External auditors issue modified opinion on Stockton’s FY2024 financial statements; three reportable findings cited

Stockton’s independent auditors presented the city’s FY2023–24 Annual Comprehensive Financial Report (ACFR) on Sept. 23 and issued a modified opinion while identifying three reportable findings tied to administrative turnover and internal‑control weaknesses.

Sophia Kuo of the auditing firm summarized that the audit provided reasonable—though not absolute—assurance of fair presentation under US GAAP and that management is responsible for preparing the financial statements. The auditors reported the government‑wide net position, the general fund balances and pension funding ratios; they highlighted a general‑fund unassigned ratio that covers roughly 2–3 months of annual expenditures and an increase in reported liabilities (including pension and subscription/lease liabilities).

The audit issued a modified opinion and identified three reportable internal‑control matters: (1) administrative service staffing shortages and turnover that delayed financial close; (2) internal‑control weaknesses related to timeliness and accuracy of financial closing processes; and (3) significant revisions to the Schedule of Expenditures of Federal Awards (SEFA/CfA) that delayed audit completion. The auditor noted uncorrected misstatements were individually and in aggregate immaterial.

Council members asked for better, more accessible reporting to committees and the public describing where carryover balances and other one‑time funds were being spent; staff said they will provide more detailed tracking for oversight committees and bring more transparent materials to the audit and budget committees before the close of the year.

The council accepted the audit and associated agreed‑upon procedures items by motion (16.1 and related items), 7–0. Audit staff and city management said they will work with an internal‑controls auditor and report back on remediation steps.