Audit of City Stars finds no material modifications but flags accounting and governance issues

An independent audit of City Stars, the nonprofit youth sports organization that uses Jonesboro parks, found no material modifications were required for the organization's financial statements for the period through Dec. 31, 2024, but the auditor told the Jonesboro Finance Committee on June 24 that the group's accounting and governance practices warrant clarification and improved transparency.

Melissa Harrison, audit partner with Thomas Bay Noble, presented the report and said the audit used the cash basis of accounting and did not require material changes to the financial statements. Harrison said the organization's only material asset on the cash-basis balance sheet was cash of $82,003.46 and that the audit showed a change in net assets of $16,354 for the period reviewed.

Harrison described a notable accounting arrangement involving field rental charges and Arkansas Revolution FC (the travel-soccer entity named in the audit). She told the committee that City Stars and Arkansas Revolution FC operate with a single checking account, so "the city won't be receiving any money because there's no checks written" for field rental fees; instead, the fee is recorded as an internal accounting entry in the Revolution travel-soccer reports and does not reflect a cash outflow from the shared account. The audit report notes that field rental is recorded for budgeting and balance tracking within the Revolution travel-soccer financial report rather than as a separate cash transaction.

Committee members and the auditor discussed cash controls. Harrison said deposit processes include multiple people counting gate and concession cash and that deposit slips and signed count sheets were available for review. She recommended separating registration, gate and concession income in the accounting records for comparative purposes and clearer reporting of concession profitability. The audit report also noted City Stars lacked depreciation schedules and other typical nonprofit schedules because the organization had not previously been audited to this level.

Committee members raised governance concerns about the overlap between City Stars and city staff. Officials noted the original 2004 agreement allows city employees to serve as City Stars officers; committee members suggested re-evaluating the agreement and increasing outside volunteer participation on the City Stars board to reduce perceived conflicts. The committee recorded that all checks required two board-member signatures and that multiple signatures accompany deposit documentation.

Public commenter Jeremy Terrell urged more rigorous external oversight and transparency; he asked who hired the auditor and whether the audit level was sufficient given the volume of cash handled at events. Melissa Harrison said she was hired by the City Stars board and emphasized professional independence and audit standards. The committee chair and staff said the council and administration requested the audit and indicated the group is exploring options to improve the arrangement, including the possibility of a less invasive but more regular “financial statement review” by a CPA firm as an interim step between compilation and a full audit.

The audit presentation prompted discussion but no formal committee action beyond receiving the report and directing staff to pursue follow-up conversations about governance and financial reporting. Committee members asked staff to provide a clearer breakdown when possible of gate, concession and registration income for future reporting.

The audit presentation and subsequent public comment underscored lingering public concern about the City Stars arrangement; the committee said it will continue reviewing governance, documentation and reporting practices with the aim of increasing transparency and accountability.