City auditor gives Lynn Haven a clean opinion, explains ARPA use for payroll

Brennan McKittrick, a partner with James Moore and Company, told the Lynn Haven City Commission at a workshop that the firm issued an unmodified, or "clean," opinion on the city's financial statements and found no single-audit or CRA findings.

"We do have what's called an unmodified opinion or a clean opinion," McKittrick said, explaining that the audit package also includes single-audit reporting because grant expenditures exceeded federal and state thresholds.

The audit report highlighted measurable improvements in the city's internal controls. McKittrick said audit adjustments decreased markedly from 18 last year to two this year; the prior-year material weakness was downgraded to a current-year significant deficiency, which he described as an improvement in severity.

"So, again, significant improvement since the prior year," McKittrick said, noting the financial statements were issued in March this year versus May the year before.

In his review of the numbers, McKittrick reported the city's total general fund balance rose from about $22 million to roughly $25 million and that the combined assigned and unassigned fund balance equals roughly 88.7% of expenditures. He contrasted that with guidance from the Government Finance Officers Association, which recommends a minimum reserve of about two months of expenditures (roughly 16.7%).

McKittrick summarized other funds and liabilities: the Community Redevelopment Agency (CRA) restricted balance was about $1.3 million; the disaster recovery fund showed a deficit tied to the timing of FEMA grant revenue recognition; the remaining ARPA fund balance was about $29,000; the city made approximately $7.4 million in principal payments during FY25 and carries about $31.5 million in total outstanding long-term debt; and enterprise funds recorded about $4 million in capital asset additions during the year.

During questions, a commissioner raised a rumor that the city had "illegally used ARPA funds." McKittrick disputed any impropriety in practice, describing how federal guidance evolved and how Lynn Haven applied the standard allowance for revenue replacement.

"For the city of Lynn Haven, you all utilize it for payroll," McKittrick said. "So with that, you were able to release the obligation with regards to the treasury under the standard allowance," which in turn removed the restriction and produced the assigned surplus now shown in the ARPA fund.

Commissioner Peebles thanked auditors and staff for the work and reiterated that the reduction in audit adjustments reflects improvement. Mayor Lowry and other commissioners publicly praised finance staff for the progress.

The workshop closed with the mayor thanking the auditor; the regular commission meeting was scheduled to begin about 15 minutes later.