Audit finds nine federal‑program issues; auditors recommend grants coordinator and stronger close process

CliftonLarsonAllen presented the city's fiscal year 2023-24 audit to the Nogales City Council on June 20, saying the firm issued "clean, unmodified opinions" on the city's governmental and business‑type financial statements but identified multiple material weaknesses and federal‑program findings.

The audit team told the council it found nine findings in the single‑audit portion — primarily tied to federal awards — and material audit adjustments related to ARPA revenue recognition and recording of Water Infrastructure Finance awards. Jean Marie Dietrich, principal with CliftonLarsonAllen, said the firm could not issue clean opinions on major federal programs because of testing and compliance gaps.

"We did have material audit adjustments over the recognition of federal awards . . . specifically for the ARPA revenue recognition," Dietrich said. She also listed procurement and Davis‑Bacon wage testing as areas that produced findings.

Council members pressed for reasons the audit was late and why several findings were repeats. Councilor Mayer noted that findings rose from seven to nine this year and asked what the city would do differently. Dietrich pointed to decentralization of grant administration across departments and delays in producing federal‑program support as principal contributors.

City Manager Joel Kramer told the council management planned to centralize grant oversight. "Management's identified the need for a grants coordinator," Kramer said, adding the city expects to fill the position in July. He said the role will monitor reimbursements, ensure timely reporting and help avoid the timing and recognition issues that required audit adjustments.

Dietrich recommended concrete steps to improve the financial close, including a disclosure checklist, a closing checklist and more training for finance staff. She also recommended the council name a point person to monitor audit progress so auditors can communicate directly with council when deadlines slip.

Council discussion focused on the audit's timing, the repeated nature of several findings and whether the city should hire outside consultants to help with audit prep. Kramer said the administration intends to tighten process and training so future audits are completed on a December timetable rather than in the summer.

What happens next: management agreed to a corrective action plan and to recruit a grants coordinator by July; auditors said those steps should reduce audit risk but will not eliminate findings overnight. The council asked for regular updates on implementation and for a designated council contact for audit status.

Ending: The council received the audit materials and directed staff to return with the corrective action plan implementation timeline and cost estimates for the grants coordinator and other recommended process changes.