Dewey council approves FY 2025 audit but urges improvements

Dewey Beach Town Council approved the Fiscal Year 2025 audit, per recommendations from the town’s audit committee, during a lengthy meeting Sept. 26.

While the approval was unanimous, Commissioner Gary Persinger cited disappointment with the audit results, urging the town to revise its monthly reporting system to ensure more accurate year-end projections.

“Based on all the discussion we had, beginning back in February and continuing even through June, there was an expectation created that we would have substantial surplus after we took care of the rainy day fund, the unassigned requirements and even any capital improvement expenditures,” Persinger said. “Unfortunately, no surplus shows in the audit.”

The commissioners believed they would have about $325,000 in surplus funds, even after meeting the town’s general fund balance policy requirements. The policy requires that at the end of FY 2025, the balances in the rainy day fund – a financial reserve intended to protect the town from major financial disruption caused by the effects of natural disasters or other catastrophic events – and its unassigned fund – used to cover short-term revenue or expenditure imbalances – must equal 50% and 15%, respectively, of the FY 2026 budgeted operating expenditures.

They had planned to use the surplus funds for the construction of the new town hall or for other uses.

In May, while the audit was being conducted, commissioners voted to move $1.4 million in unassigned funds – the accumulation of surpluses from previous years’ operations – from Brown Advisory to Community Bank, with the intent to devote the funds to the Capital Improvements - Town Hall Fund.

However, once the FY 2025 audit was completed, as Persinger said, they realized the anticipated surplus from that year did not materialize. It then became clear that to satisfy the general fund balance policy requirements, only $1.3 million of the unassigned Brown funds could be allocated to the town hall fund, rather than the full $1.4 million as intended.

“While I have no problem at all with the audit ... I think we have a reporting problem,” Persinger said. “We simply are not getting the right signals out of the information that is being reported to us each month.”

In other words, the issue lies not in the town’s accounting for funds, but in its ability to make future projections based on its monthly reports.

“The specifics of whatever errant reasoning may have influenced our expectations are not an issue now,” Persinger said. “The audit was very successful, and the audit reports over the past several years show that the town has made great improvement in meeting the governmental accounting standards and best practices. It is our monthly reporting and analytic and predictive capability that need reexamination and improvement ... and that is where I believe we need to focus our attention.”