In this section, we discuss Shady Cove's years of delayed and disclaimed Audits. We think it's important for the public to understand the situation, so that they have context to evaluate our Council's actions over the past several years. Scroll down the page to see a summary of the significant issues found during the
Under normal circumstances, Shady Cove's Municipal Audits should be completed within six months of the end of the Fiscal Year. Audits and Audit Action Plans are required to be filed with the Oregon Secretary of State's Audit Division.
Our City has been on the Oregon Secretary of State's delinquent filers list since at least January 2022. The City remains on this list today due to outstanding audits for FY24 and FY25. For context, Shady Cove is one of 40 small cities (out of a total of 241) who are on the delinquent list.
Oregon Secretary of State's Delinquent Filers List: Delinquent Filers 2025-12
Some people will tell you it's "not a big deal" to be on the State of Oregon's delinquent filers list. SCM respectfully disagrees -- looking at the financial and administrative costs to the City, we believe the City Council needs to take credible steps to understand how the City got here, and future issues can be prevented. The State of Oregon apparently agrees with us, per this recently released article.
SOS direct link: Oregon Municipalities: Summary of Financial Reporting
Two of Shady Cove's three recent audits were considered Disclaimed. A disclaimed opinion means the Auditors could not do their job. They couldn't get enough reliable information or documentation to determine whether the City's financial statements are accurate.
Think of it like this:
"We can't give any opinion at all."
Why is this a big deal? A disclaimed audit is one of the worst types of audit results because it suggests:
For an analogy to our own household budgets... Imagine trying to verify someone's household budget, but finding that...
Fiscal Year: July 1, 2020 - June 30th, 2021
Audit Timeframe: July 2022 - April 2024
Auditor: Isler CPA
Estimated Cost: $65,000
$1.6 M transferred back from a business account to the General Fund without public explanation (click to read more)
Records unable to be located; City staff unable to provide documentation or information
Disorganization of digital and physical records related to 2021
Possibility of material and pervasive effects on financial statements
Significant turnover in City staff during Covid-19 ***
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Link to audit documents and findings.
Auditors were asked to look for evidence of Fraud (link to more info).
Fiscal Year: July 1, 2021 - June 30th, 2022
Audit Timeframe: May 2024 - Feb 2025
Auditor: Isler CPA
Estimated Cost: $65,000
Financial information and records related to 2022 could not be located.
Could not verify that the budget was properly published
Could not verify that budget officials were appointed or elected
Balances could not be supported
Could not confirm that Oregon Gas Tax funds were used for allowable costs
Could not confirm that procurements complied with Oregon Revised Statues
Internal controls were unable to be evaluated for proper design, implementation and operating effectiveness as a result of turnover in City staff and lack of documentation of procedures and processes in place during 2022.
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Link to audit documents and findings.
Auditors were asked to look for evidence of Fraud (link to more info).
Mayor Ball admits that Auditors had to work to "get up to a disclaimed audit" (link to more info)
Fiscal Year: July 1, 2022 - June 30, 2023
Auditor KDP/Sorren
Oversight Auditor Summer Sears
Completed December 2025
Estimated Cost: over $100,000
Material accounting errors due to not having formalized accounting policies and procedures related to financial reporting
Material weakness -- strengthen controls over Bank Reconciliations
Material Weakness -- Maintain a schedule of Property Additions
Significant deficiency -- Improve segregation of accounting duties
Recommendation to perform fraud risk assessment
Recommendation to adopt a storage policy for accounting records
Recommendation to Approve and sign minutes of board meetings
Recommendation to hire additional competent/qualified personnel with relevant knowledge and experience in US GAAP accounting, and working experience with internal control over financial reporting to monitor daily activities
Recommendation to Engage Professional Assistance in Developing Accounting Procedures
Scroll to Read More Findings Below.
On Page 36 of the Audit, under Notes to the Basic Financial Statements, Note 3 discusses findings of non-compliance with Oregon Local Budget Law. SCM is pointing this out, so that Residents understand that the financial problems were ongoing across several Mayors, including issues during Mayor Jon Ball's term.
Per Note 3: "During the fiscal year ended June 30th, 2023, the City was in compliance with Local Budget Law, except as follows:
As reported elsewhere on this website, City Leaders were aware that the City had stopped reconciling bank statements to the accounting ledger for several years from 2021 to 2024. In the FY2023 letter from the Auditors "Communication with Governance", the Auditors mentioned the following:
Audit Adjustments and Uncorrected Misstatements
There were a significant number of material audit adjustments made to the original trial balance presented to us to begin our audit."
It is SCM's understand that -- due to the years of failed bank reconciliations, Administrator Parry and staff were forced to manually re-reconcile bank statements to the ledger for all of Fiscal Year 2023. We understand that this required the correction of hundreds of accounting ledger entries. It is this work which we understand led to sufficient evidence to allow the audit to be declared clean (with findings) instead of being disclaimed again.
Paid for by shady cove matters political action committee
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THE CITIZENS OF SHADY COVE HAVE SPOKEN!!! We were notified on June 10th that Jackson County completed the signature verification. As we already knew, there were enough signatures to proceed with the recall. Mayor Richardson will have till June 15th to decide to resign or make the decision to have the City hold an election. We await the City's response.
It's time for new Leadership. Learn how you can support the recall effort.