Auditors give Petersburg Medical Center a clean opinion; board hears operating pressures from work-building and pension entries
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Summary
Auditors (DZA) issued an unmodified (clean) opinion on PMC's FY2025 financial statements, reporting positive operating cash flow, large capital grants tied to the work building, and no material internal control findings; board discussed operating loss driven by pension/OPEB accounting and the need for formal grants-management policies.
Independent auditors from DZA presented Petersburg Medical Center’s audited financial statements for the fiscal year ended June 30, 2025, and issued an unmodified opinion, saying the financial statements are "fairly stated in all material respects." Sean Johnson of DZA told the board the audit produced a clean opinion and no internal-control findings classified as material weaknesses or significant deficiencies.
Auditors highlighted that capital grants—primarily related to the work building project—drove much of the organization’s reported change in net position, and that operating results are affected by pension and other post-employment benefits (OPEB) accounting. The auditors reported an operating loss after accounting adjustments but noted strong cash generation from operations (about $2.6 million) and capital grant activity of roughly $13.3 million tied to the work building. Sean Johnson said, "Our opinion is what we call an unmodified opinion."
PMC’s finance presenter, Jason, gave a year-to-date management overview showing gross patient revenues of about $16.8 million (roughly $370,000 above budget) and noted that net patient revenues were off budget by approximately $378,000. Jason also reported roughly $2 million in operating cash and $4.7 million in long-term investments and said the organization had about 122 days cash on hand from a recent point-in-time metric; the auditors reported 113 days cash on hand as of June 30, 2025, reflecting different measurement dates or inclusions.
Auditors reviewed financial indicators and peer comparisons, noting improved operating-margin trends when the impact of the pension plan is excluded. They also noted an increase in expenses tied to the work building and higher patient volumes, and they expect capital-equipment spending to rise for FY2026 as the new facility and equipment enter service. The schedule of expenditures of federal awards was audited as required; the largest audited award in the schedule related to Coronavirus Capital Projects Fund activity supporting the work building.
Auditors made two advisory recommendations: better documentation of checks against federal excluded parties/debarment lists for vendors, and written policies and procedures over grants management and certain significant transaction cycles (for example, review of manual journal entries and estimates for third-party payer settlements). Management and auditors said those items were advisory in nature and did not affect the auditors’ clean opinion.
Board members asked clarifying questions about capital equipment metrics and the practical meaning of the capital-equipment-to-depreciation ratio; auditors explained the metric helps predict timing of future concentrated replacement needs. Management said it will implement recommended policies and expects to propose a budget amendment in May to address work-building-related expenses.
The board received the audited financial statements and audit communications; no vote on the audit was recorded in the meeting minutes.
