City audit issues ‘clean’ opinion but flags recurring closing delays and staffing gaps

The city’s independent auditor issued an unmodified — or "clean" — opinion on the comprehensive annual financial report for the fiscal year ended Sept. 30, 2024, but reported a recurring significant deficiency tied to untimely financial closing procedures and staff turnover.

Matt Rogers, engagement director for Weaver and Associates, told the City Council the firm issued the highest level of assurance on the audited financial statements and on the schedule of expenditures of federal awards. Rogers said auditors found no material weaknesses or material noncompliance, but they did report one recurring significant deficiency that originated in fiscal 2023 and related to delays in preparing required year‑end schedules and reconciliations.

The finding arose because several senior finance staff left the city before underlying knowledge was transferred, Rogers said. "There was a list of things that had not yet been prepared," he told the council. Rogers said the city showed improvement this year and auditors expect the issue to be resolved by fiscal 2025 as processes are strengthened.

Sergio Saino, director of finance and procurement, told council members senior finance leadership vacancies and siloed recordkeeping left gaps in institutional knowledge that the department is addressing. He said the director and assistant director have now been in place for about a year and that staff training and weekly close routines are in effect. "We are much more hands on with operations," Saino said.

Council members pressed for more detail. Councilwoman Sylvia Campos asked how long staff had been in their roles and whether the department had standard operating procedures. Saino and Assistant City Manager Heather Holbert said the city is reviewing and updating SOPs; Holbert added that the city previously eliminated a position that coordinated SOP development during budget reductions and directors are now responsible for that work.

Rogers also reported on the single audit of federal programs. He identified the city’s major federal programs for the year as immunization grants and the Coronavirus State and Local Fiscal Recovery Funds (ARPA). For state awards, the hospital preparedness program was treated as a major program. Auditors issued unmodified opinions for all of these compliance reports.

Rogers told the council there was one uncorrected misstatement carried into the audited statements involving capital assets that had been classified as repairs and maintenance and later capitalized; that error was reflected as a beginning-balance adjustment that was corrected in current-year activity.

Holbert said staff will make the full audit materials available and brief council members individually if they want more time to review the voluminous report. Council members asked that future briefings be provided earlier in the packet cycle so they have time to absorb the materials before the council meeting.

The presentation was intended as an overview from the auditing firm; council members and staff said they will follow up with the audit committee and with finance staff to track remediation of the deficiency and to ensure consistent SOPs across departments.