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Gates County receives clean FY2025 audit; commissioners review fund balances, utilities and lease accounting
Summary
Auditors issued an unmodified (clean) opinion on Gates County’s FY2025 financial statements and grant testing but cited one material weakness in inventory counting. Commissioners reviewed fund balances, utility accounting oddities tied to grant classification, and moved earlier work‑session funding and design contracts for a new well to the consent agenda.
Auditors from Maldens and Jenkins told the Gates County Board of Commissioners that the county’s fiscal 2025 basic financial statements received an unmodified, or “clean,” opinion while grant testing also produced unmodified opinions with no findings for the federal programs tested.
“You receive an unmodified or clean audit opinion,” engagement partner Leanne Fagasala told commissioners during the presentation of the FY2025 audit results. She said auditors identified one material weakness tied to the county’s inventory count — a recently received item valued at about $28,000 that had been omitted but was corrected during the audit.
The auditor flagged a Local Government Commission (LGC) performance indicator showing a net operating loss in the water and sewer fund: “This formula ... is basically saying that you have a net operating loss of $909,000,” Fagasala said, and explained the discrepancy results from the LGC calculation classifying grant revenue as non‑operating while related expenditures remain in operating expenses. She said grant revenue of about $1,100,000 is not counted by that formula and recommended the county document that fact in its LGC response.
County manager Scott Sauer and finance staff walked through the balance sheet and fund‑balance trends. Sauer reported an unassigned general fund balance of $5.9 million and noted assigned and restricted amounts bring total available resources closer to $8.4 million. The manager and auditors also reviewed GASB lease accounting changes and how they can make certain departmental budgets appear overdrawn on paper even when cash flows and total county resources are sound.
Sauer and commissioners discussed enterprise fund results, noting the county’s change in net position for utilities increased by roughly $194,000 despite the LGC indicator. Commissioners and staff also highlighted specific proprietary fund items: the landfill fund’s net position was negative $112,000, which they said may require discussion during the coming budget cycle about household fee adjustments or service‑level changes.
As a result of an earlier utilities work session, commissioners moved a staff recommendation into the consent agenda to reallocate SL 2023‑134 funds ($284,912) to a new Gates County Well No. 2 replacement and rehabilitation project and to approve Green Engineering’s design contract for $80,365. The board added the motion to the consent agenda and approved it as part of the evening’s consent items.
The auditors offered several control‑process improvement suggestions, including better documentation of receivables and segregation of duties given the county’s small finance staff. They also flagged upcoming GASB pronouncements staff should address in future financial statements.
The board asked the manager and finance staff to prepare clear responses for the LGC and to provide commissioners with more accessible numbers and graphics in future audit presentations so elected officials can readily follow fund trends and potential policy implications.
