County auditor reports clean opinion but flags billing, reconciliation and reserve concerns

An external auditor briefed Smyth County supervisors on the annual audit and related reports, saying the county’s financial statements received a clean, unmodified opinion while identifying specific control and compliance issues the board should address.

The auditor said two internal control items recurred (material proposed audit adjustments, typically the conversion of cash‑basis books toward accrual reporting) and described a water and sewer billing rate that had been input incorrectly into the billing system for nine to ten months; management later corrected the rate when auditors noted the error. The auditor recommended continued monitoring of rates and timely supplemental appropriations when expenditures approach appropriation levels.

The audit also noted compliance testing gaps tied to opioid abatement funding where the county serves as fiscal agent; the auditor said the county signed cooperative agreements but did not always perform reconciliations and testing to confirm other entities’ expenditures were appropriate, so additional reconciliation is required. A separate compliance note concerned an issued school‑board check that was cut to record an expense in the proper period but was withheld from release for several months while punch‑list items were resolved.

On budgetary health, the auditor pointed to a significant drop in unassigned fund balance driven in part by the timing of bond proceeds and spending; he recalled that bond proceeds appeared as revenue in earlier years but were spent in the current year under modified reporting, which reduced the unassigned balance. The auditor said property taxes grew about 4.5% over a five‑year period before a 2025 reassessment and recommended the board aim to rebuild reserves toward GFOA guidance (about two months/17% of operating expenses) or higher depending on risk tolerance.

Board members asked about posting journal entries mid‑year and the auditor recommended posting selected consultant adjustments to provide more timely visibility rather than waiting 12–18 months for final statements. The auditor also walked through long‑term obligations, noted no debt issuances in the year, and highlighted upcoming GASB standards that will impact financial reporting.

The presentation concluded with audit recommendations available in the packet and an offer from the auditor to help identify journal entries the county could post to improve midyear transparency.