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Fayetteville City auditors issue unmodified opinion; pension transfer to LOPFI alters year‑end disclosures
Summary
External auditors told Fayetteville City leaders they will issue an unmodified opinion on the city’s financial statements and state-law compliance, but a December transfer of the fire pension to LOPFI changes measurement dates and produced deferred inflows/outflows that auditors are finalizing before issuing the report next week.
Speaker 4, an external auditor, told the board the audit team expects to issue the city’s audit report next week once deferred inflows and outflows related to a pension transfer are reconciled.
Speaker 4 said the city transferred its firefighter pension assets to the state plan administered by LOPFI in December, a move that changed the plan from a single‑employer plan to an agent multi‑employer plan. That transfer requires the city to apply GASB 67 measurement‑date rules and add related disclosures and resulted in deferred inflows and outflows that the audit team and city staff are completing.
Speaker 5, the presenting auditor, said the firm will issue an unmodified (clean) opinion on the financial statements and an unmodified report on the city’s compliance with certain Arkansas statutes. "We're issuing an unmodified opinion," Speaker 5 stated, and added the audit found no material weaknesses, significant deficiencies, or instances of noncompliance in internal control testing.
The auditors identified three major federal programs subject to testing this year. Speaker 5 said the economic development cluster — expenditures primarily tied to an Industrial Drive extension — had a little over $1 million in expenditures this year. The ARPA program and the Community Development Block Grant (CDBG) cluster were also audited; Speaker 5 said the ARPA expenditures this year focused on nonprofit and small‑business assistance and the CDBG funds supported rehabilitation of low‑income housing. The audit found no material weaknesses or noncompliance in those programs.
Participants discussed audit thresholds for federal programs. Several speakers noted the Type A threshold for determining major programs is increasing to $1 million next year; auditors said any program that exceeds the threshold remains subject to Type A testing while it exceeds that amount.
The auditors also reviewed recently adopted and pending GASB pronouncements that affect presentation and disclosures. Speaker 5 said the city adopted GASB 96 and 94 and should expect future impacts from GASB 100 and 101, including changes to subscription-asset reporting and the presentation of compensated absences that may change how some items are reported in footnotes or require restatements.
On timing, Speaker 4 said the audit team is completing final tie‑outs for the deferred items and expects to issue the final reports next week. The auditors noted some timing delays in obtaining documents from a library entity that experienced a fire and temporary displacement of its finance staff.
Next steps: auditors will finalize disclosure language tied to the pension transfer and the city will receive the final audit report when those items are completed. The city’s council packet for the upcoming Tuesday meeting will reflect the audit’s status once the opinion and report are finalized.
