City auditor issues clean opinion; council discusses fraud controls and fund allocations

Lewiston City Council heard the annual audit presentation from auditor Matt Regan, who said the city’s financial statements were complete, accurate and prepared in accordance with accounting standards for local governments.

Regan told the council that his report includes an unmodified opinion: “your financial statements are complete and accurate, and they follow the accounting standards for local governments.” He recommended procedures the city already follows and flagged a few administrative items for the council to consider.

The auditor walked the council through key statements, pointing to government-wide net position and utility fund activity. He noted that the city’s governmental activities showed a combined net position he described as the book value of city infrastructure and facilities and that the utility (water and sewer) assets had risen after capital work. He also said depreciation and interest expense contributed to a small overall use of surplus in the last fiscal year.

Why it matters: an unmodified (clean) audit opinion signals to residents, lenders and grants reviewers that the city’s financial statements fairly present its finances. The council received several practical recommendations that could affect future budgets and reporting practices.

Council discussion and administrative follow-ups

Council members and staff discussed three operational matters that Regan raised: (1) employee salary allocations between the general fund and enterprise funds; (2) impact fee analysis for recent water-system capital spending; and (3) fraud risk assessment and reporting.

- Staff allocations: the council directed staff to implement the auditor’s recommended payroll allocation approach. The mayor explained the city has reallocated portions of a recorder’s salary for the first time (3% to sewer and 10% to water) and that staff has sampled one month from each quarter to document time allocations. The mayor said the changes were intended to ensure utility funds bear their appropriate share of personnel costs.

- Impact fees: Regan asked staff to review impact fees after the city spent roughly $8.4 million on water-system projects over three years. Council staff reported they consulted Cody Dieter, the consultant who prepared the last impact fee study; Dieter had already captured most of that spending in his prior analysis and told the city a new study was not immediately required. The mayor said the city will revisit the impact fee analysis later in the year once planned sewer work is better defined.

- Fraud risk assessment and reporting: the auditor walked the council through the city’s annual fraud risk assessment, noting the city scored low risk (365 of 395 points). Regan suggested the council consider additional deterrents such as a fraud-reporting hotline or a published contact for suspected misuse of city property. Council discussion included who would receive reports; staff emphasized that an employee or designated staff member — not the mayor — would be the appropriate recipient.

Other compliance items mentioned

Regan briefly reviewed other annual filings: the deposit and investment report to the state treasurer, the new annual conflict-of-interest disclosure, and training resources on the state auditor’s website for local-government officials. He told the council ABLE (the city’s accounting/finance contractor) prepares some of these filings and can run supplemental budget reports on request.

Ending

Councilmembers thanked Regan and staff for the audit work. No formal action was taken at the meeting beyond staff follow-up to implement the payroll allocations, to revisit the impact-fee analysis later in the year, and to consider how best to receive potential fraud reports.