Novato catches up on audits after years of delays

Novato has stabilized its audit process after years of working through a backlog of incomplete reports.

The city is required to complete audits for every fiscal year. Over the past several years, the city fell behind. At one point, the city was nearly three years in arrears in completing the reports.

For the last three years, the city has had to complete two audits each year to catch up.

Novato’s previous 2024 audit officially brought the city back up to date on its audit process. However, it was completed right before the city was required to start the 2025 audit.

“While the prior audit was the one that caught us up, for me and the finance team, this is the audit that is celebratory,” said Carla Carvalho-DeGraff, the finance director.

“We went from being caught up right into this next audit preparation and so it felt like we went from audit to audit, so we didn’t even take a beat,” she said. “So being able to become current is a great feeling for the team.”

At its meeting on Jan. 27, the City Council approved the 2025 fiscal year audit. Auditors found no significant errors or areas of concern.

Along with catching up on past reports, the city has also improved the overall quality of its audits. Past audits contained more significant issues, including a handful of material weaknesses, significant deficiencies and compliance issues. Material weaknesses are flaws that could lead to significant errors.

“The main thing you want to pay attention to is if your agency has material weaknesses,” said Justin Williams, an audit partner from Mun, the organization auditing the city.

In recent years, the city has had up to four material weaknesses and compliance issues, as well as three significant deficiencies in various audits. The city had no material weaknesses in the 2025 audit, one significant deficiency and one compliance issue. Williams said these were “excellent improvements.”

The council commended city staff for bringing the audits up to date.

“As you can see it almost took a decade to get back to where we were some time ago,” said Councilmember Pat Eklund. “Under Carla’s leadership you guys were able to do it and I just want to thank you guys so much for everything that you did.”

Mayor Rachel Farac said this was “maybe the most important thing” the city had accomplished in recent years. She also asked what systems are in place to prevent the city from falling behind in the future.

Carvalho-DeGraff said she has checklists to help keep the city on track.

“We didn’t have a checklist when I got here,” City Manager Amy Cunningham said. “She developed all of them and she does monitor them very closely.”