Auditor tells Fairview council FY2021 review exposes material weaknesses, delays in reporting

Rob (auditor) gave a work‑session briefing on the fiscal year 2021 audits for the City of Fairview and the Fairview Urban Renewal Agency, telling elected officials the audits had been completed only last week and describing several material weaknesses and delays.

The auditors presented the findings at a June work session and said the FY2021 audit “we finished this one last week,” adding that the long delay and bookkeeping problems produced significant year‑end adjustments and weakened internal controls.

Why it matters: the audit shows how multi‑year delays, staff turnover and partial use of an enterprise accounting system left the city and urban renewal agency with misclassified transactions and incomplete reconciliations. Those issues affect the reliability of financial reports, bond evaluators’ views and the city’s ability to budget and plan.

Most significant items - Land deposit and subsequent purchase: auditors said Urban Renewal recorded roughly $250,000 as an expense when the amount should have been recorded as a deposit until the land purchase closed. After the purchase later in the year the accounting was corrected but the initial misclassification was material and flagged in the audit. - System development charge (SDC) reimbursements: auditors found that SDC reimbursements flowing between Urban Renewal and the city were not consistently recorded; different versions of the building and financial software and manual reconciliations produced reclassifications and “big adjustments” that the audit authors reported as a material weakness in accounting for those transactions. - Bank reconciliations: auditors found bank reconciliations behind and containing offsetting reconciling items that obscured the true cash position. Auditors reported reconciling items on the order of roughly $13,000–$14,000 at the city level and said cleanup work was underway. - Capital assets and depreciation: capital‑asset records were kept in Excel schedules and fragmented across funds, increasing audit effort and risk. Auditors recommended migrating capital‑asset accounting into a managed module of the city’s accounting system to reduce manual work and errors. - Grants, receivables and other items: auditors flagged an outstanding invoice for court services owed to Troutdale and an undercrossing grant that left the city roughly $28,000 short of initial expectations; those items were listed as past adjustments and remain under follow‑up.

What staff and consultants said City Manager Nathan George and audit firm staff described steps to correct the records and finish subsequent audits. Nathan said the city had contracted Marina and Company to assist with closing books and reconciliations; auditors confirmed the consultant’s work was noted in the audit as a management consultation. Auditor Rob said the firm has begun FY2022 fieldwork and that staff shortages and turnover had substantially delayed the audits earlier in the cycle.

On future audits and the auditor contract Rob told the council the firm was contracted through FY2023 and that he expected to finish FY2022 within a few months, with FY2023 following thereafter. Nathan said he intends to extend the contract while the city completes the backlog, citing the consulting firm’s institutional knowledge; no formal council action on a contract extension was recorded in the meeting.

Next steps and outstanding work Auditors and staff said several corrections remain in progress: final reconciliations of SDC reimbursements, posting the remaining $250,000 deposit correction for FY2021 and clearing outstanding invoicing items from outside agencies. Auditors emphasized that the new and upcoming accounting‑system work (the city is moving certain modules to the cloud and onto a newer Tyler version) should reduce manual rework over time.

Ending City officials said they would continue to provide detail to the council and that the municipality is working with auditors and Marina and Company to complete FY2022 and get the audit cycle current. Auditors warned the audit delay itself may be reported as a material weakness in subsequent audits if timeliness does not improve.