External auditors give Jackson City an unmodified opinion but warn fund balance fell below policy
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Summary
James Vince, engagement partner at Mullen and Jenkins, told the Jackson City Audit Committee the firm issued an unmodified opinion on the 06/30/2024 financial statements but warned the city’s unassigned fund balance dipped below its 25% policy and that the city had about $3 million in expenditures over its adopted budget.
James Vince, engagement partner at regional firm Mullen and Jenkins, told the Jackson City Audit Committee the firm issued an unmodified opinion on the city’s 06/30/2024 financial statements but raised several concerns the committee should address.
“As your external auditor, we are independent of your management team … our objective in an audit is to issue an opinion as to whether or not the financial statements are materially correct as presented,” Vince said, describing the audit as a risk‑based, sampling process rather than an examination of every transaction.
Vince said the unmodified opinion depends in part on component units — specifically Jackson Energy and the Jackson Community Development Agency — receiving clean opinions from their separate auditors. He said the city had roughly $5.5 million in federal‑award expenditures tied largely to coronavirus state fiscal recovery funds (an ARPA bucket) and therefore required single‑audit testing. The auditors issued an unmodified opinion on that program but noted a couple of findings related to compliance and control that the firm will discuss further with staff.
The presentation highlighted a multi‑year decline in the city’s fund balance. At 06/30/2024 the auditors reported the unassigned portion of fund balance at about 23% of annual expenditures, below the city’s stated fund balance policy minimum of 25% and projected to remain below policy under the current 2025 budget. Vince told the committee that when reserves fall below policy “your internal policies should require you to put a plan in place” to restore the reserve level.
On budget performance, the auditors reported approximately $3,000,000 of expenditures over the originally adopted budget for the year; some of the gap was offset by higher‑than‑anticipated revenues, the auditors said. Vince also walked the committee through revenue trends, noting sales tax has been a growing and relied‑upon revenue stream while property tax revenues have remained broadly neutral because of rollback actions despite about a 30% increase in assessed values over several years.
Committee members asked clarifying questions about graphs and figures shown in the presentation. One member requested a consolidated tax revenue figure that would include toll/tax charges; Vince said he would attempt to provide that total in follow‑up materials.
Management agreed to the auditors’ proposed adjusting entries; Vince said those entries will be reflected in the city’s accounting system and in the 06/30/2024 financial statements. The audit committee chair said the committee will take the auditors’ recommendations into consideration and plan to bring specific suggestions to the December council agenda.
Next steps: auditors will provide follow‑up on outstanding items, including component‑unit opinions and the ARPA‑related findings; the committee plans to review corrections and consider formal recommendations at the December meeting.
