The City of Lawton’s tardy audits of the city’s financial ledgers for Fiscal Years 2022 and 2023 are having financial repercussions and triggering warning notices from a bank and from state environmental monitors.
For example, Lawton’s motor fuels tax allocations for both years are being withheld until the audits are finished.
In response to a Southwest Ledger inquiry, Deputy Finance Director Kristin Huntley said the FY 2022 audit is finished. The FY 2022 single audit is “undergoing final testing, and when that testing is complete, the director of our audit will do a final review, then pass to her boss for a final review,” said Caitlin Gatlin, the city’s communications and marketing manager. Huntley “does not think that will be completed by the end of this month,” Gatlin said.
“We don’t know the exact amount” of motor fuels tax that is being withheld, former Finance Director Joe Don Dunham told Southwest Ledger last November. “That is calculated by the Oklahoma Tax Commission via a formula,” he said. “We typically receive between $10,000 and $13,500 per month.”
State law provides that a municipality’s audit of a fiscal year should be completed by the end of that calendar year: i.e., the statutory deadline for completion of the FY 2022 audit was Dec. 31, 2022 – almost 17 months ago.
State law further decrees, “If a municipality does not file a copy of its a udit” as provided in Title 11 of the Oklahoma Statutes, the State Auditor and Inspector shall notify the Oklahoma Tax Commission which shall withhold from the municipality its monthly allocations of g asoline taxes until notified by the Office of the S tate Auditor and Inspector that the a udit report has been f iled.”
The incomplete audit also has affected Lawton’s ability to borrow money, Dunham told the Ledger. “Our credit rating is not bad,” but the incomplete audit “affects our ability to bor row money, because banks want to see o ur financials,” he said.
The Oklahoma Department of Environmental Quality issued a Notice of Violation on Feb. 14 against Lawton’s solid-waste permit to operate its sanitary landfill, for failure to provide “an approvable financial assurance update” for Fiscal Years 2022 and 2023.
Failure to submit a “compliance plan” could result in “escalated enforcement, including penalties,” wrote Kelly Dixon, division director, Land Protection Division.
Bank of America notified city officials via letter April 30 that as of March 26 the Lawton Water Authority has been in “technical default” on its Series 2013 Supplemental Note Indenture. The Authority is required to submit an audited financial report no more than 270 days after the close of each fiscal year.
Scott Nash, senior vice president of Bank of America, informed the Lawton Water Authority and the Lawton Industrial Development Authority in a letter last July that they were “in default” on a condition of their loans as of March 27, 2023. Councilman Randy Warren described it as a “do better letter.”