Smithfield's FY2025 audit: two state-compliance findings and an unmodified opinion

Smithfield city's FY2025 audit reported two instances of noncompliance with state requirements: missing documentation behind the city's fraud risk self-assessment, and a General Fund unreserved balance above the state threshold. ^[1]

In the same report, Richey, May & Co. wrote that the city "complied, in all material respects," with the state compliance requirements it tested, and that its opinion on compliance "is not modified with respect to these matters." ^[2]

The training documentation

Smithfield files a fraud risk assessment form with the State Auditor. Its form for FY2025, completed July 9, 2025, records 355 of 395 points. It answers yes to whether governing body members completed required entity-specific training, and yes to whether a member of the management team received at least 40 hours of formal training in accounting, budgeting or other financial areas. ^[4]

The auditor's finding 2025-01 says the city "did not document the 40 hours of formal training" completed during the year by a member of the management team, "or verify the entity specific training that was required." It gives the cause as "Management was not aware of the requirement to track and document the training throughout the year." ^[1]

The auditor recommended that the city retain documentation to support its risk assessment. In response, city officials wrote that the city will track formal accounting and budgeting training, noting when and where it occurred, how long it lasted and its subject. ^[1]

The fund balance

Finding 2025-02 says the General Fund's unreserved fund balance at year-end "was 36%, which exceeded the State required threshold of 35% of general fund revenue." The auditor attributed it to higher General Fund revenue and to some expenses being paid from previously restricted resources. ^[1]

The auditor recommended reviewing the balance during the year and transferring money to capital projects funds as needed. City officials responded that a transfer from the General Fund to the Capital Improvement Fund would be made during the midyear budget adjustments in December. ^[1]

At June 30, 2025, the General Fund reported $5,866,980 unassigned, out of a total fund balance of $10,670,186. General Fund revenue for the year was $16,188,063. ^[7][8]

What the auditor did not find

The auditor wrote that it did not identify any deficiencies in internal control over compliance that it considered material weaknesses or significant deficiencies. The report says its review was for a limited purpose and was not designed to identify all such deficiencies. ^[3]

The audit's schedule of prior-year state-compliance findings reads "No prior year findings." ^[5]

Auditors presented the results to the City Council on Dec. 10, 2025, according to the minutes of that meeting. ^[9]