City receives clean external audit for latest fiscal year

LAS CRUCES - The city received a clean bill of financial health for the second consecutive year, with external auditors finding nothing new of significant importance.

At a Jan. 18 Las Cruces City Council meeting, officials were presented with highlights of the city's Annual Comprehensive Financial Report from certified public accounting firm Pattillo, Brown & Hill, L.L.P.

Last year, PBH gave the city its highest marks for its financial statements. The external auditing firm issued the same grade to the city for this audit, which covers the fiscal year which ended June 30, 2021.

"That is exactly the type of report that the city wants to receive," said Chris Garner, a CPA with PBH. "And it's in essence the highest level of assurance that we as auditors can give."

Last year's audit also gave the city its highest possible marks for compliance with its use of federal dollars, and the city received the same evaluation this year.

PBH identified one minor finding this past fiscal year, and the finding did not rise to the level of "material weakness," the highest level of risk possible for a finding or to a significant deficiency, the second-highest level.

The firm found one of 25 employees tested was missing a properly certified Federal Form I-9 in their personnel file, a form which employers must complete for all new hires. According to the audit report, the city's human resources department "is developing a recurring plan and Standard Operating Procedures have been drafted" which will be implemented to review all I-9 forms for compliance by next month.

Las Cruces HR Director Jo Richards told councilors the issue has been resolved. 

Last year, PBH identified two findings in the area of internal control over financial reporting and compliance, but they were also both ranked at the lowest level of seriousness. The audit last year also found that the most serious non-compliance issues from the previous report, which were later corroborated by the McHard Firm's audit report of Visit Las Cruces, had been resolved.

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The two issues identified by PBH last year in the internal control and compliance realm were the improper handling of cash receipts by the city's utility billing department and the city improperly paying Doña Ana County to house inmates arrested by Las Cruces police who were charged with state offenses.

Neither of those findings rose to the level of material weakness or significant deficiency. Still, the FY21 audit found both of those findings to be resolved.

The city comptroller told the council the original $409,000 owed to the city by the county for the improper payment was now down to $188,000 over a span of eight months. Moving forward, prisoner care bills are being deducted from invoices the city sends the county. City Manager Ifo Pili said the county has agreed to the arrangement and will make the city whole.

Garner said an important takeaway for the council is findings are not "lingering" for multiple years.

"Exceptions are going to happen. You're going to have findings," Garner said. "But what you really want to see as a council is, 'Is management dealing with those issues?'" 

The city council voted 6-0 to accept the audit report Tuesday. Mayor Ken Miyagishima was absent from the meeting.

Michael McDevitt is a city and county government reporter for the Sun-News. He can be reached at 575-202-3205, mmcdevitt@lcsun-news.com or @MikeMcDTweets on Twitter.