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Oro Valley receives clean audit; auditors flag recordkeeping gap for federally funded park assets
Summary
External auditors gave the Town of Oro Valley an unqualified opinion on its fiscal 2024 financial statements but reported a single significant deficiency: the town had not tagged federally purchased capital assets nor inventoried them on the federal timetable. Management says the correction has begun.
Oro Valley’s external auditors issued an unqualified (clean) opinion for the town’s annual comprehensive financial report for the year ending June 30, 2024, and reported no instances of material noncompliance — but they found a significant deficiency tied to federally purchased capital assets.
Brian Hemmerle, lead audit partner with Baker Tilly, told the Town Council on Jan. 20 that the town’s “net position” rose from $331,800,000 to $345,500,000 and that total cash and investments ended the year at a little over $70,000,000. The town’s general fund balance decreased from $23,800,000 to $22,100,000 but still exceeded the town’s 30% reserve policy by roughly $7,000,000. The town had budgeted a $5,300,000 use of fund balance, Hemmerle said, and performed better than budgeted.
Hemmerle said Baker Tilly issued a clean opinion on the financial statements and a clean compliance report. On federal grants, the town’s spending exceeded the single-audit threshold: the town spent $3,700,000 in federal funds in fiscal 2024, triggering a single-audit review. Two programs were audited as major programs: the COVID-19 State and Local Fiscal Recovery Fund and the Outdoor Recreation Acquisition, Development and Planning Fund.
“The significant deficiency this year for the major programs was related to maintenance and recording of federally purchased capital assets,” Hemmerle said. He explained the finding had two parts: federal guidance requires that capital assets purchased with federal dollars be recorded in the accounting system with a unique identifier marking them as federally purchased, and those federally purchased assets must be inventoried every two years. Auditors found that Oro Valley had not used a unique federal identifier in its general ledger and that inventories of federally purchased assets were not occurring on the required two-year schedule.
Hemmerle said town management has implemented corrections: staff added a unique identifier in the general ledger and begun inventorying federally purchased capital assets. Hemmerle emphasized that the books were materially correct — the issue was one of identification and periodic inventory required by federal rules.
Hemmerle also reported on the state expenditure limitation: voters approved an expenditure limitation of about $148.4 million and the town’s expenditures subject to the limit were $125.9 million, leaving the town about $22.5 million under its voter-approved cap. He said auditors did not identify any fraud, material weaknesses, or reportable noncompliance beyond the single deficiency noted above.
No formal action was taken by council on the audit presentation; the item was a staff/auditor report and opened for council questions.
Ending: Council members asked several questions about the finding and the auditors and staff discussed next steps; Hemmerle said the deficiency is common and that corrections are already underway.
