La Plata, MD – Charles County got a clean bill of health—at least in their financial propriety—from William Seymour and Christopher Lehman of SB & Co., an independent auditor, Tuesday, Jan. 13 at the Charles County Commissioners’ weekly meeting.
“Annually, we are required to have an independent audit,” Charles County Financial Director David Eicholtz told the commissioners.
Seymour said the results were an unmodified opinion.
“Our audit discovered no instances of fraud or weaknesses,” he said.
“Our purpose is to identify risks of misstatement or errors,” Lehman stated. “As part of using a risk-based audit process, looking at management and integrity of management, the risk assessment process points out risks for the county. In all those cases, we want to find out what are the key processes impacting financial statements. We found the process was designed and operated effectively.”
Seymour said that by using the Government Accounting Standards Board (GASB) 68 Differential Actuary Account, auditors were able to calculate future payments less than amount in the retirement, post-employment health fund trust, and whether that difference would be recorded as an asset or liability.
Retirement, post-employment health benefits carries a $65 million liability, he said, representing an approximate 16 percent decrease in that position for the county.
“What does this mean for our bond ratings? This information has historically been disclosed through financial statements,” Seymour explained. “Bond rating agencies are able to see this information and county leaders go up to New York. But for a lay person it makes it that much more transparent. An actuary will make a determination if that trust fund will run out of money in the future.
“As a result, our expectation is to have an actuary do a calculation that has to be at 2.95 percent,” he noted. “The county is at 4.25 percent. That 1.3 percent difference will have an expedential effect on future bond ratings. That liability may have to be recorded. Four or five years from now, it will be a lot more.”
Overall, Seymour said, the county’s financial statements are responsible on management.
“Ours was an unmodified opinion with no real issues,” he said. “We had no major audit adjustments, no fraud or illegal acts, no disagreements. In closing, the audit was very clean with full cooperation from management.
“Charles County has won the Certificate of Excellence 12 years in a row now,” he said, “and I expect you will win it again.”
Contact Joseph Norris at joe.norris@thebaynet.com