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Auditor explains sampling, $2M revenue surplus and ARPA transfers to council
Summary
An auditor presented Marlborough County's financial review, saying bank accounts were reconciled 100% while sampling tested 40 items, reporting a roughly $2 million revenue surplus offset by $1.2 million of over-expenditures and explaining ARPA transfer flexibility for counties under $10M in receipts.
Council members questioned the county's annual financial report and auditor processes; the auditor explained the audit's scope, materiality thresholds and sampling approach and walked council through notable line items.
The auditor said bank accounts and reconciliations are reviewed in full and that sampling of transactional disbursements and revenues typically used a sample of about 40 items to test internal controls. He explained audit resource constraints and the concept of materiality: "you couldn't pay us to look at every dollar and penny," he said, which is why auditors focus on higher-risk and material balances.
On budget results, the auditor told the council the county recorded about $2,000,000 more in revenue than budgeted and spent approximately $1,200,000 in expenditures over budget, leaving an implied surplus of roughly $800,000 after accounting differences and reserves usage; he said the county used only about $300,000 of available reserve transfers when nearly $1.2 million could have been accessed.
Council members raised a flagged bank-balance disclosure: a note indicated about $18,200,000 of county deposits were not FDIC-insured and were instead secured by pledged collateral held by the bank rather than in the county's name. The auditor explained South Carolina law requires deposits to be secured either by FDIC or by pledged collateral such as mortgage-backed securities or agency bonds and that the note was a required disclosure.
On ARPA funds, the auditor told the council that because the county received under $10 million the federal guidance allowed more flexibility in uses; he said some ARPA dollars went to capital projects and recreation, including the golf course, and that certain stricter rules applied only to larger recipients. Council members expressed concern and the auditor reiterated that federal guidance for smaller recipients permitted broader local allocation decisions.
The auditor also described the county's capitalization policy ($5,000 threshold) and that capital-asset testing targets items capitalized at $5,000 and above, while smaller purchases are not capitalized but may be pulled during disbursement samples.
Next steps: auditors will finalize the report and provide department-level line-item breakdowns and clarifications requested by council members.
