Kim Marmalich, audit department partner at AVL, presented Biloxi’s fiscal year 2024 audit to the Biloxi City Council, saying the firm issued an unmodified opinion and found no reportable internal-control or federal single-audit exceptions.

Marmalich told council members the audit package includes three documents: a letter to those charged with governance, a management-recommendations letter and the bound audit report. “You have 3 items from me,” she said. The audited financial statements are as of Sept. 30, 2024, and the audit opinion was unmodified — the highest level of assurance the auditors can give.

The audit notes that the city implemented Governmental Accounting Standards Board guidance (GASB 101) in the reporting year and attaches proposed journal entries to the report. Marmalich said AVL performed a walkthrough of internal controls and that no significant control findings were reported in the bound audit report.

Marmalich highlighted key figures from the fund-level statements the council uses to manage the city. She said the general fund ended the year with $18,000,000 in unassigned fund balance, which she described as “2 months worth of city expenditures.” She added that the Government Finance Officers Association (GFOA) recommends a minimum of two months of reserves.

On revenue and expenses, Marmalich said the city’s general fund revenues increased about $1,700,000 from the prior year, with the largest change tied to higher charges for services, driven in part by an increase in garbage fees. She said operating expenditures for the year were about $75,000,000 and that the general fund spent about $1,900,000 more in operating expenditures than it received in operating revenues; however, other financing sources such as loan proceeds (including a $2,100,000 vehicle loan) reduced the net decrease in fund balance to about $920,000.

Marmalich also reviewed the city’s water and sewer fund. She said construction-in-progress on water/sewer projects totaled about $10,000,000 at year end and that depreciation expense for the fund was about $2,000,000 for the year. She reported $6,600,000 in unrestricted net assets in the water and sewer fund and roughly $358,000,000 invested in water/sewer capital assets. Cash flow for the fund, she said, showed $3,000,000 from operating activities, $11,000,000 from noncapital financing and $17,000,000 used for capital activities, resulting in a net cash decrease of roughly $1,500,000 for the year.

Marmalich told the council Biloxi received $18.9 million in federal funding that required a single audit; auditors tested three major federal programs and reported no findings of noncompliance or internal-control deficiencies. She also said the auditors tested state compliance and found no reportable exceptions.

Council member Mr. Tisdale asked whether the unassigned fund balance could be reallocated. Marmalich replied that unassigned fund balance has “no restraints other than the normal restraints of expenditures that the council follow,” meaning the council can use unassigned funds for council-approved city purposes.

Marmalich closed by saying the audit went smoothly, management was cooperative, and the audit team would be available for follow-up questions: “You’re welcome to reach out to me for questions.”

Marmalich’s presentation and the bound audit report will be available to council members and to the public in the audit packet.