Rockingham County auditors give unmodified FY2025 opinion but LGC flags water/sewer quick ratio and budget transfer exceedance

Auditors from Thompson, Price, Scott and Adams presented Rockingham County's FY2025 audit March 2 and issued an unmodified opinion, saying they found no reason to believe the financial statements were materially misstated. Auditor Hunter Wiseman told the Board of Commissioners the firm audited governmental and business-type activities for the year ended June 30, 2025, and reported the draft financial statements are complete pending final acceptance by the Local Government Commission (LGC).

"We have an unmodified opinion, which means that we have not found any reason to believe that there are material misstatements," Wiseman said.

Wiseman highlighted two items the board must address to the LGC within 60 days of presentation: the water and sewer fund's quick ratio and an adopted-ordinance budget violation. The audit reported a quick ratio of negative 0.76 for the water and sewer fund; Wiseman explained that a quick ratio below 1 indicates the fund owes more for current bills than it has in unrestricted cash and receivables and "could indicate that the fund may have difficulty paying its current bills" if the pattern continues. He added context that some cash in the water and sewer fund was placed in investment accounts to earn higher returns and that the LGC worksheet does not factor those investments.

The second item was an ordinance-level budget violation: transfers from the general fund to capital project funds exceeded the authorized budget by $28,892. Wiseman said there had been a budget in place for the transfers, but the amounts exceeded that budgeted total.

The auditor also described standard significant audit risks — management override of controls and improper revenue recognition — and said those risks are identified for virtually all audits, not because the county is singled out. He noted the county adopted GASB Statement 101 on compensated absences during the year and pointed to significant estimates including allowance for doubtful accounts, compensated absences and depreciation.

In question-and-answer, Commissioner Hall asked why the report arrived later than in prior years. Wiseman said compliance testing was delayed by a 47-day federal government shutdown and a slower return of uniform guidance for grant testing; the state later extended deadlines, and Wiseman said the audit was submitted timely to the LGC and remains under review.

An auditor and commissioners discussed a previously discovered bank account; Wiseman said corrective action was taken once the account was identified, that the issue was not material to the overall budget, and that the finance officer followed up to reconcile and close the account. A second commissioner pointed out a verbal discrepancy in a cash figure which Wiseman confirmed matched the written report.

The presentation closed with the auditor offering to answer follow-up questions and the board thanking the audit team. No formal action — beyond the board's acceptance of the presentation and the requirement to respond to LGC items within 60 days — was taken at the meeting.

The board will be required to respond to the LGC's data-input worksheet items within 60 days of the audited presentation.