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Independent auditor gives Lexington a clean opinion; audit highlights large DSS building expense and new debt issuances
Summary
External auditor reported a clean, unmodified opinion on Lexington’s FY2024–25 financials and highlighted that expenditures grew faster than revenues, partly due to $1.5 million in DSS building spending and multiple large debt issuances during the year.
An external auditor told Lexington City Council on Dec. 18 that the city received a clean, unmodified independent auditors’ report and a clean Yellow Book opinion on internal controls and compliance for the most recent fiscal year.
Emily (auditor) said federal spending totaled about $695,000, below the single‑audit threshold of $750,000 for fiscal year 2025. She noted that city expenditures grew faster than revenues over a five‑year window and attributed a significant portion of the increase in the health-and-welfare line to $1,500,000 spent on the DSS building during the year. "You all have a clean, unmodified opinion," Emily said during the presentation.
The audit also documented major debt issuances and allocations for capital projects: about $6,700,000 was allocated to city hall, roughly $10,300,000 to the DSS building, approximately $3,700,000 to the utility fund (water and sewer) and $1,500,000 to stormwater; a new lease liability for city hall swing space was recorded. The auditor encouraged council to monitor reserves and noted that, excluding the DSS building, expenditures still grew about 6% over the multi‑year period.
Emily pointed to strong reserve balances and said the general fund ending unassigned fund balance rose slightly during the year, but she cautioned council to be mindful of inflationary pressure on expenses. She also noted implementation of GASB 101 for compensated absences and listed upcoming reporting standards to consider for FY2026. Council asked about changes to the single-audit threshold; Emily said it will increase to $1,000,000 for fiscal 2026.
