External auditors give North Myrtle Beach a clean FY2024 opinion but note restatements and control findings

North Myrtle Beach— The city's new external auditors told the City Council on June 5 that they issued an unmodified (clean) opinion on the fiscal 2024 financial statements but identified presentation changes and prior-year corrections that required restatements.

"We have issued an unmodified opinion. That's a clean opinion," said Emily Sobchak, partner with Greenfinley Cawley LLP, who oversaw the cityaudit. She told council the opinion provides reasonable (but not absolute) assurance that the financial statements are materially correct and highlighted explanatory paragraphs describing changes in how several funds are presented and corrections of prior-year capital asset overstatements and measurement of certain lease receivables.

What the auditors found: Sobchak said the city had several reporting changes that made FY2024 financial statements not directly comparable with prior years, so management's discussion and analysis (MD&A) for FY2024 was omitted until comparability could be restored in FY2025 reporting. The auditors also flagged a finding for the timeliness of closeout procedures under previous management and identified errors corrected in the current year.

Financial context: The audit presentation showed the general fund had a $1.3 million decrease in fund balance, leaving a total fund balance of about $28.3 million as of June 30, 2024, with roughly $26.6 million unassigned (about 36% of operating expenditures), a level the auditor characterized as a healthy position that affords roughly four months of operating expenses. Auditors also reported material actuarial liabilities related to pension and OPEB (retiree health) that remain significant but are recorded as actuarial estimates rather than amounts the city will immediately pay.

Council response and next steps: Council members welcomed the auditor switch after more than 40 years with the prior firm and praised staff for catching up the finance closeout. City manager Ryan said the city is finalizing the report, expected to be issued by the end of the week, and noted auditors will begin work on FY2025 after that. Several residents who spoke during public comment asked whether a forensic audit was warranted; auditor and staff responses emphasized that the FY2024 audit procedures and the new audits have identified errors and reporting differences but have not produced evidence of theft or fraud.

— Based on the auditor presentation in the council meeting transcript; direct quotes from Emily Sobchak.