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Information |
TITLE: |
Consideration and Approval of Audited Financial Reports: Year ending June 30, 2022 |
STAFF RECOMMENDED ACTION: |
Approve the FY 2021-2022 Annual Comprehensive Financial Report and the FY 2021-2022 Single Audit Report
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Executive Summary: |
The City is required to perform an annual audit each year, pursuant to Arizona Revised Statutes (A.R.S.) Section 9-481 and the City Charter (Article VI, Section 5); this audit is commonly known as the Annual Comprehensive Financial Report (ACFR). The ACFR is reviewed by an independent auditor to provide reasonable assurance that the financial statements are free of material misstatements. In addition, the City also obtains an annual Single Audit as a condition of receiving federal assistance in excess of $750,000. An independent auditor performs the Single Audit.
Pursuant to A.R.S. Section 9-481, the certified public accountant who performed the audit is to present audit results and any findings to the council in a regular meeting, without the use of a consent agenda, within 90 days of audit completion. |
Financial Impact: |
There is no financial impact on approving the City's Fiscal Year 2021-2022 Annual Comprehensive Financial Report (ACFR) or the FY 2021-2022 Single Audit. |
Policy Impact: |
None. |
Connection to PBB Key Community Priorities/Objectives & Regional Plan: |
Financial Reporting supports the Key Community Priority of High Performing Governance by furthering the following associated Objectives:
- Encourage public trust through transparency...
- Enhance the organization's fiscal stability..., and
- Implement innovative local government programs, new ideas & best practices; be recognized as a model for how others to follow
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Previous Council Decision on This: |
None. |
Options and Alternatives: |
- Approve the City's FY 2021-2022 ACFR and FY 2021-2022 Single Audit Report.
- Do not approve the City's FY 2021-2022 ACFR, FY 2021-2022 Single Audit report, and provide direction to the Audit Committee or independent auditor to address Council's questions/issues.
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Background and History: |
The City is required to perform an independent annual financial audit per City Charter Article VI, Section 5 which states:
"Prior to the end of each fiscal year, the Council shall designate an independent Certified Public Accountant, who, as of the end of the fiscal year, shall make up an audit of accounts and other evidence of financial transactions of the City government, and shall submit a long-form report, including recommendations concerning policy and fiscal procedures, to the Council, and to the City Manager. Such accountant shall have no personal interest, direct or indirect, in the fiscal affairs of the City government or of any of its officers. The accountant shall, within specifications approved by the Council, post-audit the books and documents kept by the City, and any separate or subordinate accounts kept by any other office, department, or agency of the City government."
In addition to the financial audit, the City is required to complete a Single Audit because it receives more than $750,000 in federal assistance.
The City has hired CliftonLarsonAllen, LLP (the Auditors). The Auditors work directly with the Finance Staff as well as other City Divisions & Sections to complete a review of the City's financial data and internal controls. The financial reports are the responsibility of the City and are based on the activity of the fiscal year. The ACFR is presented in accordance with all standards as defined by the Government Accounting Standards Board (GASB). The Auditors are not responsible for reviewing every transaction for the fiscal year, however, based on the standards the Auditors plan and perform the audit to obtain reasonable assurance that the statements are free of material misstatements. The Auditors prepare the Single Audit which is an independent assessment of City finances and includes a schedule of expenditures of federal fund awards.
The City has established an Audit Committee to review the financial reports and findings (ACFR and the Single Audit). The committee discusses the information and makes a recommendation to Council to accept or reject the financial reports. The Audit Committee is represented by a City Councilmember, the City Manager, and the Management Services Director:
- Lori Matthews, Councilmember
- David Cosper, CPA
- City Manager, Greg Clifton
- Rick Tadder, Management Services Director
We currently are working on filled two open citizen committee positions. We hope to have them filled over the next 6 months. The financial reports were reviewed by the Audit Committee through a presentation by the Auditors. The presentation of the financial reports to the Audit Committee occurred on April 5, 2023, and was facilitated by Rick Tadder, Management Services Director and Ann Fang, Manager with CliftonLarsonAllen LLP. |
Key Considerations: |
The City has received an "unmodified opinion" from the Auditors, meaning the audit firm believes the financial statements are fairly presented in accordance with generally accepted accounting principles. In the Communication to Mayor and City Council (attached), the audit firm states: there were no significant difficulties encountered in performing the audit and; there were no disagreements with management.
In the FY 2021-2022 Single Audit Report, there were no findings, material weaknesses, significant deficiencies or noncompliance material to financial statements noted. The City did qualify as a low-risk auditee for the FY 2021-2022 audit.
The Audit Committee unanimously approved the acceptance of the ACFR and Single Audits at their April 5, 2023 meeting. |
Community Benefits and Considerations: |
An annual audit is statutorily required by A.R.S. Section 9-481. In addition, should the City not perform an annual audit of its financial statements and complete a Single Audit, the City could lose valuable grant funding. The amount of reimbursements of Federal Award reported for in the Fiscal Year 2021-2022 was $22.4 million. State and local grant funding totaled $3.8 million in Fiscal Year 2021-2022. |
Community Involvement: |
Independent review of the City’s financial statements elevates the level of confidence that the City is reporting fairly, accurately, and within prescribed guidelines. |
Expanded Options and Alternatives: |
Involve: The community is directly involved through the participation on the Audit Committee.
Inform: Any community member may review the most recent ACFR and Single Audit Report. The current and historical ACFR and Single Audit and SEFA are on file and available for public inspection in the following locations:
- On the City website, www.flagstaff.az.gov under the Management Services & Finance Section (https://www.flagstaff.az.gov/4826/Annual-Financial-Reports)
- At the Flagstaff Public Library, 300 W Aspen Ave, Flagstaff, Arizona
- At the East Flagstaff Community Library, 3000 N 4th Street, Suite 5, Flagstaff, Arizona
- Contact the Finance Director at (928) 213-2217
These reports are also attached to this staff summary. In addition, one copy of the ACFR and one copy of the Single Audit Reports are on file and available in the Council office. |
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