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Auditors present Mount Holly’s 2025 financials; fund balance drops, one material weakness identified
Summary
Martin Starnes audit manager Claire Earnhardt presented the preliminary audited financial statements for fiscal year ending 06/30/2025, reporting a drop in general fund balance to $18.8 million, a 46.5% available fund balance percentage, and one audit finding (material weakness) for expenditures exceeding the adopted budget.
Mount Holly’s auditors presented preliminary fiscal-year 2025 financial statements to city council on Dec. 8, reporting a decrease in the general fund balance and one material weakness related to budget controls.
Claire Earnhardt, manager on the audit engagement, told the council the audit was preliminary pending a new federal compliance supplement from the Office of Management and Budget and that the auditors expect to issue an unmodified opinion. Earnhardt said total general fund balance fell by about $4.4 million to $18,800,000 (about a 19% decrease) and attributed the primary cause to an increase in capital outlay spending compared with the prior year. Available fund balance as a percent of expenditures and transfers was 46.5%, which Earnhardt said corresponds to roughly six months of expenditures when measured by the Local Government Commission's (LGC) definition.
Earnhardt reviewed revenues and expenditures: revenues rose from about $24.6 million to $25.9 million (about a 5.4% increase), while expenditures increased from about $23.3 million to $31.2 million (about 33.9%), driven primarily by current-year additions to construction-in-progress and other capital outlays. Key revenue drivers included ad valorem taxes and unrestricted intergovernmental revenues; the audit noted investment earnings declined year over year.
The audit identified one material weakness (2025-1): the city expended more than the amounts appropriated in the annual budget ordinance and did not amend the budget to account for the increased expenditures. Earnhardt said the city must prepare a written response and action plan for the Local Government Commission to address the financial-performance indicators and the finding.
The presentation also covered the water and sewer fund (a quick ratio below 1 principally driven by a large advance from grantor funding, which will improve as those funds are expended) and financial-performance indicators that auditors review when preparing the LGC data input report.
City staff and council asked no substantive follow-up questions during the presentation. The audit was presented as preliminary and subject to finalization once the federal compliance supplement was incorporated.
