Harney County auditor delivers clean opinion; report shows reserves, federal awards and long-term liabilities

John Russell, the county auditor, told the Harney County Court on Jan. 8 that the auditor’s office issued a clean opinion on Harney County’s 2023–24 financial statements and presented highlights from the nearly 150-page report.

Russell said the county elected to present its financial statements on a cash basis rather than full generally accepted accounting principles accounting, and auditors issued the clean opinion based on that basis. "That first paragraph says that we've audited your financial statements. Paragraph 2 would give our opinion where we're saying that they are presented fairly in all material respects," Russell said.

The auditor told the court the combined general fund balance was about $6,781,000 at year-end; combined expenditures in the general fund were just under $8 million for the year, which the auditor characterized as roughly 10 months of reserves for the general fund under a typical operating year. Russell said the road fund reserves equated to roughly three months of operating reserves.

Russell reviewed several items the court might track:

- Federal awards: The county spent about $4.3 million in federal awards during the fiscal year; about $678,000 of that was passed through to other entities. Because the county exceeds the then-applicable single-audit threshold, auditors performed a single-audit compliance review on selected programs and reported no material noncompliance in the tested programs.

- Investments and cash: The auditor reported approximately $29 million invested in the Oregon State Treasurer’s Local Government Investment Pool and noted differences between bank and book cash balances were normal and covered by collateral or insurance.

- Landfill closure: The audit noted an estimated future landfill closure cost of about $361,000; roughly $61,000 had been restricted and set aside. Remaining closure costs would be expected to be funded from general revenues when they occur.

- Debt and lease commitments: Russell outlined a lease-purchase tied to road equipment with an outstanding balance of about $204,000 at year-end and noted a roughly $180,000 balloon payment would be due in 2026 if the county retains the equipment.

- Credit cards and controls: The county had about $109,000 in total credit card availability with a roughly $20,000 outstanding balance at year-end; auditors tested sample months and reported no misuse in the reviewed transactions.

- Budget-to-actuals: The audit included budget-to-actual schedules showing a large difference in grant revenue: the county budgeted roughly $5.54 million in grant revenue and recorded about $647,000 in actual grant receipts for the year (reflecting timing and awards not received). Overall, Russell said, general-fund expenditures were under the final amended budget by several million dollars.

On audit methodology and compliance, Russell reminded the court that cash-basis reporting records revenues when cash is received and expenditures when paid; the firm emphasized that cash basis is acceptable for the county given its operating model but differs from the GAAP (accrual) default.

Judge William Hart and other commissioners asked clarifying questions about timing and program compliance. Russell said auditors selected several major federal programs for compliance testing and described the kinds of compliance requirements auditors verify—examples included Davis-Bacon wage rules, signage requirements on construction grants and other program-specific conditions.

Russell also pointed out a minor Oregon Department of Revenue budget-category reporting issue (classification of certain expenditures) that the county should address in the next budget cycle; auditors did not consider it material noncompliance for the year under audit.

The auditor closed by noting that, while audits are not a legal determination of compliance, the county’s financial statements and schedules were presented fairly on the cash basis and that the auditor found the county’s internal controls and processes to be generally effective for the areas reviewed.

The court and staff said they appreciated the presentation and reserved hard copies and digital files for review.