Patillo, Brown and Hill LLP presented the City of StaffordauditorChris Pruitt, a partner, told the Stafford City Council on Oct. 15 that auditors issued what he described as a "modified opinion" also called a clean opinionon the cityfinancial statements for the fiscal year ended Sept. 30, 2024. "In our professional opinion, the financials are free of material misstatement and ... they can be relied upon," Pruitt said.

The auditors also completed the single-audit required because the city received more than $750,000 in federal funds. That review included a focused look at the city's American Rescue Plan/Coronavirus State and Local Fiscal Recovery Fund program. Pruitt said the single-audit work did not find grant compliance deficiencies for the COVID-19 program, but the auditor reported one compliance finding to federal oversight: the city's data-collection form required by the Office of Management and Budget was not filed by the June 30 deadline. "You didn't meet that requirement," Pruitt said, and the firm listed the late filing as a finding in the single-audit report.

The audit presentation included financial highlights that the auditors and the finance director called healthy. The audit shows the city's unassigned general fund balance at roughly $13.2 million and sales tax receipts of about $18 million. Across all funds the audit reported about $1.8 million was added to ending fund balances for the year; the finance team and auditors said that resulted largely from lower-than-budgeted spending and unspent grant proceeds. Pruitt noted that the city was short about $1.3 million in revenue compared with budgeted figures because some intergovernmental grant revenues were not used, but overall expenditures were about $3.9 million below budget.

Council members asked whether the late OMB filing could affect the city's bond rating. Pruitt said he did not expect a direct rating impact from the late filing but advised council to consult bond counsel for a binding opinion. He also told council the data-collection form could not be filed until financial statements were complete. The auditors said they expected the form to be filed this week and said future filings should occur earlier in the cycle.

The audit presentation also noted the city relies on outside audits for component units; Pruitt said the firm did not audit the Stafford Municipal School District financial statements and is relying on the district's auditors for those figures.

At the meeting the council moved to accept the fiscal year 2024 annual financial report, the single audit, and the required communications with governance. The motion carried on a voice vote. The auditors and the finance director said copies of the three documents will be filed with the appropriate state and federal agencies and posted to the city's website.

What happens next: staff said they will file the outstanding federal data-collection form, and auditors recommended earlier internal scheduling so the municipality can meet federal deadlines in future audit cycles.