The state office that oversees public audits says it has not been in contact with the City of Marion over its finances and water system, and that its last audits on file for the city are for fiscal years 2018, 2019, and 2020, all submitted at the same time in 2022.
The Department of Examiners of Public Accounts is the state agency that performs routine financial and compliance audits of counties, school systems, and many other local boards and authorities, but it generally does not audit municipalities unless a special examination is requested or required by law.
In an email responding to records requested by The Times-Standard-Herald, Chief Examiner of Public Accounts Rachel Riddle wrote:
“Attached are the last audits that our Department has in the repository from the City of Marion. These are for FY 2018, 2019, and 2020. As you will see, they were submitted in 2022. To my knowledge, our Department has not been in communication with the City.”
Those three audits, performed by an outside accounting firm, show that Marion’s financial problems and water-system issues go back years before the separate 2022 audit previously reported by The Times-Standard-Herald in its Dec. 11, 2025 edition.
Qualified Audit Opinions and Unverified Receivables
For each of the years 2018, 2019, and 2020, auditors issued the same qualified opinion on the city’s governmental activities, business-type activities, the General Fund, other governmental funds, and the Water Utility Fund.
In each case, auditors reported they were unable to confirm hundreds of thousands of dollars in customer accounts receivable from water, sewer, and garbage bills:
- $835,226 at the end of 2018
- $835,226 again at the end of 2019
- $807,104 at the end of 2020
Auditors stated they could not obtain sufficient audit evidence about those balances in any other way.
Auditors also said that, because of inadequate accounting records in earlier years, they could not verify the amounts at which Marion’s capital assets and accumulated depreciation were recorded, nor the annual depreciation expense, in any of the three audits.
Those same issues — unverified water receivables and incomplete capital-asset records — were cited again as the basis for a qualified opinion in the city’s 2022 audit.
Audit Dates and Filing Status
The 2018 and 2019 audits are both dated August 3, 2022, and the independent auditor’s reports state that they were performed in accordance with Government Auditing Standards. The 2020 audit is also dated August 3, 2022.
Riddle’s email confirms that all three were submitted to the Examiners’ office that year and that no later year, including 2021 or 2022, has yet been filed with her department.
Declining Net Position
Taken together, the three earlier audits show a steady erosion of Marion’s overall financial position.
- At the end of 2018, the city reported total net position of $4,302,497.
- By the end of 2019, that number had fallen to $3,478,893, a drop of more than $800,000 over two years.
- At the end of 2020, total net position had fallen again to $2,399,490.
The 2022 audit shows that by the end of that year, the city’s total net position had declined further to $1,249,976.
Governmental Funds vs. Water Utility Fund
The government-wide statements in the 2018–2020 audits show that Marion’s General Fund and other governmental activities have carried large deficits for years, while the Water Utility Fund has remained in positive territory.
In 2018, the city reported combined governmental fund balances of $574,095, including:
- A General Fund deficit of $755,970
- A surplus of $181,875 in nonmajor funds
In 2019, combined governmental fund balances totaled $431,591, including:
- A General Fund deficit of $630,569
- $198,978 in the other funds
By 2020, combined governmental fund balances were $767,094, with:
- A General Fund deficit of $851,308
- $84,214 in the other funds
During those same years, the Water Utility Fund consistently reported a positive net position at the government-wide level:
- $2,000,671 in 2018
- $1,886,236 in 2019
- $1,968,498 in 2020
As reported previously, the 2022 audit shows business-type net position of $1,591,375, while the governmental side finished 2022 with a negative net position of $341,399.
In practical terms, the audits show that the city’s water, sewer, and garbage revenues have been the main reason Marion’s overall net position remains positive at all, even as the General Fund has stayed in the red.
Management Discussion and Repeated Findings
The management discussion sections in the 2018, 2019, and 2020 audits each note that the city carried an unrestricted deficit:
- $722,303 in 2018
- $605,935 in 2019
- $819,610 in 2020
Each report also states that total net position declined in every year covered. All three reports include the same language noting that the city’s tax base “remains strong and vibrant due to the stability of major employers and taxpayers,” language that appears unchanged across all three years.
All three audits include separate reports on:
- Internal control over financial reporting
- Compliance with laws, regulations, contracts, and grant agreements
- A Schedule of Findings and Recommendations
The detailed findings address many of the same issues highlighted again in the 2022 report, including the lack of complete accounting records and the city’s long-running dispute with the Internal Revenue Service over past-due payroll withholding taxes.
Lack of Communication and Missing Filing
Riddle’s email makes clear that, while the Examiners of Public Accounts receive and archive these outside audits, her office has not been directly communicating with Marion officials about them.
The 2022 audit, completed on May 10, 2024, has not been filed with the Examiners’ office, according to Riddle.
