External auditors give Asheville an unmodified opinion but flag one material weakness and funding pressures

The Asheville City Audit Committee received an update on the fiscal year 2025 external audit showing a clean opinion accompanied by a material weakness and indicators that will require follow-up reporting.

Becky Oglaltz, assistant finance director, said auditors Cherry Beckert issued an unmodified (clean) opinion on the FY2025 financial statements and presented results to council in December 2025. Oglaltz told the committee that the auditors identified one material weakness: a single transaction that was not accrued in FY2025 because the related invoice was not received and paid until FY2026. She said staff have added extra year-end accrual review steps to reduce the chance of recurrence.

Oglaltz said the city's unassigned general fund balance for 2025 was 14%, below the city's 15% policy threshold. That decline, together with the material weakness and a negative net income in the water fund, means the city will submit a Local Government Commission FPIC response letter to council for approval. The negative result in the water fund was attributed to two months of lost customer service revenue, repair costs and the timing of FEMA reimbursements.

The single-audit portion of the FY2025 review (the grants compliance work) was delayed because of late issuance of the federal compliance supplement; staff said they were working to complete it and expected to have more information shortly. Oglaltz directed committee members to audit materials posted on the city's website and said preliminary work for the FY2026 audit will begin in April.

The committee had no additional questions and adjourned after noting there were no public comments.