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11 <br /> Slide #12 <br /> II\AT <br /> 4 J Orange County,North Carolina <br /> Required Communications(Continued) <br /> • Audit Adjustments <br /> Several adjustments were required during the conduct of the audit;these adjustments have been provided to <br /> management and they have provided us with representations that the adjustments have been posted to the <br /> County's general ledger. <br /> We did not have any passed audit adjustments. <br /> • Financial Statement Disclosures <br /> The footnote disclosures to the financial statements are also an integral part of the financial statements and the <br /> process used by management to accumulate the information included in the disclosures was the same process <br /> used in accumulating the statements. The overall neutrality, consistency, and clarity of the disclosures was <br /> considered as part of our audit. <br /> • Information in Documents Containing Audited Financial Statements <br /> Our responsibility for other information in documents containing the Countys basic financial statements and our <br /> report thereon does not extend beyond the information identified in our report. If you intend to publish or <br /> otherwise reproduce the financial statements and make reference to our firm,we must be provided with printers' <br /> proof for our review and approval before printing. You must also provide us with a copy of the final reproduced <br /> material for our approval before it is distributed. <br /> • Auditor Independence <br /> In accordance with AICPA professional standards, M&J is independent with regard to the County,its component <br /> unit,and its respective financial reporting processes. <br /> Auditor's Discussion&Analysis(AD&A) <br /> June 30,2025 <br /> Slide #13 <br /> /AAT <br /> J Orange County,North Carolina <br /> Audit Findings <br /> • 2025-001 Accounting for Lease Activity <br /> Issue: We noted that the County did not record the current year lease activity required under GASB 87. A new <br /> material lessor lease executed during the fiscal year was not recorded in the County's financial statements,as well <br /> as the current year additions for lessee leases were not recorded. As a result,both lessee and lessor lease activity <br /> for the fiscal year was incomplete in the accounting records and thus audit adjustments of approximately$73 <br /> million were required to properly report the County's leasing activity in accordance with GAAP. <br /> • 2025-002 Reporting of Accounts Payable and Related Balances <br /> Issue: During our search for unrecorded liabilities,we identified multiple vendor invoices relating to goods and <br /> services received prior to year-end that were not accrued to the appropriate fiscal year. These invoices were <br /> instead recognized in the subsequent fiscal year when processed,resulting in a misstatement of accounts payable <br /> and expenditures. As a result,audit adjustments totaling approximately$700,000 were required to properly report <br /> the Count}fs liability for accounts payable and the related expenditures/expenses for fiscal year 2025. <br /> • 2025-003 Prior Period Adjustment <br /> Issue: We noted that the County recorded sales and use tax refund receipts after year-end as revenue,despite the <br /> related receivable and revenue having already been recognized in prior fiscal years. This resulted in duplicate <br /> recognition of revenue and thus audit adjustments were required to properly reduce outstanding receivable <br /> balances and to restate beginning fund balance of the Countys General Fund to address the errors in revenue <br /> recognition that occurred in previous years. <br /> Auditor's Discussion&Analysis(AD&A) <br /> June 30,2025 <br />