Annual audit: Lynchburg receives clean opinion; schools show year-end adjustments and one material weakness
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Summary
Brown Edwards reported an unmodified (clean) opinion for the city and combined schools financial statements; auditors noted one material weakness in school year-end accounting and two budget line-item overspends tied to late state bonus funding.
The city’s external auditors told the Lynchburg City Council they will issue an unmodified — or "clean" — opinion on the city's combined financial statements for the year, while noting limited findings at the schools.
Chris Banta, partner in charge with Brown Edwards, said: "In our opinion, the financial statements ... present fairly in all material respects," and commended city staff for completing the audit on time despite federal compliance guidance delays that pushed the federal portion of the work to after the new year.
Banta said the audit included three phases: the financial-statement audit, state compliance procedures, and the federal compliance audit. He reported no legal exceptions in the city's general-fund budget but said auditors identified one material weakness in the schools related to several year-end audit adjustments, including accrued payroll, subscription liabilities and pooled-cash reconciliation.
On the schools, Banta said two line items appeared overspent after the state provided late-year funding for employee bonuses; the adjustments produced no net bottom-line impact but triggered a budget noncompliance finding at the line-item level.
Councilors asked whether the city should maintain or contract an internal-audit function. Banta explained the difference in roles: "Internal audit is focused on your concerns ... operational things," while external auditors look primarily at financial statements. On cost, he said experienced internal auditors are not inexpensive: "a CPA coming out of college is, like, $70 nowadays," and strong internal-audit programs typically require experienced staff or outside firms.
Banta also said the federal compliance phase was delayed by the Office of Management and Budget and should be issued after the guidance was released; the federal compliance report was not yet complete.
Next steps: the council received the audit presentation and may pursue internal-audit options or request further follow-up on the schools’ corrective actions.
