Audit firm reports clean opinion expected; committee accepts draft audit with chair authorized to finalize details

Auditors from Mitchell and Titus told the Dewey Beach Audit Committee on Aug. 13 that they had substantially completed the town's audit for the year ended March 31, 2025, and were "anticipating issuing an unmodified opinion" once outstanding confirmations and a management representation letter are received.

Dan Kenny, a partner at Mitchell and Titus, reviewed the audit process and findings for committee members, saying auditors made GASB conversion and reclassification journal entries during statement preparation and noted one prior-period adjustment related to compensated absences of about $63,000. He told the committee that auditors had not identified suspected fraud, material weaknesses, significant deficiencies, or instances of noncompliance with laws and regulations.

Kenny highlighted several management-letter recommendations. The auditors suggested the town consider the Government Finance Officers Association Distinguished Budget Presentation award as a diagnostic exercise to strengthen budget presentation, improve segregation of duties so bank reconciliations and journal entries are reviewed by someone other than the preparer where feasible, and perform a formal post-implementation review of recent IT changes (a new time-clock system) and the planned migration from QuickBooks to an enterprise solution (referred to in the presentation as Edmonds GovTech) to capture vendor feedback and ensure effective control design.

On financial statement highlights, Kenny said the net pension liability was reported at roughly $104,008 (an estimate) and noted the town's rainy-day fund balance of $2,899,450, which he described as about 50% of FY2026 operating expenses. He said the unassigned fund balance was shown as $2,169,019 and that the town's 15% policy threshold equated to $869,000, leaving roughly $1.3 million that could be assigned under the policy.

During questions, the committee discussed whether management intended to reassign unassigned balances; the auditors pointed to the accounting-policy language that allows assignments by council or management and offered to assist with policy revisions. Chair raised the practical need to finalize outstanding audit correspondence before issuing the report to the full council.

Following the presentation, the committee moved to accept the draft audit "with the caveat" that the chair retain the authority to approve outstanding items prior to presentation to the council. The motion was seconded and accepted; the transcript records the committee's acceptance but does not include a roll-call vote tally. The auditors said they planned to issue the final report in September, after receiving legal confirmations and the management representation letter.

The committee adjourned with plans to present the finalized audit to the full council once the outstanding confirmations are completed.