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Newport audit returns unmodified opinion; general fund ends at $19.2 million
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Summary
The city’s FY2025 audit gave Newport an unmodified (formerly “unqualified”) opinion and reported a $19.2 million ending general fund balance; auditors flagged a recommendation to segregate duties and recorded Newport’s share of pension and OPEB liabilities.
The Board of Commissioners on March 16 heard a presentation on the City of Newport’s fiscal year 2025 audit, which auditors issued with an unmodified opinion.
Ben Keith, an accounting presenter for the audit team, told the commission the auditors gave “the unqualified, also now called the unmodified opinion,” and that the audit found no instances of noncompliance in the internal controls testing. He said Newport’s reported ending general fund balance for the audited year is $19,200,000.
Why it matters: an unmodified opinion is the highest standard auditors issue and signals the auditors found the city’s financial statements to be free of material misstatement. The presentation also highlighted long-term liabilities that affect future budgeting: Newport’s share of the CERS unfunded pension liability was reported at about $31,200,000 and the OPEB (other post-employment benefits) health-insurance portion at $920,000.
Keith reviewed revenue and expense drivers behind the positive result. He said general fund revenues rose from $17.3 million to $19.2 million and that the city outperformed its original budget by roughly $2.8 million, driven by stronger-than-expected revenues (including parking and permit fees) and lower payroll costs because some positions were filled later in the year.
The presenter drew commissioners’ attention to a set of audit adjustments explained in the auditor’s letter of governance: changes to lease accounting rules that require disclosure (for example, a postage machine), arbitrage payable related to 2021 bond proceeds for capital projects, and reclassifications for certain revenue and internal service fund accruals. Keith described one material bookkeeping adjustment tied to how proprietary (enterprise) funds record bond proceeds and debt-service payments.
The auditors recommended improved segregation of duties for investment bookkeeping after Red Tree Asset Management began handling investment draws in September; staff reported that a second reviewer outside finance (Willie) has already begun monthly reviews of December and January work. Mayor (speaker 1) and city manager (speaker 5) thanked finance staff for producing cleaner audits amid statewide delays and noted the city’s reserve level — about eight and a half months, per the presentation — as a sign of fiscal stability.
Next steps: staff said they will continue implementing the auditor’s governance recommendations and bring any required accounting changes into the next budget cycle.
