Smithsburg council reviews FY25 audit true-up as water fund shows nearly $400,000 owed to general fund

Smithsburg — Town finance staff on Feb. 3 told the Mayor and Town Council that the FY25 audit shows water owes the general fund just under $400,000 and sewer just over $21,000, and urged the council to weigh the timing and scope of any cash transfers.

Aaron Clark of SEK explained accounting differences that produce the reported balances, saying in presentation materials that “as of the June 30, 2025 audit, those amounts total just under $400,000 for water and just over $21,000 amount for sewer.” He told the council those are audit-era balances that result from cash flowing through a single general account while revenues are recorded to the enterprise funds on a billing cycle.

Council members asked how an immediate true-up would affect cash on hand. Staff warned that transferring the full water balance could strain the town’s water cash accounts and recommended considering a partial transfer, awaiting maturing CDs, or otherwise staging any repayment so capital needs are not impaired. The council asked Jenny (town finance staff) to compile the town’s current cash balances and present options at the next meeting so members can consider a partial true-up or other approaches.

Why it matters: A true-up would move cash to align fund-level cash with audited fund accounting, but it could reduce reserves available for maintenance or capital projects if done immediately. Council members emphasized they are not seeing a structural deficit but want to avoid creating short-term liquidity problems.

Next steps: Staff will bring current cash and maturity information (Jenny) for council review and the council will decide whether to do a partial transfer, wait, or adopt a different approach at a future meeting.