Oak Ridge audit: clean opinion; $12M interfund loan and three audit findings highlighted

Auditors from Pew CPAs presented the annual audit for the fiscal year ended June 30, 2025 at the Oak Ridge City Council meeting, delivering a clean (unmodified) opinion while flagging several items for council attention.

Gary Mitchell of Pew CPAs told council the city and schools combined had assets about $3 million lower than the prior year against a roughly $300 million total; the electric and water departments’ assets increased by "20-something" million largely because of construction of the new water plant. He said unrestricted net position declined by about $6 million to approximately $7.3 million and highlighted a subsequent-event $12 million interfund loan to support the water department after year end.

Mitchell also called out three audit findings: repeat problems with financial reporting and account reconciliations in the Kayenta system, a budget finding tied to line-item overspending in an emergency communications district, and additional audit adjustments and uncorrected misstatements that were not material to the financial statements. He said management has taken steps and the finance office has seen improvements, including vendor contracts to help the Kayenta reporting.

Council members asked clarifying questions about the findings and the presentation; auditors noted an "emphasis of matter" paragraph related to adoption of a new accounting standard and error corrections, and said those items did not impair the clean opinion. The auditors provided both a full financial-statement report and a shorter required-communications report to council.

Council did not take formal action on the audit itself; auditors offered to answer questions and provide copies of the larger packet for council review.