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Auditor flags billing error, opioid-abatement reconciliation gap and falling reserves in Smyth County report
Summary
The county received a clean opinion on its financial statements, but the auditor told supervisors the report includes internal-control notes — a water/sewer billing tier was input incorrectly for months and corrective action was taken, material audit adjustments are needed to move from cash to accrual reporting, and opioid-abatement fiscal-agent reconciliations were not performed.
An outside auditor (speaker 7) briefed the Smyth County board on the independent auditors' report, the yellow-book internal-control review and the single-audit results, saying the county received a clean, unmodified opinion on its financial statements but that several internal-control and compliance items were noted.
The auditor said two internal-control items were repeated from last year: material proposed audit adjustments tied to converting cash-basis records to modified/accrual accounting, and a water/sewer billing-rate input error that caused incorrect bills in one tier until the mistake was corrected during testing. "One of those rates was input into the system incorrectly. So the bills that were in that tier of bills went out incorrectly up to the point that we had performed our testing," the presenter said.
On compliance, the auditor noted expenditures exceeding appropriations in the general and water/sewer funds, incomplete reconciliation and testing for funds the county accepted as fiscal agent for opioid-abatement cooperative agreements, and a school-board check issued in June that was not released until October (the auditor said withholding the check was the local staff ecision but recommended following code that disallows issuing checks until approved for release).
The presentation highlighted a substantial drop in unassigned fund balance, in part explained by bond proceeds drawn and expended this year. The auditor said property tax growth slowed prior to the 2025 reassessment and recommended monitoring revenues and considering reserve targets closer to 20—5% of operating expenses. The auditor also suggested posting selected journal entries to give the board better midyear visibility if the county is comfortable with maintaining those adjustments during the year.
Board members asked follow-up questions about whether consultants or county staff should post accrual adjustments and requested more detail on proposed journal entries; the auditor said staff could post some adjustments but warned about the need to reverse them appropriately.
No formal vote was taken on the audit report at this meeting; the auditor provided the written report and said staff should review the audit recommendations and proposed adjustments.
