FRONT ROYAL – About 10 months after the county usually receives its audit report, the Board of Supervisors during its Tuesday meeting heard a presentation on its fiscal year 2018 audit.
Matt McLearen, of the county's auditing firm Robinson, Farmer, Cox Associates, explained the delay stemmed from the Front Royal-Warren County Economic Development Authority's inability to finish its audit. This comes as the EDA continues attempts to unravel and understand the series of alleged embezzlements perpetrated within the authority.
EDA Executive Director Douglas Parsons told supervisors that its accountants are working on finalizing proposed adjusted journal entries, which should be completed and presented to its auditor by the month's end.
"We're very sorry it has taken as long as it has. Our accountants are working diligently but these are very complex issues and we have to get things right," Parsons said.
Instead of waiting longer for the EDA's audit to be complete, the county proceeded with its own.
McLearen noted the EDA is a “component unit for financial reporting purposes” and its information is usually included in the county’s report.
“We do not audit [the EDA]. We do wait for the financial information when that audit has been completed and comprise a summarized version of that in the county’s report. That, of course, was not available this year,” he said.
Regarding the county's audit, McLearen said there were “no significant" findings and "no deficiencies" or "material weaknesses." As a disclaimer, he noted that another firm is auditing the EDA because it is a “separate legal entity.” He added his presentation just examined the county’s and School Board’s finances.
He explained that that the auditing process included an examination of internal controls, testing of account balances, sampling transactions and examining supporting documentation.
McLearen said the county has a combined fund balance of $37.7 million and a general fund balance of $13.5 million. He explained a fund balance represents the county's equity while the general fund represents the county's "main operating fund." From the previous year, he said the fund balance decreased by $9.5 million while the general fund balance decreased by $2.2 million.
The fund balance, he said, decreased in large part due to capital projects that were previously financed, such as bonds for schools.
“Capital projects funds do have ebb and flow to them. As large capital projects are started, the fund balance goes way up and as the projects end they go way down,” he said.
By the standard of comparing the county's expenditures to its fund balance, he said the county is in good standing. He noted because his presentation is so late, that just represents findings through June 2018.
Supervisor Tony Carter asked if the county’s audit report had to be adopted Tuesday.
County Administrator Doug Stanley responded that “the short answer is no.”
“Obviously, we need to submit our audit to the reporting rating agencies, credit agencies. We are delayed significantly to this point but certainly we’ll leave that to the board,” he said.
Supervisor Tom Sayre asked if the delay will harm the county’s credit rating.
McLearen explained that he is "not a financial adviser" but he believes the county's financial adviser and bond consultant have determined the risk of a harmed credit rating "is very minor."
Carter noted the 250-page audit report was sent to the supervisors Monday and he would “like to review it more.” He motioned to postpone its adoption until the supervisors’ next regular meeting, which the board unanimously approved.
The supervisors also:
- Approved the $46,831 purchase of a 2020 Chevrolet cab pickup truck for the Public Works Department.
- Adopted a resolution authorizing Stanley and Supervisors Chairman Dan Murray to execute the purchase of a 1.5-acre Villa Avenue property that houses the Warren County Community Center. According to the meeting’s agenda item, the county has made lease payments on the property since 2011 and the county is exercising its option to buy the property. Aside from the $550,000 in rent payments the county has made over eight years, no other money will be spent.
- Authorized public hearings regarding the proposed rezoning on a Panhandle Valley Retreat subdivision lot that would allow for private camping and a conditional use permit that would allow Backroom Brewery to host events such as weddings.
- Heard a presentation regarding the refinancing of bonds that could potentially save about $10.4 million. The board postponed a vote on the matter until its next regular meeting.