Council accepts annual audit; auditors report clean opinion and note capitalization and lease accounting items

City finance staff and the city's external auditor presented the comprehensive annual financial report and single-audit findings to the Amarillo City Council, which accepted the audit report.

Mrs. Stores (city finance staff) told council the external auditors issued an unmodified (clean) opinion on the city's financial statements and that the single-audit coverage included approximately $53.8 million in federal and state grant expenditures. The auditor, Janie Arnold of CMMS CPAs & Advisors, said the audit identified one deficiency related to delayed capitalization of certain capital improvement projects and to the recent changes in accounting for leases and subscription-based information-technology contracts.

"There was a deficiency that was identified and we have addressed that in greater detail," Mrs. Stores said, explaining that staff has already begun corrective steps, meets regularly with project managers to ensure timely capitalization, and is considering adding staff or contracting third-party help to address complex lease and subscription accounting.

Auditors also said that their standard risk considerations reference management override and improper revenue recognition as inherent audit risks; the auditors described planned procedures to address those risks, such as testing journal entries and revenue transactions.

Council discussed the report language and asked about the period the city has used the same audit firm; auditors confirmed the firm has provided audit services under various merged or renamed firms for several years and that the city issues an RFP periodically for outside audit services.

Council voted to accept the audit report and auditors offered to meet individually with council members to review any questions in more detail.