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City auditor gives Port Arthur a clean 2024 opinion, flags lingering material weakness in financial reporting
Summary
Patillo, Brown & Hill LLP presented a clean (unmodified) audit opinion for the fiscal year ending Sept. 30, 2024, but reported a material weakness tied to corrected financial statement errors and untimely reconciliations; federal awards expenditures totaled roughly $30.68 million in 2024.
Cameron Aaron of audit firm Patillo, Brown & Hill LLP told the Port Arthur City Council on July 15 that the firm issued an unmodified (clean) opinion on the city’s 2024 financial statements, the highest level of assurance an external auditor provides.
Aaron said the audit covered governmental activities, business‑type activities and major funds for the fiscal year ended Sept. 30, 2024. The auditors also completed a single audit of federal awards after the city exceeded the $750,000 federal‑awards threshold; the schedule of federal expenditures for the year totaled $30,680,000, up from prior years.
While the audit opinion was clean, Aaron described one material weakness that had been identified and corrected during the audit. The firm found material errors in financial information that were corrected, related primarily to cutoff of expenditures, balance‑sheet reconciliations and bank reconciliations. Aaron said turnover in the finance office and the complexity and volume of federal grants contributed to the condition and that staff have been addressing the matters.
The auditors noted that the city had restricted cash in the water‑and‑sewer fund and that reimbursements from grantors can require borrowing temporarily from other funds until grants are reconciled and reimbursements received. Aaron said that at year end the general fund reported roughly $7.5 million in cash and that the city’s unassigned fund balance equated to about four months of expenditures, a level he described as in the normal range.
Council members asked for clarifications on audit terminology and property‑tax receivables. Aaron explained “unmodified” as materially free of misstatement and described how receivables that are not collectible within the near term (about 60 days) are recorded differently for governmental fund reporting.
Aaron recommended continued attention to timely reconciliations and staffing to support grant complexity; city finance staff were credited with progress on catching up reconciliations and audit deliverables.
Council members and the mayor praised the finance team for the clean opinion. The council did not take further formal action at the meeting beyond receiving the audit presentation.
