Kennington and Christiansen issued an unmodified (clean) opinion on Toquerville's basic financial statements and found the city's financial reporting controls adequate, but the auditors reported one compliance finding tied to budgeting for a capital project.

"As auditors, we plan an audit in accordance with generally accepted auditing standards and government auditing standards," said Marcus Arbuckle, with Kennington and Christiansen. He told the council the audit included a review of internal controls over cash receipts, cash disbursements, payroll and the overall financial close and reporting process, and found "good checks and balances" in place.

The auditors' required compliance testing under state rules produced a single finding: expenditures in the capital projects impact fee fund exceeded the adopted budget. That overrun stemmed from the Cholla Creek project, which Arbuckle described as a roughly $250,000 project with the city's contribution about half that amount. The auditors said the city budgeted only its share of the expense rather than the entire project cost, producing the apparent exceedance.

"Normally, what you do is you budget for the entire project and then budget for the revenue from the state," Arbuckle said. He recommended the council consider a budget amendment as year-end approaches to correct the presentation and avoid the appearance of an overexpenditure.

Arbuckle also told the council auditors found no evidence of fraud or abuse during interviews, journal-entry testing and other customary procedures. He thanked city staff by name for cooperation during the audit and urged council members to review the Management's Discussion and Analysis (MD&A) and footnotes for additional context. The MD&A, he said, shows the effect of the Parkway project on year-to-year comparisons and can make the city's prior fiscal year figures look unusually large when a multi-million-dollar capital project is included.

No formal action was required of the council to accept the audit presentation. Council members asked clarifying questions about the Cholla Creek budgeting and were told the item is revenue- and expense-neutral once grant funds are recorded and the city's budgeting is adjusted.