The firm of Lank, Johnson & Tull, CPAs presented the town’s FY 2024 audit during the Monday, July 20, meeting of Laurel Mayor and Council. The audit covers the period from July 1, 2023 through June 30, 2024, and resulted in an “unmodified opinion,” commonly referred to as a “clean audit.”

Presenting the report was Brandon Tull, CPA, who said the audit reflects significant financial growth during the fiscal year while also highlighting several administrative challenges the Town continues to address. “The town received an unmodified opinion, which is the highest level of assurance we can provide,” Tull told council members. “That means the financial statements are fairly stated in all material respects.”

According to the audit, Laurel’s total net position increased by approximately $3.1 million, an 18 percent increase over the previous year. Tull attributed the growth primarily to major capital investments funded through grants and forgivable loan proceeds. Among the largest projects were renovations to the Dunbar Police Station and extensive water main replacement projects financed through the Drinking Water State Revolving Fund.

Total municipal revenues increased from approximately $6.4 million in Fiscal Year 2023 to $11.1 million in Fiscal Year 2024, while the Town’s total program and operating expenses remained relatively unchanged at approximately $8 million.

Tull emphasized that the revenue increase should not be viewed as a permanent change in the town’s financial condition. “Most of that improvement came from one-time grant funding and loan forgiveness tied specifically to capital projects,” he explained. “If we isolate those extraordinary items, the town’s operating budget remains relatively stable.”

Grants and contributions accounted for the largest share of municipal revenue during the year, representing 41 percent of total revenues. Police services represented the town’s largest expenditure at 32 percent of total expenses, followed by water and sewer operations, general government and street maintenance.

The auditors also reported the town successfully completed its federally required Single Audit because federal expenditure exceeded applicable thresholds. Two federal programs—the Drinking Water State Revolving Fund and American Rescue Plan Act (ARPA) funding—were examined. Both programs received clean compliance opinions with no audit findings or questioned costs.

While the overall audit opinion was positive, Tull noted two issues requiring attention. The first involved accounting corrections from prior years concerning the recording of certain grant revenues and forgivable loan proceeds. Those adjustments required a restatement of the town’s beginning net position but did not affect the clean audit opinion.

The second involved “a material weakness in internal controls over financial reporting.” Tull explained that financial records were not maintained on a current basis during portions of the fiscal year, requiring auditors to make significant adjusting entries before completing the financial statements.

He said the weakness was largely attributable to the departure of the town’s former finance manager and subsequent employee turnover, which disrupted normal accounting procedures.

Tull noted that such findings are not uncommon among smaller municipalities and said recommendations have been provided to town management to strengthen financial reporting procedures going forward.

Following the presentation, Laurel resident Sharon Ardisana, who attended the council meeting, questioned Tull about the length of time required to complete the audit and whether the town’s charter should be amended to better reflect the audit timeline.

Tull explained that several factors contributed to the delay, including the transition from the town’s previous auditing firm, the departure of key financial personnel and the complexity of the town’s accounting system. “The software was configured in a way that made sense for the previous finance manager,” he said. “When that transition occurred, it created significant challenges as we worked through the records.”

He expressed optimism that future audits can be completed much more quickly now that auditors have worked through the transition. “Now is the easiest time for us to move right into the next fiscal year,” Tull said.

Town staff also told council members they have been responding promptly to auditors’ requests by uploading requested documentation as soon as it becomes available.

Responding to additional questions from Ardisana, Tull said the material weakness will likely continue to appear until Laurel is fully caught up on its audit schedule. He added that once the town returns to a normal audit cycle, management will have a greater opportunity to demonstrate corrective actions.

Asked how Laurel compares with other municipalities, Tull said the town’s situation is not unusual. “The theme with local governments in Delaware is they’re understaffed and under-resourced,” he said. “This is a very common finding.”

The auditors also reported they are actively working on Laurel’s Fiscal Year 2025 audit and hope to complete that engagement before the end of 2026. If possible, the firm would also like to complete the Fiscal Year 2026 audit shortly thereafter, allowing Laurel to return to a current audit schedule.

“Our goal is to give you a set of audited financial statements you can hand to any grantor, any lender, or any citizen and say with confidence, ‘This is where we stand’,” he said.

Town Manager Jamie Smith said citizens with questions regarding the audit are encouraged to contact Laurel Town Hall.