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Philomath council accepts 2023–24 audit after auditor flags budget and control items
Summary
The Philomath City Council approved its 2023–24 financial audit unanimously after the city’s auditor said the financial statements fairly present the city’s condition but noted budget‑to‑audit variances, expenditures in excess of appropriations and internal control weaknesses tied to staffing and segregation of duties.
The Philomath City Council on March 10 voted unanimously to accept the city’s 2023–24 financial audit after the firm presenting the report said the statements “present fairly in all material respects.”
The auditor, the partner in charge of the government sector for the firm engaged by the city, told the council the audit opinion covers the fiscal year ended June 30, 2024, and highlighted that government‑wide net position increased in the period. He reported governmental activities with a net position of about $23,000,000 (an increase of roughly $1.7 million) and business‑type activities with a net position near $20,100,000 (an increase of about $3.5 million).
Why it matters: the opinion signals the financial statements can be relied on for budgeting and oversight, but the auditor also flagged specific compliance and control issues the council must address to reduce risk and improve transparency.
The auditor said the separate compliance review under Oregon’s minimum standards for audits identified a set of budget‑document variances and instances where expenditures exceeded appropriations in the general fund (notably police and city council categories), the urban renewal fund and the sewer debt service account. "Those are required to be separately appropriated under Oregon Budget Law," the auditor said, noting the findings are among the most common in small local governments.
The audit’s internal control letter identified two recurring areas of concern. First, the auditor reported material beginning‑balance errors that required adjustments and indicated a deficiency in controls over financial statement preparation. Second, the audit noted limited segregation of duties — a common issue for small governments — and pointed to the city’s utility‑billing process as an example where one employee posts receipts, applies payments and prepares deposits.
Council discussion focused on whether the control issues were new or carryovers and on staffing constraints. Councilor Jessica Andrade asked whether the internal‑control findings were the same as previous years; finance staff and the auditor said one issue was new (the billing‑clerk workflow), while other items were familiar. Finance staff said they can make procedural improvements but acknowledged limited staff resources hamper stronger segregation of duties.
Councilors also asked about the legal consequences of exceeding an appropriation. The auditor said enforcement actions under Oregon law are rare in his experience and often result in a corrective letter from the Secretary of State rather than formal sanctions, though he cautioned that officials can be held responsible in principle. The city attorney offered to research and return with specifics.
After the discussion, Councilor Richard Salsa moved to accept the audit; Councilor Spencer Erwin seconded. The motion passed unanimously.
What’s next: the audit identifies measurable control and compliance items the city should address. Staff and council discussed using contingency appropriations and formal resolutions to prevent small overexpenditures and prioritized follow‑up on segregation of duties where practical given staffing constraints.
