Matthew Harmon and Joe Sarno of HFA Certified Public Accountants presented a forensic audit of Clifton’s financial records for fiscal years 2019 and 2023 at a Sept. 25 council meeting. The audit examined budget and appropriations, capital and debt, grants, trust funds, payroll and benefits, and procurement. HFA said it performed document testing, data and analytical testing, control walkthroughs and investigative procedures including interviews, and reviewed up to a 10‑year lookback to form expectations.

HFA’s principal findings included noncompliance with a 2014 fund‑balance policy, instances where the city had relied on one‑time revenues repeatedly, gaps in public documentation for the city’s use of 2021 American Rescue Plan Act (ARPA) funding, instances of grant balances canceled without clear follow‑up, trust funds recorded without formal state approval and several payroll and benefit control weaknesses including incorrect Chapter 78 health‑benefit deductions in sample testing. In presenting recommendations, the auditors emphasized improved reserve management, a capital grant monitoring policy, quarterly tracking of ordinance cash balances, clearer trust‑fund accounting and closer monitoring of hiring and payroll payout controls.

On the question of fraud or material misstatement, Matthew Harmon said the forensic procedures ‘‘did not find any big errors in accounting that were happening’’ and that ‘‘what was being reported on the financials… was true and was able to be backed up’’ by supporting documentation. The auditors also said they did not identify evidence requiring a criminal referral in the documents and samples they tested.

Specific figures and examples in the report included: a 52‑page report with testing drawn from 2019 and 2023 (and some 2024 data where available); an excess of $141,017 in bond‑anticipation note borrowings beyond authorized ordinance balances; about $1.3–$1.4 million in city‑owned tax‑title properties on the books that auditors recommended be evaluated for return to the tax rolls; and, in the Chapter 78 sample, a recalculated shortfall of $212,996.99 in deductions for 2019 within the sample tested and smaller errors in 2023 testing.

The audit identified multiple trust accounts that appear on the city’s books but lack formal Division of Local Government Services approval; auditors recommended consulting legal counsel and either seeking the approvals or canceling and returning funds to fund balance where appropriate. HFA flagged the city’s treatment of opioid‑settlement receipts as recorded in trust funds rather than in a state‑recognized grant fund and referenced Local Finance Notice 23‑04 as the applicable guidance.

During public and council questioning, HFA officials described their methodology, including the selected 2019 and 2023 focus and the use of analytical procedures built on a 10‑year lookback. Auditor Joe Sarno said HFA performed extensive testing and interviews and that the engagement’s objective was to identify internal‑control weaknesses and recommend remedial actions. Some council members and public commenters pressed for additional follow‑up: attendees asked whether auditors had reviewed corrective‑action materials submitted by city officials and whether HFA had interviewed the CFO in time to incorporate responses. HFA said it had attempted interviews but scheduling constraints limited some in‑person follow‑ups and that it issued the final report as presented.

Council reactions varied. Several council members said the report validated operational concerns and recommended implementation of a corrective‑action plan; other council members questioned whether the forensic engagement, at an expense of about $150,000, should have produced larger recoveries. The council discussed directing the administration to prepare a written corrective‑action plan and to provide more detailed lists (for example, the auditors’ list of tax‑title properties) for follow‑up at a future meeting.

No formal vote on the audit itself was recorded in the transcript; the record shows the audit presentation, an extended public comment and council question period and a motion to close the public portion of the meeting. The auditors’ recommendations in the report were presented as items for the municipal government to consider for budgeting, control improvements and potential future action.