Accounting firm lists one lingering finding from previous year
By Molly Ann Howell
Managing Editor
The Gallup City Council heard a presentation about their Fiscal Year 2025 annual financial audit report by the Albuquerque-based accounting firm Pattillo, Brown & Hill, L.L.P.. during their April 28 meeting.
One of the firm’s partners, CPA Chris Garner, provided the presentation.
The audit report for the City of Gallup for the fiscal year ending June 30, 2025 indicates that the city is in generally strong financial health. Pattillo, Brown & Hill, L.L.P. issued an unmodified opinion. This is the best result possible, meaning the city’s financial statements are reliable and accurately reflect its financial position.
Pattillo, Brown & Hill, L.L.P. turned Gallup’s audit into the state on Jan. 20. It was released after the state auditor’s approval on March 20.
According to the audit, the city manages over $541 million in total assets and resources. The city’s total net worth grew to approximately $421 million. During FY 2024, the city’s total net worth was over $388 million.
The city maintained a strong cash position with over $98 million in cash and equivalents.
Garner went over the firm’s findings in the city’s latest audit, and compared them to the FY 2024 findings.
The annual financial audits for FY 2025 revealed one finding related to internal controls. The finding was determined to be under improper distribution of employee benefits.
The auditors discovered during the FY 2024 audit that the City of Gallup had continued to pay health and life insurance premiums for several individuals who had already retired or been terminated.
The city overpaid more than $140,000 in excess benefits. This issue remained a problem for the city in FY 2025, but overpayments decreased to nearly $5,600.
The errors were attributed to oversight and a lack of follow-up in updating benefit records, the audit stated.
Additionally, the audit document states the city is currently updating its offboarding policies, providing training to department heads, and seeking refunds from insurance providers.
While this was less of an issue in the FY 2025 audit, Garner recalled the FY 2024 audit to remind the councilors of the high stakes of banking with institutions unable to provide a safety net, also known as collateral, to protect their “tens of millions of dollars.”
During the 2024 audit, the auditors found that one of the city’s banks didn’t have the proper safety net in place.
According to the audit, the city had “a massive amount of cash,” in an institution that wasn’t properly backed up—specifically, the bank was short by nearly $70.5 million.
State law requires that a financial institution, which serves municipalities, must be worth at least 50% of its uninsured deposits. Essentially, a bank must set aside specific securities (such as bonds) that the city can claim if the bank were to fail.
Hypothetically speaking, if one of the city’s banks went out of business in 2024, the City of Gallup stood to lose a substantial amount of cash.
City officials fixed this problem by implementing a new rule to manually check the protection levels for every bank account once a month, and confirming that all of their financial institutions were in full compliance by 2025.
Because of these changes, the current audit officially marked this issue as “Resolved.”
The council ultimately approved the report unanimously.
In an interview with the Sun, Mayor Marc DePauli said he was “feeling good” about the audit results.
