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Commission accepts FY2024 audit; auditors report four new findings
Summary
The City Commission accepted the City of Hobbs fiscal year 2024 audit and received a clean opinion on financial statements and federal awards, but auditors reported four new findings including accounts receivable tracking, federal filing delays, PERA withholding errors, and capital asset tracking discrepancies.
The Hobbs City Commission voted unanimously Tuesday to accept the fiscal year 2024 audit, which provided an unmodified opinion on the city’s financial statements and federal awards but identified four findings the auditors said should be addressed.
McClain Enriquez, senior audit manager in charge of the audit, told the commission the auditors issued a clean opinion on the financial statements and federal awards but found four issues they labeled as findings: accounts receivable reporting and tracking, missed federal filing deadlines, incorrect PERA withholdings for some employees, and capital asset tracking and depreciation discrepancies.
Why it matters An unmodified opinion means auditors concluded the financial statements present fairly in all material respects. However, the four findings raise concerns the commission and staff said they will work to correct before the FY2025 audit. Enriquez said staff turnover late in the fiscal year likely contributed to the problems.
Details from the presentation Enriquez said the accounts receivable issue reflected several separate problems: difficulty obtaining an ambulance accounts-receivable report from a third-party billing company, discrepancies in utility billing schedules, inadequate AR tracking in municipal court, and a troublesome weed-and-condemnation receivable report that requires running on June 30 to reconcile.
The audit also flagged late federal filings including a Form 941 for the quarter ending June 30 and a Form 1095 for calendar year 2023. In testing of employee withholdings, auditors found PERA calculations incorrect for 6 of 25 employees sampled. Auditors also identified errors in capital asset depreciation that they attributed to manual entry mistakes in the city’s asset software, resulting in audit adjustments.
Commission and staff response Finance staff said they are addressing the findings, have obtained missing receivable balances from a billing provider, and plan software or process changes for court accounts receivable. The city manager said the administration will send corrective-action responses to the Department of Finance and Administration when the audit is finalized.
Vote and procedural notes Commissioner Smith moved to approve the audit; Commissioner Mills seconded. The vote was recorded as unanimous in favor.
Ending City leaders said they will file corrective-action responses with state authorities as required and continue work to remedy the audit findings before the next audit cycle.
