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Auditors praise Smithfield’s finances; council approves $3M transfer to capital fund in mid-year budget
Summary
External auditors reported strong finances and two minor state compliance findings; council subsequently approved mid-year budget amendments including a $3 million transfer to capital projects to address a 36% general-fund balance.
Smithfield’s independent auditors presented the city’s fiscal year 2025 financial report and two minor state compliance findings at the Dec. 10 council meeting, then the council approved a mid-year budget amendment that moves $3 million from the general fund to the capital projects fund.
Diana Cannell, audit partner with Richie May (formerly Aldred Jackson), told the council the city ended the year with about $113 million in total assets — roughly $13 million higher than the prior year — driven mainly by capital improvements. She said the city’s cash position increased about $7.4 million while liabilities rose roughly $1.3 million, largely due to customer deposits tied to construction projects. "Your debt is incredibly low," Cannell told the council, praising Smithfield’s ability to invest in infrastructure without taking on significant borrowing.
The auditors reported two state compliance findings: incomplete documentation of fraud risk assessment training (auditors said certificates and supporting documents for certain 'yes' answers were not available) and a general-fund balance at 36%, slightly above the state's 35% cap. Cannell recommended transferring funds to capital projects to bring the general fund below the state limit.
Following the audit presentation, Justin Lewis proposed mid-year budget adjustments including a $3 million transfer from the general fund to the capital projects fund; the council approved Resolution 2025-12 to implement the change and other adjustments for grants, impact fees, tree-trimming funds, police/fire wildland revenues, and capital projects such as the planned 3,000,000-gallon water tank. Justin emphasized the transfer does not spend the money but reallocates it to better match the timing of planned capital projects.
The council approved the resolution unanimously. Staff said they will track corrective actions on the audit findings, retain documentation for fraud-risk assessments and training, and report back on capital projects funded by the transfer.
