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City council accepts FY23–24 audit after auditors note material weaknesses and fiduciary correction
Summary
City Council accepted the fiscal 2023–24 audited financial statements after Vasquez & Company issued a clean opinion while identifying repeated internal‑control deficiencies and reporting that previously unrecorded fiduciary activity totaling about $9.3 million was added to the city's statements.
The City of Needles City Council voted unanimously to accept the city’s fiscal year 2023–24 audited financial statements after auditors issued a clean opinion while flagging control deficiencies and reporting a corrected disclosure of restricted fiduciary funds.
Mark Demaine, the city’s finance director, introduced auditors from Vasquez & Company and told the council the audit had been completed more efficiently this year. Roger Martinez, CPA, the lead auditor, told the council the firm issued a clean opinion on the financial statements as of June 30, 2024, and that supplemental information agreed with the basic financial statements.
Martinez said auditors identified a material weakness and other control matters tied largely to past instability in finance leadership and delays in audit readiness. He called out repeated compliance findings including the city’s failure to adopt an investment policy annually and to submit quarterly treasurer’s reports as required by state law. "We did identify a material weakness ... and some other control matters that we brought to the attention of staff," Martinez said.
The auditors also reported that prior year fiduciary activity had not been fully reported. Martinez said the city corrected its financial statements to disclose restricted funds related to All American Canal activity — described in the presentation as roughly $9,300,000 — and that the funds are now reflected in the city’s fiduciary fund statements.
Council members asked whether the findings reflected fraud or misuse of funds. Demaine and Martinez replied the matters were process‑related and tied to earlier staffing gaps rather than improper activity. "These findings were process related ... not fraud, not misstatements, not misuse of funds," Demaine said, noting the city now has a finance manager and improved internal controls.
After discussion, a council member moved and the council unanimously approved accepting the audit and related financial statements. The motion was recorded as accepted by roll call.
The city will receive a separate written communication from the auditors with recommended internal‑control improvements; staff said it will address the investment‑policy adoption and treasurer‑reporting items and incorporate the auditors’ recommendations into future procedures.
