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Auditor gives Auburn a clean FY22‑23 opinion but flags material weakness and control issues
Summary
Munn CPAs issued an unmodified (clean) opinion for Auburn's FY22‑23 financial statements but reported one material weakness tied to about 20 audit adjustments, a significant deficiency related to grant reconciliation (approx. $400,000), and a compliance finding for late filing; auditors and staff attributed many issues to an ERP implementation and turnover.
An independent audit firm presented Auburn’s audited comprehensive financial report for the year ended June 30, 2023 at the June 24 council meeting and issued an unmodified — commonly called a “clean” — opinion on the city’s financial statements.
Erica Pastore, a partner with Munn CPAs, told council that while the financial statements are presented in accordance with GAAP, the audit identified one material weakness and one significant deficiency. The material weakness stemmed from roughly 20 audit adjustments across multiple accounts and control lapses related to an ERP system implementation and staff turnover; the auditors recommended strengthening controls around accrual posting, bank reconciliations and grant accounting.
Pastore said the grant issue involved about $400,000 of expenditures that had not been recorded as a receivable, and the audit also recorded a compliance exception because the FY22‑23 audit was filed late. She summarized the firm’s overall conclusion: “For fiscal year ’23, the city was issued an unmodified or I call it a clean opinion,” and then explained that the number of adjustments led to a material weakness finding.
City Finance Director Gretchen Johnson acknowledged the late timing and the challenges produced by system changes and turnover; she said staff have established a fiscal year‑end checklist, are implementing improved internal controls and will bring quarterly financial updates to the council to provide earlier information.
The single‑audit of federal funds — required when entities expend more than $750,000 in federal awards — produced an unmodified opinion for the major programs tested. The auditor noted about $3.6 million in federal expenditures in the year (including home loan programs and airport funds) and reported no compliance findings on the major programs.
Council members pressed auditors and staff on the timing of the audit and the repeat nature of some management letter comments. Pastore said repeated, smaller adjustments sometimes cause a higher count of audit adjustments, and that many of the items had been addressed; staff committed to procedural changes and closer monitoring going forward.
The auditors provided a management letter with 10 recommendations for improvement and a conclusion letter showing where adjustments were made; staff said those attachments are available in the audit packet and that they will work to get the next audit back on a December timetable.
