Auditors: Fayetteville City to receive unmodified opinion; pension-plan transfer requires measurement-date disclosures

Fayetteville City auditors said on Monday that they expect to issue an unmodified opinion on the city's financial statements next week and reported no material weaknesses or significant deficiencies in internal control.

The external audit team told the board the year's audit produced a clean opinion on the financial statements and on compliance with major federal programs and Arkansas state laws. "We're issuing an unmodified opinion on those financial statements being prepared in accordance with GAAP," one auditor said, and added the team's review of internal control found no material weaknesses.

The auditors called out two notable items for the year. First, disclosures related to a contract or entity identified in the transcript as "Savitas" are under review and the auditors have proposed markups to the city's draft disclosures. Second, the city transferred assets from a single-employer fire pension plan to the state agent multiple-employer plan administered by LOPFI. That transfer means the city must apply GASB Statement Nos. 67 and 68 reporting rules with a changed measurement date and record related deferred inflows and outflows. The auditors said the accounting treatment has been prepared and they are finalizing the deferred inflow/outflow calculations.

The audit team also reported the results of major federal-program testing. Three major programs were audited: the economic development cluster (approximately "a little over a million" in expenditures tied to an Industrial Drive extension), the American Rescue Plan Act (ARPA) funds used for nonprofit and small-business assistance, and Community Development Block Grants (CDBG) supporting housing rehabilitation projects. Auditors said there were no reportable compliance findings for those programs. Staff noted about $1.5 million of ARPA commitments remain and emphasized deadlines: obligations must be made by the end of the fiscal year and expenditures completed by 2026.

Auditors reviewed recent and upcoming GASB pronouncements and their likely impact on presentation and disclosures, including GASB 94 (public-private partnerships), GASB 96 (subscription-based information technology arrangements), and upcoming Statements 100 and 101 (accounting changes, error corrections and compensated absences). The auditors said many changes affect footnote presentation and MD&A structure and that the city should evaluate longer-term implications for restatements and liability calculations.

The audit team noted a delayed draft for the library audit, caused by a library fire and temporary staff displacement, but said the city's report itself will be issued on schedule. "We're gonna get this thing issued on time next week," an auditor told the board.

What happens next: auditors said they will complete final number tie-outs and issue the opinion next week; city leadership said they will confirm wording and timing before the Tuesday city meeting so the administration can speak accurately about whether the opinion has been issued.

Votes at a glance: the board approved the March minutes and the meeting agenda by voice vote during the session and adjourned by motion at the meeting's close.