HAGERSTOWN – The City of Hagerstown received a clean audit opinion for fiscal year 2025, with auditors reporting no material issues and noting continued growth in assets and the overall financial position.
The results were presented during the Dec. 9 work session by William Seymour, client advisory partner with SB & Company, alongside Finance Director Michelle Hepburn. The audit covered the city’s Annual Comprehensive Financial Report for the fiscal year ending June 30, 2025.
Audit scope and findings
Seymour said the firm issued an unmodified opinion, the highest level available under generally accepted auditing standards. The opinion indicates the city’s financial statements are free of material misstatement and were prepared in accordance with required accounting principles.
As part of the engagement, SB & Company audited the city’s financial statements, reviewed the uniform financial report submitted to the State of Maryland and completed required federal reporting. The firm is also conducting a “Uniform Guidance Single Audit,” required because the city exceeded $750,000 in federal grant expenditures. That portion of the audit is due in March.
Auditors reported no material weaknesses or significant deficiencies in internal controls, no audit journal entries, no instances of fraud or illegal acts and no disagreements with city management. Seymour also certified that the firm remains independent of the city.
Financial position improves
On an entity-wide, full-accrual basis, the city continued to grow financially during fiscal year 2025.
Total assets increased from approximately $439 million at the end of fiscal year 2024 to more than $466 million at the close of fiscal year 2025. Liabilities rose modestly, from about $173 million to $177 million.
The city’s net position, which represents assets minus liabilities, increased by roughly $30 million over the fiscal year.
Revenue and expense trends
Revenues increased from about $142 million to $161 million, driven primarily by higher service charges in business-type activities, such as utilities.
Expenses also rose, from roughly $117 million to about $132 million, but the increase still resulted in a significant positive change in net position. Auditors said no issues were identified during the review of revenues or expenditures.
Seymour told council members that the city’s internal controls and financial processes are effective and would continue to produce reliable financial information even without an external audit.
City officials credited the finance department’s strict adherence to policies and procedures for contributing to the positive audit outcome.
