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Nacogdoches auditors give unmodified opinion as council answers questions about $1.3M transfer
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Summary
City auditors delivered an unmodified opinion on the fiscal 2025 audit and reported stronger cash and reserves; council members pressed staff after a resident flagged a $1.33 million transfer, and finance said the change was a budget amendment that largely reflected ARPA grant money reclassified into the proper fund.
The Nacogdoches City Council heard a report from independent auditors on March 17, 2026, who issued an unmodified opinion on the city's financial statements for the fiscal year ending Sept. 30, 2025. Interim finance director Todd Cimno and audit partner John Manning told council the report showed higher cash balances driven in part by bond proceeds and sound reserves.
The audit partner, John Manning of Patillo Brown and Hill, highlighted that governmental cash increased by about $13 million — a change tied to recent bond issuances — and that major fund balances and capital assets were properly reported. Manning said the city's controls and reconciliations supported an unmodified audit opinion.
Why it matters: An unmodified opinion is the highest standard auditors can give municipal financial statements and helps the city when seeking grants or debt financing.
Concern raised and staff response: During open forum, resident Sammy Smith said he found a $1,330,000 budget change "buried" in the consent agenda and asked council to scrutinize such transfers. The mayor asked finance to respond. Todd Cimno said the council approved a budget amendment on Aug. 8, 2025 that increased transfers; he said roughly $1.2 million of the difference consisted of ARPA (federal pandemic relief) funds that had been deposited into the utility fund for construction projects and later moved into the special grant fund where staff determined the funds properly belonged. Cimno said an additional roughly $124,000 was interest income on those ARPA funds that was moved to the general fund. He described the amendment as appropriate and consistent with grant and accounting practice.
Manning added that auditors and bond counsel review transfers for compliance and that the Governmental Accounting Standards Board guidance and bond attorneys had not raised findings about the transfers. "It's completely legal. It's ordinary. It's common," Manning said.
What the council did next: Council thanked the auditors for the report. The transcript of the meeting shows the presentation and Q&A but does not record a subsequent formal vote to accept the audit in the excerpt provided.
Details worth noting: The audit packet includes management's discussion and analysis, comparative tables, capital asset details and a statistical section with a 10-year trend. The auditors noted the city did not reach the federal-expenditure threshold that would have required a single audit for federal programs this year.
Next steps: No additional action on the audit was recorded in the meeting transcript excerpt; council and staff discussed transparency and the handling of consent-agenda items after the resident's question.
