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Needles accepts delayed 2023 audit, orders fixes and hires new audit services
Summary
The City Council accepted the FY 2023 annual financial report and single audit — which carried three material weaknesses tied to delayed closeouts and staffing — and approved a new audit services contract and readiness work to get future audits on schedule.
The Needles City Council on Aug. 12 accepted the city’s annual financial report and single audit for the fiscal year ended June 30, 2023, after auditors reported a clean opinion on the statements but identified three material weaknesses and two significant deficiencies tied largely to delayed year‑end closing and turnover in finance staff.
Roger Martinez of Vasquez & Company told the council the firm was issuing a ‘‘clean opinion on your financial statements’’ for 2023 but also found material audit adjustments and a ‘‘significant delay over the year‑end closing process’’ that triggered a material weakness. He said delays also affected the city’s single‑audit filing and increased the extent of testing required for federal programs.
City Manager Patrick Martinez and interim finance director Joe Tara told the council the problems stemmed from a prolonged vacancy in the finance director role and staff turnover. Tara said the city has hired an interim finance director, is recruiting for a permanent director, and has contracted for outside assistance to complete audit closeouts. Tara said the city expects to start the FY2024 audit in September or October and complete outstanding MPUA audits by September, with a plan to meet future filing deadlines.
On a related agenda item, council approved a contract with LSL CPAs and advisors to provide combined city and component‑unit audits plus audit‑readiness services. Joe Tara said the proposed contract saves the city roughly $25,000 compared with recent extra charges and includes $30,000 in closeout services to help the city complete prior years’ entries and implement upcoming GASB standards.
Council members pressed staff on whether grant eligibility or federal funding could be jeopardized. Martinez said timely completion is required to remain eligible for some federal programs and that the city is pursuing a corrective plan to avoid future impacts.
The council voted unanimously to accept and file the 2023 audit and to authorize the new audit services contract and associated closeout work. Staff will return with implementation details and timelines as the closeout work proceeds.
