Payson audit: independent auditors issue clean opinion, cite three significant deficiencies

Auditor McKay Hall, partner with Hinton Burdick (now merged with Squire & Company), told the Payson Town Council the independent auditors' report for fiscal 2025 issued an unmodified, or "clean," opinion on the town's financial statements and a clean single-audit report for federal programs.

"There's an independent auditors report ... which is to say, in effect, can you ... rely on the information in those statements," Hall said, adding the report was unmodified. He highlighted the town's total net position of $170,000,000 as of June 30, 2025, and said net position increased by $12,500,000 over the year. Hall said total revenues were $56,800,000 and program costs were $44,300,000.

The auditor also reviewed capital activity and debt trends: governmental capital additions were about $15,000,000 with related depreciation, year-in-process projects increased by about $6,600,000, and governmental long-term debt decreased about $420,000. Utility fund long-term debt fell by roughly $1.3 million to $1.4 million as a result of scheduled debt service.

Hall told the council the audit did not disclose any material weaknesses. "We're happy to note that there are no material weaknesses," he said, but he added there were three significant deficiencies that the auditors documented and communicated to the town with recommended corrective actions. Hall summarized those issues: one document had been reprinted with two different dates; capital assets in process required allocation clarifications; and the town's accounting-system conversion produced a higher-than-normal level of adjustments during the audit.

When asked whether the audit raised concerns meriting a forensic audit, Hall said the test work performed did not indicate fraud. "We didn't see anything in the course of our test work that appeared to be fraudulent in nature," he said, but he cautioned that a forensic audit is expensive and intrusive and suggested targeted follow-up where specific concerns exist rather than a blanket forensic approach.

Council members asked for more detail about the significant deficiencies and whether focused examinations of areas such as community services cash handling or the water fund would be appropriate. Hall said those were viable alternatives: a limited, strategic review of particular transactions or processes can be less costly and more productive than a full forensic engagement.

The presentation concluded with staff noting the town has prepared responses to the auditors' findings and will work to address the recommendations. Council members and staff were invited to follow up with the auditor for further clarification on specific items.

The audit presentation and question-and-answer session occurred during the council's regular meeting; no formal council action on the audit was required at this session.