Clifton Larson Allen presents Nogales 2023 audit findings revealing communication breakdowns

The City of Nogales is taking significant steps to address ongoing financial reporting challenges following the recent audit presentation for the fiscal year ending June 30, 2024. The audit, conducted by Clifton Larson Allen, revealed nine findings, including several repeat issues from previous years, raising concerns among city council members about the effectiveness of current financial management practices.

The audit highlighted material weaknesses in internal controls, particularly related to the management of federal programs, including the American Rescue Plan Act (ARPA) funds. These weaknesses stemmed from communication breakdowns between various city departments, which hindered timely and accurate financial reporting. In response, city management has proposed the creation of a grants coordinator position, aimed at improving oversight and communication regarding grant management and compliance.

During the meeting, council members expressed frustration over the audit's late delivery, marking the fifth consecutive year that the audit has not been completed on time. They emphasized the need for a structured financial close process and better training for finance staff to prevent future delays and findings. The council is committed to ensuring that the audit process is streamlined, with plans to have future audits completed by December.

Jean Marie Dietrich, the principal auditor, noted that while the city received clean opinions on its financial statements, the identified deficiencies must be addressed to enhance overall financial governance. The council is now considering the establishment of an audit committee to facilitate direct communication between the auditors and council members, ensuring that any issues are promptly reported and addressed.

As the city moves forward, the implementation of the grants coordinator role and improved financial processes are expected to lead to more effective management of federal funds and a reduction in audit findings in the coming years. The council remains focused on enhancing transparency and accountability in the city's financial operations, aiming for a more efficient audit process in the future.