Auditor issues clean opinion but flags missing support for a loan and weak accounting controls in Parlier's FY2022 report

Ryan Jolley, the independent auditor who presented the city's fiscal-year 2021-22 audit on Oct. 5, told the Parlier City Council he issued an unqualified (clean) opinion on the city's financial statements but flagged two findings that require attention. Jolley said the combined statements show a change in net position of about $6.5 million for governmental activities and roughly $675,000 for business-type activities, but the general fund ending fund balance remained short by just under $300,000.

The audit report includes a single-audit because the city received more than $750,000 in federal funds in the audit year, Jolley said. As part of that single audit the auditors identified a questioned cost: a loan made to a business for which the city could not locate adequate supporting documentation. The report also cites broader weaknesses in accounting oversight, including untimely closing of the books, which Jolley said contributed to delayed completion of the audit.

Jolley described the finding about the loan as a documentation issue recorded as a single-audit finding and said the city's responses and corrective actions are included in the financial statements. He said staff has posted required adjusting entries and that the auditors helped the city by providing part-time assistance from a seasoned CPA to support daily accounting work while the city searches for a permanent finance director.

Council members pressed for clarity on a few technical points: the auditor explained that 'cash payments to employee services' on the cash-flow statement represent payroll and benefits; the significant-deficiency language was adjusted between a draft and the final report; and routine journal entries needed to correct misposted funds are typically approved by a finance director. Jolley said there were no numerical changes between the draft and final report, and that the changes were limited to wording and the addition of the extra finding.

Several residents and council members said they had not received the audit packet before the meeting and asked that the second, fuller presentation be scheduled when Sonia (city manager) or the interim finance director can attend. Council voted to place the auditor's full presentation and detailed discussion on the Oct. 19 agenda so staff can respond to technical follow-up.

Next steps: council directed staff to post corrected pages identified by the auditor, make the city's written responses to the findings public, and return with the auditor and finance staff on Oct. 19 for a more detailed review and Q&A.