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Auditor reports missing invoices; commission debates GAAP vs. regulatory basis under KSA 11‑20a
Summary
City auditors delivered a regulatory‑basis audit and reported 11 missing invoices from a sample, a significant deficiency. Commissioners discussed whether to waive generally accepted accounting principles (GAAP) under KSA 11‑20a or to budget for a GAAP audit in a future year.
Amanda Lancaster of Deal, Banwart & Bolton presented the city’s audit to the Fort Scott City Commission on Jan. 21 and summarized a regulatory‑basis engagement that produced an unmodified opinion for the regulatory basis but noted a significant deficiency related to missing invoices.
Lancaster explained the firm performed a regulatory‑basis audit and that the financial statements were “fairly stated” on that basis. She said the firm’s testing included sampling expenditures and that “out of 45 expenditures, 11 were not located in our normal testing,” which the auditors classified as a significant deficiency. She attributed the missing invoices to staff turnover and said staff told auditors the issue was isolated to the year under review.
Lancaster also described presentation items in the report, including schedules of long‑term debt, capital projects and footnotes on pension and compensated absences. She said the golf course fund was a newly created fund that had not been included in the budget and therefore showed as over budget for 2024.
The commission then discussed a pending resolution that would exempt the city from GAAP reporting under Kansas law, KSA 11‑20a, and continue reporting on the state’s regulatory basis. City staff and commissioners noted the two approaches differ in format and scope of testing: a GAAP (accrual) audit would include inventories, accounts receivable and capital assets and typically increases audit fees.
One commissioner said it would be beneficial for the city to perform a GAAP audit at least once to get an in‑depth review and to establish a baseline. Commissioners noted a GAAP engagement often costs substantially more; Lancaster said the fee could be “two to three times” the current regulatory‑basis audit cost.
Commissioners discussed timing and budgeting for a GAAP audit; the conversation included suggestions to budget for a GAAP engagement in 2026 or to pursue it for one upcoming year. The transcript records a motion to adhere to generally accepted accounting principles for the year; the records in the meeting packet show commissioners debated fees and timing and asked staff to include the additional cost in the budget planning process if they pursue GAAP.
Ending: Amanda Lancaster provided to staff the detail on the invoices that could not be located; staff said they will follow up with the audit firm and that the commission will consider the GAAP waiver resolution and budget implications at a future meeting.
