Auditors say FY24 water and sewer statements were restated after capital-asset corrections

Samantha Ruggles of RHR told the Richmond Water and Sewer Commission that the town’s FY24 water and sewer financial statements required a restatement to correct capital‑asset records and depreciation calculations. The adjustment changed the July 1 beginning net position for the enterprise funds.

The auditors described how enterprise funds differ from general‑government reporting: “Water and Sewer … are enterprise funds … they require … capital assets, long‑term obligations and accounts receivable to be represented on their actual balance sheet,” Ruggles said. Auditors explained capital assets are recorded when acquired and then reduced by depreciation and any related debt to compute net position.

Using figures presented at the meeting, auditors reported water operating revenue of about $384,000 and operating expenses of about $36,000 for FY24, producing a net increase of roughly $27,000. For sewer, auditors reported operating revenue near $82,000 and operating expenses near $1,165,000, a net decrease of about $263,000. Auditors described ending net position for water at roughly $2.5 million and for sewer at roughly $4.2 million.

Commissioners asked how liabilities and interfund balances are represented; auditors reviewed bonds payable, current liabilities and “due to/from” lines, explaining that the trial balance and supporting schedules show where counterpart entries appear (for example, a general‑fund payment recorded on behalf of the water fund is later repaid). The auditors also clarified accrual accounting versus cash receipts: billed amounts are recorded as accounts receivable, not cash, and year‑end adjusting entries reconcile billed but uncollected amounts into the fiscal year they pertain to.

On delinquent accounts, staff reported the current delinquent balance is small (about $400) after adopting a delinquency policy and offering payment agreements. Auditors said the town’s capitalization threshold and useful‑life estimates determine which purchases are capitalized and depreciated; Heather Hunter, director of audit, noted depreciation is a non‑cash expense used to spread large capital costs over the asset’s useful life.

The audit presentation also identified FY24 sewer capital additions, including approximately $150,000–$160,000 of press repairs and other replacement parts that were capitalized. Auditors recommended continuing quarterly budget‑to‑actual reviews so managers can track when cash flows and accrual adjustments will affect year‑end audited balances.

The commission did not adopt a formal action on the audit during the recorded meeting; staff and auditors said they would return as needed to follow up on clarifying schedules and the audit footnotes.