Auditor reports fiscal distress in Radford and Tangier; flags IT and reporting weaknesses across state agencies

Stacy Hinshaw, Auditor of Public Accounts, told the commission that the APA’s oversight work has highlighted persistent problems with timeliness and capacity at some local governments and significant control weaknesses at several state agencies.

Missing locality data and web‑accessibility concerns

Hinshaw said APA’s comparative local‑government report is the only uniform statewide compilation of locality revenues and expenses, but the office received an unusually high number of late or missing transmittals this year (52 late as of the statutory deadline, 32 late by publication). APA identified resource and staffing shortages as common causes and warned the commission that new federal web accessibility rules (effective date extended to 2027) complicate APA’s ability to publish locality financial reports if localities do not supply accessible transmittal files. Hinshaw said APA is exploring options, including adding accessibility requirements to audit specifications or seeking legislative changes to require accessible transmittals.

Fiscal‑distress cases: Radford, Tangier, Charles City

APA reported three localities underwent fiscal‑distress monitoring for fiscal years 2023–24. The county of Charles City initially showed downward financial trends but submitted a questionnaire and later improved ratios, so APA did not escalate a state‑assistance recommendation. The city of Radford, APA said, continued to show declining revenue projections and other strains (including unpaid liabilities tied to wholesale electricity purchases) and met the criteria for fiscal distress; APA issued a formal recommendation for state assistance in March 2026 and the Commission on Local Government is awaiting decisions on a state assistance plan. Tangier was identified qualitatively (vendor non‑payments, federal reporting lapses), received state assistance approvals in November, and is working with an external turnaround specialist.

Statewide audit themes: IT security, federal awards and material weaknesses

Zack Borgerding, APA deputy auditor, summarized FY25 audit themes: federal award compliance, financial reporting errors, and employee offboarding issues were prominent; information‑technology security was the most common finding area across agencies. APA issued material‑weakness findings in social services (subrecipient monitoring and federal performance reporting), Wildlife Resources (unsupported journal entries and grant accounting), Energy (payroll charges to federal grants), and VEC (accounts receivable and IT governance backlogs). APA noted some agencies (including UVA, DGS and VITA) have reduced prior material weaknesses after sustained corrective action.

Higher education and sponsor‑access issues

On higher education audits, APA reported a material weakness at Longwood related to related‑party transactions with its foundation and noted Norfolk State’s repeated financial reporting weaknesses. APA also described a difficulty at George Mason where sponsor and subcontractor restrictions limited APA’s access to detailed financial records for high‑risk sponsored programs; APA said it relied on sponsor confirmation for FY24 and lacks a viable path to a full FY25 audit opinion without further evidence or cooperation.

Quotes and next steps

"We do this monitoring as an early‑warning system," Hinshaw said, explaining APA’s two‑part quantitative/qualitative review. APA urged localities to improve transmittal timeliness and told the commission it will continue to work with the Commission on Local Government when state assistance is warranted. The office will provide its full reports and follow up as agencies implement corrective actions.

The commission asked about potential legislative remedies and about whether state intervention becomes a fiscal obligation; APA said statutory intercepts and assistance programs exist but that state action depends on the specific circumstances and the formal distress process.