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Spencer audit: clean opinion but general fund balance falls below state benchmark
Summary
The town’s FY2023–24 audit returned an unmodified (clean) opinion but recorded a general fund balance at 28% of expenditures — under the 34% benchmark — triggering a required response to the Local Government Commission and prompting board discussion of corrective steps.
The Board of Aldermen heard the town’s FY2023–24 audit report and was told the financial statements received an unmodified (clean) opinion, while the general fund balance dropped to about 28% of expenditures, below the 34% threshold the state tracks.
T. D. Hill, senior audit manager for RHCPA, told the board the audit found no material weaknesses but identified one significant deficiency and a financial performance indicator of concern. Hill said the town must file a response with the Local Government Commission explaining what happened and the plan to improve the ratio.
In his presentation Hill said higher capital outlays and payroll drove the increased expenditures and that the town’s year-end fund balance decreased by roughly $580,000, leaving an ending general fund balance near $2.5 million. He described the drop as a “blip” rather than a trend but said continued declines would raise additional concerns.
Board members pressed for details about penalties and next steps. Hill said the LGC primarily tracks benchmarks and requests periodic explanations; he did not describe any automatic financial penalties tied to the current percentage but urged the town to present a plan to recover the reserve level.
The auditor also noted some year-end closing entries that were not made and a previously resolved segregation-of-duties item; staff agreed to provide the requested documentation and follow-up to board members. The town manager and finance staff will work with the LGC on the response and report back to the board.
