The Stuart Town Council learned it received an unmodified opinion, or positive result, from its 2024 audit at its Wednesday, Aug. 20, meeting.
As part of the audit, both a qualified and an unmodified opinion on the financial statements were issued.
For the unmodified opinion, Town Manager Bryce Simmons said the business-type activities, which include water, sewer and sanitation funds, received the positive rating.
“The audit also identified several material weaknesses in our internal controls. For audit adjustments, the town has historically relied upon the auditors to make material adjustments to the financial statements, which indicates a weakness in our internal control,” Simmons said.
He noted this is something he has been working on over the past year.
“If you remember, when we first went to our financial management system, a lot of the information could not import from our old system to our new system. We had six months basically of information that was in the system, but didn’t click exactly right. They had to make a lot of journal entries. That has been done for the audit itself,” he said.
Simmons said the audit also noted a lack of proper segregation of duties, as a single employee has been responsible for most accounting functions for the town.
“That is also something that we have been working to separate” where the treasurer “does payroll, deposits, things of that nature. I have been doing invoices and then separating the checks. So that’s the separation of those duties that they’ve been talking about, where now all bills are reviewed by council and approved. That’s something that didn’t necessarily happen in the past, but now you’re seeing the full-fledged approving everything that we write a check for,” he said.
The bank reconciliations also had not been completed accurately in a long time. Simmons said this is something he has been doing, and the town now has at least a full year of bank reconciliations accurate.
“So what is in our system now matches what is on our bank statements. That was something important for me to get resolved,” Simmons said.
The audit also noted some instances of noncompliance, with the town’s expenditures exceeding appropriations.
“The general fund expenditures were over budget. This is because we had grants that were basically expensed out of the general fund, but we did have a good mechanism to account for those within our budget,” he said.
Two of the town’s bank accounts also were not properly reported to the Virginia Department of Treasury as required by the Security for Public Deposits Act. Simmons said he is now working to address the issue.
For the FY24 audit, Simmons said the town’s net position increased by $652,429.
“The town’s total revenues for government activities was $1.13 million and our general fund saw total revenues of $1.113 million, which was $997,000 over the final budget. This was largely driven by the higher-than-budgeted revenues from other local taxes, particularly our meals tax, which brought in $436,000,” he said.
The total expenditures for government activities was $1.13 million, with general government administration being the largest expense at $567,000.
“The general fund’s total expenditures were $1,439,000, which exceeded the final budget by $593,000. A major factor in this was $577,000 in capital projects, primarily for the purchase of the Star Theatre and the fire department equipment, which was ARPA (American Rescue Plan Act)-funded expenses,” Simmons said.
He said Stuart’s combined cash and cash equivalents was $2,899,106 at the end of FY24, with an additional $230,792 in restricted cash. The town also holds $1,152,528 in the Virginia Investment Pool.
“The long-term liabilities total $5,695,000, which includes $1,404,000 loan for government activities and a total of $3,457,000 in revenue bonds for business-type activities. Our USDA (United States Department of Agriculture) bonds require a debt reserve equal to one year’s payment, and these bonds are secured by our water and our sewer revenues,” Simmons said.
Simmons said a qualified opinion was given for the town’s governmental activities and the general fund because of the Stuart Volunteer Fire Department.
“This is something that happened last year. While not an illegally separate entity, the fire department maintains its own checking account and related financial activities outside of the town’s official financial statements. This is a matter they suggest we need to address,” he said.
The auditors recommended either bringing the fire department’s financial records into the town office or creating a separate legal entity for it.
In other matters, the council:
*Approved project financing but will still look into a plan of finance regarding the Municipality Advisory Services agreement.
*Approved a $1,000 donation and a $2,000 in-kind donation to Front Porch Fest 16.
*Heard the town manager’s communication.
*Discussed meals tax collection.
*Approved the meeting minutes.
* Paid the bills.
