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Auditors give Stonecrest a clean opinion for 2022 but flag material weaknesses and past payroll tax lapse
Summary
External auditors told council the 2022 financial statements will receive an unmodified (clean) opinion and highlighted a $59 million net position and $30 million unrestricted funds, but reported material weaknesses including numerous audit adjustments, a 2022 failure to remit payroll taxes on time, expenditures exceeding appropriations, and late filing to the state.
External auditors Tab & Tab presented the results of the audit of the City of Stonecrest’s financial statements for the year ended Dec. 31, 2022, telling the council the firm will issue an unmodified opinion while also reporting material weaknesses and compliance findings.
Partner Lee Tab said assets exceeded liabilities by approximately $59 million for 2022, a roughly $10.3 million increase from the prior year, and reported roughly $47 million in current assets with about $30 million unrestricted. Tab attributed a decline in grants and contributions to the waning of COVID-era federal funding but described overall positive operating results for 2022.
Tab identified three primary concerns in a required letter to governance: auditors made numerous material adjustments to the draft statements (the firm recommended strengthening review procedures and building staff capacity); the city failed to remit payroll taxes to the IRS and the State of Georgia on time for the year ended Dec. 31, 2022 (the auditors recommended establishing timely payroll procedures or outsourcing payroll and pursuing abatement where appropriate); and there were instances of expenditures exceeding appropriations across several funds. The auditors also noted the required annual audit report had not been submitted to the state within the prescribed timeframe.
The auditors said management has prepared corrective-action plans for those findings and the team observed evidence that payroll remittances were corrected in 2023. Forensic accountant Marshall Mitchell and the mayor summarized the extraordinary operational context: Stonecrest moved from a third‑party management firm to self‑operation in 2021–22, which required reconstructing ledgers and staffing up under difficult conditions. Mitchell and council emphasized the value of continuity with the current audit firm as the city seeks to complete audits for 2023–25. Tab said if staff can prepare reconciled financial statements by April 1, the auditors plan an aggressive schedule to complete 2023 in roughly 60 days and then proceed on subsequent years with weekly coordination meetings.
The council asked clarifying questions about timing, audit adjustments, and corrective actions; auditors said completion requires timely bank reconciliations, attorney responses to standard audit inquiry letters regarding litigation and contingent liabilities, and continued weekly coordination between staff and auditors. The audit packet and management letter were presented as the final draft for council approval and for electronic filing with the State of Georgia.
