Montgomery County audit committee hears clean FY25 audit, recommends SB & Company contract extension

Montgomery County's audit committee heard on Wednesday that auditors from SB & Company issued unmodified (clean) opinions on the county's FY25 financial statements and related retirement-plan reports and found no reportable material weaknesses or audit adjustments.

"We did not discover any instances of fraud," said Bill Seymour, the engagement partner with SB & Company, adding that the firm's work is not a forensic fraud audit but that testing showed no instances of fraud in areas examined. Seymour said the firm also issued a clean compliance opinion on federal programs tested.

The auditors described the engagement's scope as including the county's financial statements, the Uniform Guidance single audit of federal grants, the 9-1-1 program, agreed-upon procedures for landfill activity, National Transit Database requirements, and audits of several retirement and deferred-compensation plans.

Seymour said auditors tested six major federal programs that totaled just under $120 million in expenditures and noted total federal awards for the year were just over $230 million, representing about 52% coverage of federal spending for testing. He also said Montgomery County continues to qualify as a low-risk auditee for single-audit purposes.

"We issued unmodified opinions on all of the financial statements," Seymour said. "We had no findings on the agreed-upon procedures report. We did not discover any material weaknesses in internal controls over financial reporting."

Karen Hawkins, chief operating officer in the Finance Department, told the committee that continuity of the audit team has improved efficiency and institutional knowledge during preparation of the county's year-end statements. "They come back with the knowledge of us," Hawkins said, thanking staff who worked with auditors.

On areas for attention, Seymour recommended only housekeeping changes to internal processes but flagged the shifting federal grant environment and rising identity-theft risks as matters for ongoing diligence by county staff.

During Q&A, the council vice president asked whether the single audit is required and how major programs are selected. Seymour explained the current federal threshold that triggers a single audit is $750,000 in grant spending (scheduled to move to $1,000,000 next year), described the Type A/Type B risk assessment for program selection, and said programs with no issues can move to a less frequent audit cycle.

The committee also reviewed a staff-recommended contract amendment to extend SB & Company's engagement for an additional year and apply a Consumer Price Index increase of 2.7 (about $8,000 for the year). Staff said the increase would be paid from existing audit funds and recommended approval.

Committee members voted by raised hands and unanimously recommended forwarding the contract amendment to the full council for approval.

The audit committee said it will meet again after the county budget process in June to review inspector general reports and any related items staff and the inspector general determine appropriate for that meeting.