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Jackson City CFO outlines repeated material weaknesses in FY2023 audit; council plans follow-up
Summary
CFO Jillian Caldwell told the Jackson City Council the FY2023 audit shows multiple material weaknesses and noncompliance findings, including an adverse opinion for the convention center, and a general fund balance of $43 million; council members pressed for a timeline to reduce repeat findings.
Jillian Caldwell, Jackson's chief financial officer, briefed the City Council on the city's FY2023 financial report and audit on Nov. 24, saying the city's governmental and business-type financial statements received an unmodified opinion but one component unit —the Jackson Convention Center —received an adverse opinion because the city did not receive that unit's financial report in time to include it.
Why it matters: The audit lists a string of material weaknesses and noncompliance findings that the council's finance staff said will require months of work and could carry forward into the 2024 and 2025 audits if not addressed. Caldwell told members the general fund's combined balance was $43,000,000 for 2023, with an unassigned fund balance of about $29,100,000.
The findings are numerous. Caldwell read a list of specific deficiencies, including inaccuracies in internal financial reporting for bank accounts, investments and receivables; delayed grant reimbursements; supplies inventory and liability reconciliation issues; misclassified capital outlay expenditures; problems with purchasing procedures and late invoice entries; and instances of noncompliance with state statutes and bond covenants. She said the water and sewer fund showed a substantial negative net cash flow and the city's total long-term debt grew during the year.
"The audit process was significantly delayed while the city gathered the necessary information and prepared a preliminary draft of the act for audit," Caldwell said as she summarized effects tied to findings.
Council members pressed staff on whether the same findings would appear in future audits. "Yes," Caldwell said. "We have corrected some, but you will be seeing some of these same findings, transfer over to the '24 and '25 audits." A city official added the expectation of a significant drop in findings by 2026 if current corrective actions continue.
City Attorney Drew Martin warned of legal exposure tied to budget noncompliance and asked the council to exercise caution when approving expenditures. "An individual council member can be held personally liable for approving an expenditure that is not permitted by the budget or otherwise permitted by law," Martin said, while also noting existing bonds provide partial protection except in cases of intentional acts.
Council President and members asked for clearer, timely information on fund balances and recommended one-on-one meetings between councilmembers and finance staff to accelerate remediation. Caldwell said final numbers for the current fiscal year would be available later that week and confirmed the city will seek to place the audit on the public website after the council formally accepts it.
What happens next: The council voted to receive the FY2023 annual financial report and related audits and scheduled follow-up meetings to address the findings, with staff projecting a multi-year remediation effort and a targeted reduction in findings by 2026.
