External auditors give Hampton a clean opinion; city posts modest general fund surplus
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Summary
External auditors issued an unmodified (clean) opinion on Hampton's fiscal 2024 financial statements and single-audit of federal programs. Finance Director Carl Daughtry reported a roughly $2.9 million excess of revenues over expenditures for the general fund and highlighted interest income, delinquent personal property collections and business license receipts as key drivers.
Laura Harden, the engagement director for the city's external auditor, told Hampton City Council that the audit of the financial statements for the fiscal year ending June 30, 2024, resulted in an "unmodified opinion," the firm's highest level of assurance. Harden said auditors also issued an unmodified single-audit opinion on compliance for major federal programs and identified no material weaknesses in internal control or reportable noncompliance.
"We issued what is called an unmodified opinion on the financial statements," Harden said during the presentation. She added that auditors "did not identify any misstatements that had to be corrected by management." Shelby Brown, the audit manager on the engagement, joined Harden in summarizing required communications and upcoming Governmental Accounting Standards Board (GASB) changes the finance staff will need to consider.
Finance Director Carl Daughtry summarized the general fund results. He reported actual general fund revenues of $435,200,000 for fiscal 2024, about $13.6 million (roughly 3.2%) above budget, and actual expenditures of $432,300,000, about $6.3 million under budget. "Some refer to that in layman terms as a surplus," Daughtry said; the numbers translate to an excess of roughly $2.9 million for the year.
Daughtry identified three main revenue drivers: higher interest income (the city benefited from a high-yield state and local government investment pool while short-term Federal Reserve rates were elevated), an improved collection of delinquent personal property taxes, and stronger business license receipts driven by a handful of large taxpayers. Meal tax receipts exceeded estimates by about $1.1 million, growing roughly 2.5% year over year.
On the expenditure side, Daughtry said most of the $6.3 million budget underrun reflected position vacancy savings and prudent spending. He noted transfers to other funds totaled significant sums: about $31 million to debt service, roughly $39 million to capital projects to accelerate work, and a transfer to the convention center fund funded from dedicated meal and lodging tax allocations.
Daughtry also reviewed the city's unassigned fund balance, which grew to approximately $109.8 million from about $80.4 million in 2020. He said the city's policy is to maintain at least 10% of general fund and school operating fund revenues as fund balance and that the city's cushion helps during events such as storms when federal reimbursements are delayed.
Council members asked clarifying questions about the school transfer (Daughtry said the reported 91.8% transfer figure represents the local match and is the total transfer for the fiscal year) and about trends in consumer-driven revenues; staff said they will provide updates after closing December transactions.
The audit presentation concluded with staff thanking the internal finance and audit teams and committing to continue work to implement forthcoming GASB guidance.
