proceeds; examples cited included roughly $1,000,000 associated with a 2017 issuance and about $259,000 associated with a 2019 issuance. Staff said they will implement a standard, regularly reconciled tracking schedule for bond‑funded projects (town center park, public safety building and public works facility were cited as examples). - Fund monitoring: of the city’s 21 funds, three showed negative balances during the period reviewed; staff proposed a minimal policy and monthly cash monitoring to prevent recurrence. - Fund balance and liquidity: the city reported an unassigned general fund balance of approximately $5.2 million, about 54% of annual general fund expenditures (roughly six months’ worth of spending), exceeding the GFOA baseline recommendation. - Revenue composition and recent movements: total assets exceeded liabilities by about $106 million, with an increase of roughly $6.9 million year over year; property taxes represent about 46% of governmental revenues, sales tax about 9% and grants/contributions about 20%. - Accounting changes: auditors noted a forthcoming change to compensated‑absence accounting that will require recognizing sick leave alongside vacation in government‑wide statements; staff said the change will increase the carried liability on those statements but will not affect fund accounting. Ayers said the city has not yet calculated the exact liability increase and will report it to council once calculated.

Council discussion focused on longer‑term revenue pressures and planning. Council members pressed staff on the effect of an aging population and the senior tax freeze on property tax revenue, the pace of new home construction (staff said fewer than 50–60 new houses per year recently), and the need for multi‑year financial planning. Ayers and staff said they will prepare longer‑range (10‑ to 20‑year) financial modeling to inform upcoming budget work.

Action taken: Councilman O'Malley moved to receive and acknowledge the FY 2024 Annual Comprehensive Financial Report; the motion was seconded and passed unanimously.

Next steps: staff said they will implement monthly bond and cash tracking, increase reporting cadence (monthly financial reports, quarterly investment reports) and include the compensated‑absence calculation in future year financials. Council members requested that the multi‑year financial model inform the FY 2025–26 budget process.