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Independent auditors give Shelby County a clean FY2025 opinion but flag reconciliation and county-clerk control weaknesses
Summary
Auditors issued an unmodified (clean) opinion on Shelby County's FY2025 financial statements but reported a material weakness tied to corrected/uncorrected adjustments and significant deficiencies in reconciliations; custodial-fund internal control weaknesses in the county clerk's office required alternative procedures to reach an opinion on those funds.
External auditors presented Shelby County's FY2025 Comprehensive Annual Financial Report to commissioners on April 8 and issued an unmodified (clean) opinion for the county-wide financial statements. Auditors noted, however, that the school board's component unit had a disclaimer by its own auditor and was therefore excluded from the county-wide opinion.
Daniel Gogerty of Cherry Becker said the audit produced a clean opinion but identified a material weakness related to multiple corrected and uncorrected adjustments and recommended improving reconciliation processes so errors are detected earlier.
"While the county does have reconciliation processes in place, those reconciliations could be improved upon to find these errors more timely," Gogerty said. He added that the corrected items were posted to the FY2025 financial statements before issuance.
A separate auditor report covering custodial funds found three internal-control material weaknesses in the county clerk's office, including a lack of bank reconciliations and missing annual financial reports. Banks Finley & White said auditors performed alternative procedures and used trustee-office information to reconstruct records so a clean opinion could be issued for the charter offices audited by that firm, but they recommended immediate action to address oversight and recordkeeping.
Commissioners pressed for a concrete remediation plan and asked the county clerk to be prepared to explain why standard reconciliations and annual reporting were not available; auditors and finance staff said they would continue to strengthen internal review controls. Director of Administration and Finance Audrey Tipton said the county will present quarterly CIP and project-status reports to better track spending and improve estimates.
The audit also noted upcoming GASB changes affecting budget disclosures (GASB 103/104) and recommended procedural improvements; no instances of fraud were identified by the auditors during the engagement.
Next steps: commissioners asked administration and the county clerk for an action plan to address the custodial-fund findings and to provide quarterly CIP status reporting for the commission.
