Escalon staff say auditor withdrew after extensive draft work; city seeking replacement

City finance staff told the Escalon City Council that an out-of-state auditing firm ended its engagement after concluding it had exceeded professional independence thresholds during work on the city’s 2022–23 financial statements.

Wendy, the city’s finance representative, said the auditor did not find fraud or intentional wrongdoing in the prior years but determined it had become too involved in preparing elements of the report rather than strictly auditing them. The firm will refund contract monies already paid, Wendy said, and the city will seek new proposals to complete a clean 2024 audit.

Council members asked for plain-English context and staff described the problem as largely procedural: prior years’ fixed-asset records required extensive adjustments and the draft reports required a fine-tooth review. Staff said they have draft 2024 financial statements and a mapping of accounts that should reduce time for the next auditor.

City Manager French said staff expect to solicit at least three quotes for a replacement auditor and continue work to finalize fixed-asset reconciliations. Councilors requested regular updates and staff indicated they will return with progress reports.

The city emphasized that the withdrawal does not reflect a finding of fraud and that staff will pursue a completed, publishable audit.