Completion of Lawton’s Fiscal Year 2022 audit resulted in a financial windfall for city government.
The Oklahoma Tax Commission released $161,670.55 in motor fuel taxes to the City of Lawton that were withheld because its last two audits were not filed in a timely manner, in contravention of state law.
Lawton’s Fiscal Year 2022 audit was filed with the State Auditor and Inspector’s Office a year and a half late, Finance Director Rebecca Johnson informed the City Council on June 25.
State law decrees, “If a municipality does not file a copy of its audit” as provided in Title 11 of the Oklahoma Statutes, the State Auditor “shall notify the Oklahoma Tax Commission which shall withhold from the municipality its monthly allocations of gasoline taxes until notified by the Office of the State Auditor and Inspector that the audit report has been filed.”
State law provides that a municipality’s audit of its fiscal year finances should be completed by the end of that particular calendar year. That means the statutory deadline for completion of the FY 2022 audit was Dec. 31, 2022, and the deadline for submission of the FY 2023 audit was Dec. 31, 2023 – seven months ago.
“We are on track to turn over our FY23” ledgers to Crawford & Associates in early August, Johnson told the City Council on July 23. Within a couple of weeks after that Crawford will release those financial records to “our auditors, FORVIS,” an accounting firm in Oklahoma City, Johnson said.
FORVIS is expected to “turn over our FY23 audit” to the SA&I by Oct. 1, she said.
As for the city’s audit for Fiscal Year 2024 (July 1, 2023 – June 30, 2024), Johnson indicated some optimism that those records will be finished “before December 31,” she told the council. “That’s our goal.”
Tardy audits of Lawton’s financial ledgers for FY 2022 and 2023 have had financial repercussions and resulted in a citation from state environmental monitors.
For example, the Tax Commission is still withholding the city’s motor fuels tax allocation for FY23.
In addition, the Oklahoma Department of Environmental Quality targeted 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.
While inspecting the landfill on Nov. 1, 2023, the DEQ “observed that the Fiscal Year 2022 financial assurance mechanism update” that was due on Dec. 31,
Turn to AUDIT, p4 2022, “had not been submitted” to the agency for approval. The FY 2023 financial assurance mechanism update that was due on Dec. 31, 2023, also “has not been submitted to DEQ for review.”
Consequently, on Feb. 14, 2024, the agency issued a Notice of Violation of the state Administrative Code provision on “closure/ post-closure cost estimates.” The “financial assurance mechanism” is proof that the city has sufficient resources to safely and adequately shut down the landfill if it needed to.
During a closed-door executive session July 9, the council authorized city officials to enter into a consent order with the DEQ. The decree requires the City of Lawton to submit to DEQ an alternative financial assurance mechanism in the amount of the currently approved cost estimates of $9.1 million no later than Oct. 31.
The incomplete audits also have affected Lawton’s ability to borrow money, former Finance Director Joe Don Dunham told Southwest Ledger.
“Our credit rating is not bad,” but the incomplete audits “affect our ability to borrow money, because banks want to see our financials,” he said.