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Auditor issues clean opinion on Dillon’s 2025 financial statements; council Q&A on reserves and controls
Summary
Hinkle and Company issued an unmodified (clean) audit opinion for the town’s 2025 financial statements, found no material weaknesses, and recommended longer-term planning to increase general-fund reserves; council members asked about internal controls, fund variances and cash-on-hand.
Hinkle and Company PC presented the town’s 2025 audited financial statements and issued an unmodified opinion, meaning the auditors concluded the statements were prepared in accordance with generally accepted accounting principles.
"Yours is referred to as an unmodified opinion," said Jim Hinkle, the lead auditor, explaining that the firm found no material weaknesses or significant deficiencies during testing and that auditors had open access to records. He described audit procedures — tests of details, analytics and control-feature testing — and reiterated that auditors test controls as part of assessing risk to the financial statements.
Council members asked whether the auditor expresses an opinion on the effectiveness of internal controls. Hinkle said an audit of financial statements is not the same as a standalone internal-control engagement and therefore does not provide a direct opinion on control effectiveness; auditors test controls to set the scope of financial testing but do not issue a control opinion in a standard financial-statement audit.
Key figures discussed: Hinkle cited roughly $6,400,000 in general-fund cash on hand against approximately $18,700,000 in annual general-fund expenditures (about three months of reserves) and noted net position increased by about $5,000,000 year over year. He advised multi-year planning to increase reserves (for example, contributions toward a target one-half million dollars per year over five years was discussed as a model), and said the town’s audit will be filed with the state auditor’s office by the July 31 deadline.
Why it matters: An unmodified opinion indicates the financial statements are free from material misstatement. Council members pressed for clarity about fund variances, supplementary information and how the upcoming GASB requirements will require narrative explanations for significant budget-to-actual variances.
Next steps: The auditor and staff will provide additional details on specific variances (including water and sewer enterprise funds) at the council’s July 21 meeting; the auditor said internal-control testing will receive closer attention in the next audit cycle given recent personnel changes in the finance office.
