Audit shows ‘good news’ for Yuma

Findings go from 14 to 1

The Yuma City Council received good news when it came to the audit results of its financial statements. The audit covers financial documents, development fees and investments.

The good news is that the audit found only one finding, down from 14 in a previous audit. The single finding was connected to the financial piece of the audit.

“That requires a corrective action plan, and that has already been submitted,” Doug Allen, finance director, said on Tuesday during a work session.

The items that are regularly audited include the Annual Comprehensive Financial Report, Federal Single Audit, Annual Expenditure Limitation

Report, Highway User Revenue Fund compliance letter and communication to those charged with governance.

“We received a clean opinion, unqualified, the best you can get from an audit perspective,” Allen said.

Overall, the city received a “clean” opinion from the auditor, Heinfeld, Meech & Co., which presented its findings on Wednesday.

The audit noted a few items of concern related to Information Technology, a conflict of interest and travel reimbursements and capital asset items.

“We did have a significant deficiency, no material weaknesses, no noncompliance,” auditor Brittney Williams said.

The deficiency was a payroll bank reconciliation that was not performed timely. The reconciliation for June 2022 was not provided until January 2023.

“We did identify what those issues were. We just weren’t able to fully research it and get it resolved in that timeline, within that audit constraints, but we don’t have any concern,” Allen said.

He explained the reason for the reconciliation delay. “We have gaps and turnover and extended leaves and could only get so much at one point in time. So we’re putting measures in place in a new structure of the department to

address those,” he said.

The fix is to “bring the continuity of operations even when there’s turnover and extended leaves. So step one is to stop the practice of having a complex accounting issue handled just by one person and one person only, start to kind of spread that among the accounting staff,” Allen noted.

As for this deficiency, Williams explained, “Immediately there’s been a plan put in place and people assigned to do this and correct the situation. Just really has a lot to do with all of the turnover in the finance office.”

She added: “But we wouldn’t have been able to issue an audit opinion had it not been reconciled and had it not been fully reconciled to our satisfaction to where we could, you know, note that it was late, note that there were some errors, but it was done in time for the audit and we could issue an audit opinion and feel comfortable with that. So that’s a good thing.”

The development fees audit covers land use assumptions, the infrastructure improvements plan (IIP) and impact fees. This audit, which is required every two years, covered the period from July 1, 2020, to June 30, 2022.

It also requires a public hearing, which the council held Wednesday. However, no public speakers asked to address the issue.

As part of the process, the auditors reviewed a handful of city expenditures related to impact fees, also called development fees. Impact fees are paid when a developer applies for a building permit and are in addition to fees for a building permit, water and sewer connection or system development fees. Impact fees are paid in addition to site-specific exactions for roads, parks, water and sewer, etc., by developers.

The idea is to cover the cost of “excess capacity” creed by new development via new parks, collector roads and piping that are available for the entire community to use for recreation, crosstown traffic and enhanced water delivery.

The auditors also looked at some of the building permit revenues. “We tested 15 on each side of that to make sure that the monies were received appropriately and spent appropriately. There were no issues there,” Williams said.

And the auditors looked at infrastructure improvement plan projects, basically construction in progress, to determine its relation to police, fire and general government.

The auditors then looked at the projected numbers in the Infrastructure Improvement Plan, otherwise known as IIP. Williams noted that the projected-versus-actual numbers will

always differ.

“They’re common. You’re never going to be perfect. You’re never going to be exact,” Williams said. “We look at the number of jobs that were projected and the ones that are still here for general government, fire, and then we look at the population and vehicle trips for police in the streets.”

The council approved the IIP in February 2019, and it went into effect July 30, 2019. A few things have changed since that time due to COVID-19, 2020 Census, supply chain delays and the higher costs in construction and many commodities.

“Those audit findings for this IIP are going to be reflective of that because we didn’t know those things were going to occur back in 2018, when this document was put together,” Allen said.

Some of the differences were for jobs related to the Fire Department and General Government facilities. For example, 53,515 projected jobs were projected for 2021, but the actual jobs turned out to be 43,858, or 18% less. In 2022, the city projected 54,372 jobs and actually had 48,207, or 11% less.

The population count was also off, according to the 2020 Census, which city officials have consistently said was undercounted. The city projected a 2021 population of 119,142, but the official count was 97,883, or 18% less. For 2022, the city projected 120,488 residents, but the official count came in at 100,196, or 17% less.

Mayor Doug Nicholls expressed concern with the census. “We all know it’s been undercounted, and it’s noted as an 18% reduction in your report.

More of a frustration than anything because we know that those numbers are inaccurate,” he said.

The auditor also noted that the city did not have updated estimated costs to complete seven of 30 projects in the IIP.

Nevertheless, Allen noted that these findings do not impact the city’s budget, revenues or expenditures. “There’s no adjustments needed for the ‘23 budget as a result of this audit. So that’s good news,” he said.

The audit results, which include use of pandemic relief federal funds, are reported to the Federal Audit Clearinghouse, “which is basically the White House. All the federal agencies, they want to see what’s going on with those federal dollars and at the entity. So that’s kind of where things get reported to,” Williams noted.