City Council - Special Meeting

business. Algiance in reciting our pledge of allegiance. I aliance to the flag of the United States of America and to the republic for it stands nation indivisible with liberty and justice for all [clears throat] council. We have a short active agenda here. We're going to move right into the discussion item. [snorts] Please note that identifying an item is that it does not require the city council to vote on that item. Item is a 2025 annual comprehensive report presentation from President G25 annual comprehensive commission approach is this next item and we will hear from our treasure finance director Amy Gordon. So Amy I'll turn it over to you. Thank you.

Thank you mayor city council Amy Gordon uh finance director. I appreciate you all being here this afternoon ahead of your regular meeting tonight. This is our opportunity to introduce our auditors to the council and for you to get an expanded review of the financial report that will be then presented to you tonight for formal production. Um this is the end of like a fivemon work project. So we're relieved to be here today and um a lot of time and effort and energy go into this. So, thanks to our auditor and her staff for the work that they put into this. Thank you to my staff for all the work that they do, especially Claire, our accounting supervisor. She puts a lot of [snorts] time and effort into the report and putting those books together to for you guys each year. Um, and we'll turn it over to Don Alverie from President Gage. She's an associate partner there in charge of our audit. because she works with her team of staff to um review all our transactions and help us put this book together. Um just really appreciative of her and her staff and making that such an easy process and being confident go through it. Thank you.

Thank you, Amy. Mayor, city council, I'm going to grab that keyboard. Mayor, where's the best place you want me to be at the end? Yeah. Are we filming this? Yeah. We just need to remember to speak [clears throat] up. Okay. You know what, Don? How about if I put you right here and I'll move to you. Or I can sit over on [snorts] the other side. No. Then you can play this here and then if people are listening only. Don't you usually sit at the head of the table.

Pleasure. snarling at me already.

Thank you. Thank you for having me here today and thanks for um having this special session to go over the the um audit for September 30, 2025 in [snorts] a little bit more detail. Um as Amy indicated at the meeting tonight, it'll just be very very quick few minutes and then approval for release and distribution of the financial statements. Um, I do have just a a little handout. I'm not going to go through it. I just thought maybe it would give you just a summary. Um, those of you who are on the audit committee has probably seen some of this, but I just want to kind of you read it at your at your leisure, but take one pass around. It's just kind of an agenda or a summary of what I'm going to cover here. I will probably talk a little fast, so sometimes it's Yeah, I made 10 copies. Hopefully there's enough there. But um again, it's just some summary of the information that we're going to cover here um right now. And um be good. So, as I indicated, this is um a presentation of of the audited financial statements as of September 30, 2025. Um we do start pretty early um with our planning phase. We meet with I met the mayor and Amy and Claire probably was it the end of September? Yeah, at the end of September, audit committee, some of you, um, we met at towards the end of October. Um, city's working their tails off to get the books closed, all the adjustments done, uh, prior to Thanksgiving. So, so when Amy says five months, yes. So, um, by Thanksgiving, we have audited numbers from the city and then we start doing

our audit procedures in December. kind of slows down around Christmas time because everybody's gone for the holiday or a lot of people are gone for the holiday on my staff as well and then we kind of kick back up in January and wrap wrap everything up. So um here we're going to talk about um some required communications that we have with um that the auditors have to communicate to those charged with governance and that's you guys as the city council. Um as an audit firm that we're required to be independent and so we are independent. We're the independent auditors. [snorts] Uh we are confirming what you see throughout the year is accurate. That's our job during this process. Um the only thing that will belong to President Gage is going to be the three audit opinions and audit reports are within the financial statement within this book booklet. Um and then everything else belongs to the city. Shouldn't present any new information. So, at any point during an audit, you should never be shocked about something that you see in there. There's going to be some a little bit different format maybe than what you have been reported on or shown, you know, as as the year goes along, but um that the information should be what you hopefully would expect and um you know, verifies the accuracy and the quality of your accounting records. So, just kind of talking about um that that we as president Gage, we have audited the financial [snorts] statements of the city of Lewon um as of September 30, 2025 and we're in conformance with our auditing requirements. Um what we have audited is the government activities business type activities all the comp the component unit which is the URRA

and all the remaining funds and just kind of give you an idea when I say governmental activities I'm talking about the general fund transportation capital projects [snorts] economic development cemetery library public trans transportation fleet workers comp information system and um then the business type activities would be your water, wastewater, sanitation and storm water and the component unit is the urban renewal agency of the city of Louis which is in the financials as well and um some of the remaining funds is the CE talk about the cemetery we have the cemetery perpetual care fund so it's the whole city all the funds within the city and within the handout I gave you, I I kind of outlined what all the funds were so you're aware of of what's being discussed here today. So, what we [clears throat] have um the book in front of you is called the annual comprehensive financial report. I don't know the book and I happen to bring mine from last year. Every year I go through it and I mark on it and I tag it and spill tea on it. So, mine always looks very worn a year later because I I like to go back through it when I'm working on the next year. But in the book is broken into five sections. So, you have the introductory section. So, that's going to be um the letter from the mayor talking about the year, talking about the city, um your certificate of achievement for the finance report from the GFOA, and then some structure. Then you get into the financial overview. That's the guts of it for the most part. So, you have the management discussion and analysis. um that is a great place to go if you're looking for a summary of what went on within the city and you know that's maybe something that you want to be

familiar with when [clears throat] when citizens ask you a question. Pretty much a lot of the the information is in that first section. It's just a really quick quick summary and then we get into um the the guts that we're kind of talk about a lot of the numbers and then um some supplemental information, statistical information, great data, what's going on with the city over a 10-year period of time and then the single audit. So those are the five sections as I mentioned what belongs to president gage is the audit opinion and the first audit opinion on page 11 is uh do the financial statements represent what really happened in the city's finances for the year and this is an unmodified opinion which is clean best opinion you can have um so that's it's a multiple page report and I've summed it up in one little sentence it does have discuss questions on some who's responsible for what, what the auditors are responsible for, and what management is responsible for. We'll cover a little bit of that um kind of quickly here in [clears throat] the next couple slides. And that's part of what I call the required communication of that. Another excuse [clears throat] me, report. It's [snorts] on page, you don't have to flip if you don't want to, page 165 through 167 is an opinion on the the federal grants. So the city of Lewon expended more than $1 million during the fiscal year. So they're required to have a single audit or an audit in compliance with uniform guidance and um there's a report on that. So there's specific discussions or specific tests and reviews that we have to do for that. um this putting this thing together the the we call the schedule expenditures of federal awards together which we'll talk about later takes a lot of work for for the city

staff to do and I know Claire spent a lot of time tracking down those grants and making sure that is there federal money in those grants and is it not for that kind of thing so it does take a lot of work and making sure that it's on the acrrual basis of accounting so it's it's a challenging challenging event and then we get to audit that you have all the fun, right? The [clears throat] third report is um a report on internal uh excuse accounting [snorts] internal accounting controls and compliance page 163 to 164 and again that is a clean um opinion. We don't have any findings [clears throat] on the control issues there. I talked about some required communications Um we're required to to conduct our audit and follow standards. That's one of the requirements that we have for the [snorts] auditors. Uh we are responsible for conducting our audit to gain a reasonable assurance, not an absolute assurance that the financial statements are free of material misstatements. And I always stop and make sure that everybody understands in an audit, we're not auditing every single transaction that goes on. [snorts] We're doing some sample testing. um we're you know verifying to third party documentation that kind of thing but not at 100% level. So we're getting a reasonable assurance about that. As auditors, we're required to have um exercise professional judgment, [clears throat] identify risks, have an understanding of the controls, um evaluate county policies, and whether thei the city will continue operating for the next 12 months. And so we have no issues with that. With management, management is responsible for preparing the financial statements and making sure that the information is accurate,

designing and having internal controls that are appropriate and operating efficiently and and making sure that accounting policies they have appropriate accounting policies. There are some accounting estimates also in these financial statements. Um, for the most part, every financial statement has some kind of estimate and it's, you know, guess or whatever you want to call it, but um, an allowance for uncollectible accounts would be considered an estimate. How much are you going to collect on those accounts receivable? And for the city that for the most part, we're looking at utilities and ambulance billing are the kind of the key areas. Yes, there's other receivables from grants and things like that, but the key ones are that useful lives of assets. How long is something going to last? That's an estimate. Um the medical insurance, unpaid claims, that's an estimate after you're in workers comp. The pension asset liabilities from leasing and any compensated absences. Those are some key areas in these financial statements is also um the the assets of the airport 50% of the assets of the airport authority. Um the city and county jointly own that activity and they're included in here at 50%. The airport additions for the year was about 1.1 million. So the city has 50% of that picked up component unit. Um the urban renewal agency in the first few pages there'll be a column on the right hand side that specifically identifies um the component unit and that is audited separately. President Gage also does that audit and we are completed with that. We haven't issued it final. It usually will be presented at the March meeting, [clears throat] but um a draft is gone and been reviewed, so we're good with that. The city employee benefit plan trust is also a separate

audit. It's included in this packet. Um President Gage has audited that as well and that was issued prior to December 31st. Um the requirements with the [snorts] department of insurance is that it is be is filed and issued and submitted by within three months of the police retirement is a fiduciary fund also reported in here. The police retirement that's the closed plan. Some terms that you're going to hear me talk about here in a little bit when we get into the numbers is acrual basis of accounting. um that's going to be recognizing income when it's earned and expenses when that expense is incurred. And modified acrruel basic accounting is going to be you know acrruel and cash. So that's how the the city operates more on a day-to-day basis is more on a modified um modified acrruel basis of accounting. to kind of start. We're going to start with the statement of that position and a statement of activities. And these are on page starts on page 34 of your big book. [laughter] And I just want to cover some highlights of items on here. Again, these statements, these few pages that I'm going to talk about first are on the acral basis of accounting. So some key key items that I wanted to point out and I like to highlight in green when it means money. So you see green especially because I'm pointing out so cash and investments. So total cash and total investments [clears throat] for the city city governmentwide is 91,600,000.

of that current of 69 million non-current of 22 million um and 22 million is is restricted investments for one purpose or another. A question for you. Yes. Now that your little green highlighted thing Yep. isn't on here. Nope. You just added it up somewhere.

I put it on my I put it on my slide. But so what I added up that adds up to the 91 million is in that total column is the 44, the 25 and the 22 million. So that those add up to that 91 million. The first the 44 million and the 25 add up to the 69 as current assets and then the non-current would be the 22 million in the lower section mid page. Can we get a copy of your slides? the city has a copy of the slides.

I emailed them and yeah, happy to maybe that's why I should have passed that. Oh, let's just make sure we have

Yeah. So, just like to point out that the other item I like to point out is um is the capital assets. what the city has as equipment, buildings, plans, infrastructure, you name it. Cap is a capital asset. [clears throat] This is net of accumulated depreciation. So capital assets in the city is 247,659 and broke up into what's a government activities and business type. 103 million for government and 144 for business and that's in that blue section below. The other [clears throat]

is that includes the airport.

That includes the 50% of the airport and that would be in the government column [snorts] government activities column. Also included in there would be you know any sort of your your um [snorts] infrastructure for Under business type is going to be your water, waste water, sanitation, and storm water is going to be in your business. Fleet, it's going to be in your governmental. So, if they're fleet, um, information systems, those kinds of things, they're going to fall into the governmental category [laughter] and everything involved in that is going to There's going to be a part of it in land. There's going to be a part of it in buildings. Back in the detail in the notes of the financial statements on page 63 and 64 will show the airport as separate lines on those totals. So, if you're curious what 50% of the airport assets are that are included in the city's books, they're listed there. So, if you see um land, airport [clears throat] land and improvements, airport runway, [snorts] there's some construction progress going on down there. And there's airport equipment. [clears throat] So, if you're curious, and then if you go to the midway through page 64, you'll [clears throat] see the net

capital assets for government and business. And so, it's the cost of the assets minus the accumulated depreciation will get you to those rows or get you those columns that I'm showing you in the blue as a summary. [clears throat]

So, those are really great pages if you're wanting to see um things broke out. [snorts] We talk and internal service, that's where your your fleet is going to be. It's fleet and information systems is in that category there. That's what the internal service means. [clears throat] Great questions. I sometimes skip over some of the notes, but there's so much valuable information in there [clears throat] that support all these numbers that we're talking about. We'll get into the liabilities. And here some of the numbers I'd like to to point out is um for the most part the big debt items are going to be in the business type and that's your water and wastewater bonds that are outstanding. I have [clears throat] highlighted kind of in the pink the the the bond with the current portion. You'll see that's only in the business types. So that's water and waste water. The um the line in the blue down at the bottom right down in here you'll see net in invest [clears throat] net investments and capital assets. So what that does is it takes those asset numbers from the prior page, subtract out any sort of debt related to those assets, which would also include any kind of accounts payable or retainage on those and [snorts] this is how much money is invested net of debt in your capital assets. I got a [clears throat] question from the 10 pages forward from 34. Yep.

The ones that said the restricted investments are those like the policeman's fund and those retirement pack fund is that um those funds are in business type and I believe Amy can correct me if I'm wrong. Those are because of [clears throat] bond requirements. I believe those restricted restricted investments.

Yeah. you and I think there there is some in governmental like the police investments would be restricted. Um the but yeah they the bond requirements on the water wastewater loans have some restrictions where we have to set so much aside in a bond reserve account. Um we have our debt service cash for the handle payment and then um also they have equity buyins where equity buyins being that number as well because they have a narrow scope of how you can use those fees. [snorts] [clears throat] Also the the police retirement that that retirement plan is not in these sections. it's reported separately. So if you're curious when I say about what's going on with the bond, you know, we talked about the assets and if you're also curious about what's going on with the debt on page 65, 66, and 67 are the breakdown showing the the debt talks about [clears throat] um the interest rates, the borrowing, future payments um and how much was paid down on those I do have a slide here that does talk about the debt a little bit here. So we have the wastewater total balance due at 93025 was 24,688. During the year uh principal payment of a million81 was paid and interest of 329 on the water. 39,440,000 is this balance outstanding and a principal payment of 1,334

was paid with the interest plus interest of 657 during the year. So on those pages of 65 and 66, you'll see what the um obligation is going to be going forward for both the water and waste water. It will also show you what's the component unit um which is the urban renewal agency what's owed on that loan as well. So with those the loans what shows here the years like for instance the water loan is through 2049. Yes. [snorts] And then the the waste water is 2038. Yes.

Okay. basically pay off pay off based on the amortization schedule at some point. You know, at some point if the city decides to come up with 40 million [snorts] paid off early without penalty. So you'll notice that the um water loan is at a 1.625%.

So Anybody else want a loan that's 1.625%. Yeah, pick me, right? Um and then of and then the waste wastewater loan is at 1.26. [snorts] The um urban renewal agency loan is a little higher as a variable. Just some things I like to point out in those sections are kind of the key areas of of the statement of net position or your balance sheet. [clears throat] The next page I point out is the statement of activities. And it's kind of an odd statement. It's required to be presented this way by government standards. So the expenses are on the far left going down and then there's income. So as I show you here you have expenses and they go down here. So total expenses for total primary government is 61 million charges for services operating grants and contributions capital grants listed here. And then here's where your taxes, franchise fees, some interest, some interest. This is awesome. 1.5 million is is what you your investments have done on the government side. 1.8 on the business type. And then some other items here. The change in net position, which is your income for the year. So in in the governmental activities, you had income of 10,528. on the business type we had 15,687 when I say that we're on the acrual basis accounting so if the city put money into some infrastructure for water wastewater [snorts] that's being capitalized so that expense doesn't hit here it does [clears throat] um on the

business it will on the business side they're always acrruel so it's never going to hit but when the city governmentwide the governmental activities has capital additions, then they are capitalized and appreciated. When we get to the fund county um statements, I'll show you that there those capital assets aren't on there. So, there's a little bit different. So, does that one the other government revenues is that broken down anywhere here? Is it um I don't have the this other government revenues right here. I do not have it broke down, but if you wish to have what's in there, I can that together. That's something that you want.

Amy probably

I can't remember what all goes in there. [laughter] But so when we talk about I the balance sheet and what's the dayto-day how the city kind of reports their information on a day-to-day basis. Page 37 this is going to be your governmental funds. So here presented the the four funds that I'm showing here. The general transportation and capital projects and economic development are what's considered the major funds within the city. Then other governmental funds is listed all in one column. They are broke out on page 94. Did you want to see? It's kind of

I know you're flipping around. I know it's hard. It's hard. This is the total. Can you say that again? I'm sorry.

Yes. So the total governmental funds is going to be here. Okay. But the major funds of the city is the general transportation, capital projects and economic development. And then all the other funds which would be transit, library, cemetery, this one, [clears throat] cemetery, professional care are all going to be in this other column here. One of the things [snorts] I want to point out on this screen is this. This is on how you would this is the modified acrruel. So this is how the city would look at on a regular day-to-day basis. You'll notice that there's no capital assets and there's no no debt here because that's not how you report these. So what I'm going to show you on the governmental funds here, the fund balance which we happy to sometimes recall it. The carryover is $40 million. Of [snorts] that 40 million of the governmental funds, 9.7 million is unassigned money. So that's basically out of the 40 million a lot of it's already spoken for. It's under capital projects, building reserves, you know, reserve for perpetual care money, what have you. The 9.7 million is what's available to be spent at your discretion. 9 million

9 million7 and that comes out of the general general fund. So the general funds carryover is 16 million and and the unassigned is the nine on page 39. This is this is the um revenues and expenditures. Same types of categories. This is going to be for the governmental same major funds. And then I'll shoot down to the bottom net change and fund balance. So you'll see the general fund had a loss, economic development had a loss, and then there's a loss of those group of funds. Now, when you do your budgeting and you um budget to use fund reserves for expenses, you know, we're going to use some of our reserves. We're not out here to grow capital. We're here to support this, you know, city and and make it bigger and better and and have our citizens. Well, when you use and plan to use fund balances from years prior, you're often going to have a loss in those years because you're planning to use money you've already accumulated over prior years for expenses in that current year. Does that make sense? So, so that's why sometimes you'll see you have these losses and you're like, you know, you don't want to be too too quick to be shocked because you may be something that you had planned to do by using some of those reserves. And often what happens is o over a couple years you're like, we're trying to build those reserves because we're planning to do something, [snorts] you know, x and then we then you use those and then it looks like it's a loss. So that's all part of, you know, the budgeting and the planning and the

use process that you all go through, you know, come come August when you're talking about budgets and and using funds and when the fund really begins, right? And here's where I talked about the carryover. The non- major governmental funds, like I said, is on page 94. Um I do have a summary of them here. So cemetery library public transit and cemetery perpetual care. You'll see that there's a transfer between the cemetery perpetual care and the cemetery fund. That's the only transfer that you're going to see. The city voted a number of years ago city citizens to not have transfers. However, Idaho, I think it's under a statute actually that require cemetery perpetual care is in the business of giving money to the cemetery, but um there are specific requirements um uh investment earnings, that kind of thing to allow that transit transfer that occur. So that you'll see that um you'll see too, you know, cemetery. Cemetery always seems to run with a a tight a tight um [snorts] budget there. Yeah. Library. Um public transportation, that's transit. So there was been some activity in transit during the year for for capital projects, things like that. So you'll see that they'll be reported here. Just a quick question of the earnings on the investments for the cemetery. Is that just the perpetual care fund or something else?

Um the earnings in the the the 136,000 the 15,000 that is going to be on their their interest earnings on their checking account. Okay. It's a perpetual care is reported off to the right. own separate it own separate column. Thank you.

Yeah, this perpetual care [snorts] their investment earnings is 136,000. talk about um the proprietary. These are this the ones I talked about on the front couple pages 34 35. Basically, these totals are going to be exactly the totals that were on those prior pages. These funds are reported on the acrual basis of county. They're supposed to be self- sustaining, self-supporting. So it isn't going to be the tax funds here. It's the services that you're providing. You're getting funds to do that and then that's what's reported here. So these these numbers are going to be what's reported on those prior pages as well as there's the debt that I had pointed out before, but they are separately identified by fund um here. So you can also see on this particular This [clears throat] is the liability. Here's the the income, the revenue, and expenses. So, you can see what each fund did for the year. So, remember that here when one of these funds spends money on some sort of capital project, it doesn't hit their expense line. it it goes in as an asset on this [snorts] line and then it's depreciated over the useful life of the asset. So the expense then hits [clears throat] it's here under the depreciation over the time and the length of time of that particular asset. So, if you buy a a truck that's gonna suck sewer or suck storm water um for whatever it runs, 300, 400, 500 million or,000,

it's going to be capitalized and depreciated over whatever we think it's going to last. [clears throat] Off the top of my head, I don't know how many years that is, but that you guys are doing that. Probably seven to 10, I would imagine. Okay. talked a little bit about the fiduciary funds. These are not included in those statements that um they're not part of that. They're reported separately. So, here's what we're talking about. The this is the employee retirement plan. This is that police retirement account. $14 million is sitting there. That's funds that are spoken for. Those are for those retirees. Currently there's now um 29. At year end there was 30, but now there's 29. And that could be the those retirees or their spouses who are receiving those benefits still. Um this every other year there's an actuarial report that's done to help identify if there's additional [clears throat] liabilities and things that need to be picked up for that. But the city hasn't paid into the account for has it been a while? Several

years. It's been a while. So, it's funding itself. It's actually um based on what the actuary says, it's overfunded. So the investments and the money sitting in the in the bank account here or investment accounts is plenty enough to cover what the actuary believes the obligation will be and I think it's like at 127% or something like that is the funding rate of that. Of course if the market were to tank that could change as well. So it is it should have been used before.

Yeah it does. it has happened and and but anyway it's doing very well and this employee benefit plan [clears throat] is the um health plan and again it has money because it's got to be able to pay your self-insured portions of your health. Again, um you'll see here where the employee benefit plan, it had net fair value. You know, it had a great unrealized gain this year of 800,000. So, that could sway what goes on. But internal service funds, we talked a little bit about that real briefly. They're um they're listed here. This is fleet workers comp and information system. While you're looking, I'm going to ask a quick question about that received from

contribution from private sources after you're in these numbers.

It won't be in these numbers because I believe you're in. So other things that you'll see in here towards the um after the footnotes you'll see what's required supplemental information in that is the budget comparison schedules for the major funds no funds exceeded the budget the Percy there's um some forms that talk about for the last 10 years what percentage of the Percy funds belong to the city how much covered payroll that kind of how much was paid in is listed there. Um, you have a base Percy plan. You also have the firefighter pension plan within Percy. And then there's the police retirement. So, there's actually three different things to talk about. The fire [snorts] portion of the Percy is also overfunded by quite a bit as well. And on my page page 86 and 87 is where that starts. I have a picture So if you look at page 86, you'll see that very um top line is the employer's portion of the net liability. So because the because the city portion of that retirement fund,

it's underfunded by about 9%. So you'll see that bottom number about midway through says 91%. So that's 91% is the funded amount of the Percy account. And so each government agency within the state of Idaho has to pick up based on their employer what portion of liability if business ended on that day that has been calculated by actuaries. So you're saying it's worse than 90% 91% is the is the funding amount is funded amount. So if if so it's only funded at 91% I see for the the whole state's right

person plan is funded at 91%. And um so it's like 8% or so. Yeah. 9%. And so yeah, if yours is, you know, 11 and you're one of the bigger [snorts] bigger um cities, you'll see that [clears throat] your portion and share is 48.

2021 for the upper I think. says 49 million. [snorts]

I'm sorry. 2021. Yes. I'm that guy. I just Oh my gosh. Oh, wait a minute. There's a put the balance into the [laughter] Never mind.

Okay. Well, we will need to change that page. Okay. You saw such a jump, right? Yeah. [snorts] Thank you. Quite a jump. Even the percentage dropped way down. [snorts] Yeah. Great. Thank you. Thanks, Mayor. That's what I get for pointing out that page. No, it's good. It's all good. That's what we're here for.

Um, and I was talking uh earlier about the federally expended funds. So, the city of Lewon um expended 7 million, this is on the very last couple pages of the report. 7,561,000 was the total federal funds expended during the year. So, and I say expended because let's say a government agency, which has does has happened, they gave you um you know $7 million and you stuck it in the bank and that's but until you actually spend it doesn't go onto this report. So, that's what happened with some of those. Um actually I think the fund that had the money this year the corona [snorts] virus which was the major fund that was tested in detail was 4.5 million the 4.5 million is made up of I know it's hard to see I can't tell if it's or not.

Yeah it should because I copied it right out of there. So, so that that's on page 71, right? [snorts] 171. 171. Mhm. Yeah. 171. And then the the 170 is the rest of it there. And that's other things that we want to make sure we um communicate is if we have any adjustments during our audit. [snorts]

And why why is talking about adjustments during our audit important for you guys to know [snorts] is as you're going month to month or meeting to meeting and talking about um the finances and making business decisions on what to spend money on and what projects to do and you get that financial information and you make a decision on it. And if the auditor rolls in after year end and goes, "Oh, no. you we need to have more liability or more of this or more of that or change. Um you might think, oh gosh, maybe I didn't make a good business decision because I didn't have good numbers to go off of. Now, as far as audited numbers, we I don't think we had any adjustments that we recommended. [snorts] There were a few what we call what the city calls um period 13. So the books are mostly closed, but there's some things that when they're reconciling get noticed and they need to be adjusted. I don't they weren't very significant this year. Um in these reports we don't in the first few pages that I talked about there is no encumbrance accounting. So we take that out and then we help with the Percy adjustment. But other than that, there shouldn't be there isn't adjustments that should um have changed your opinion on a decision that you [snorts] made throughout the year that changed the financial number. Um we didn't have any disagreements with management regarding u accounting policies, reporting, anything like that. And during our audit, we did not become aware of any fraud or legal acts during the audit. And again to recap, the reports that um [snorts] belong to President Gage that we covered in the beginning are all clean clean reports. Um and I want to thank the city staff for always getting us information a very timely fashion. um walking through

information with us and there's we can't do our audit unless the finance department is is doing their their job and and with that if if we did have some difficulties and that kind of thing we wouldn't be sitting here today we've been had talked a long time ago talked to the [snorts] mayor we talked to that and um we would be already having those conversations so That's um what I have for you tonight as more detail. I know it's hard to take 171 pages and try to talk about it, but hopefully I get the highlights [snorts] um for you and if you have questions um feel free to ask those. The audit committee, we did meet at the end of July and we talked about a few things there. Um the audit committee is I know kind of seen it as the leaison with the community to kind of bring items if they have any they've heard something in the community and want to bring something to us. um in the planning stage that's why we meet in October um the audit committee meets in October and then they can communicate with you um and then we meet again [snorts] they are their job also is to make sure that that transparency is there making sure that um they're making sure that we as auditors are doing what we're supposed to be doing as well with that process and then you know the mayor always keeps me on my toes too you know, give me a give me a call if he has questions throughout the year, something going on. Um, you know, different different departments maybe we visit and we have, you know, recommendations probably, you know, this year maybe oral. Um, I was over at looking at the um, ambulance billing and and how that process works. And one of the comments I [snorts] made to Amy was

that there's some cross trainining that needs to be done and making sure that that's that's done. So if something happens to the folks that are involved in doing that process that it continue without a hiccup at some point. So I know that they're working towards making sure that there's some cross trainining to have other people available and that's what I have for you. Yes, you have a question. Yeah. So here on the identification of major programs the CFBA numbers I just it says audit audit qualified as low risk.

[clears throat]

So when we so when we do our audits and audit is the city and we have to do assessments of whether you fall into a low risk or not low risk is what they call it. So if the city has received an audit, a single audit like we have over the major funds in the last two years, one year in the last two years and then there was no findings, then you can qualify as a low risk. So what that allows the auditors then is we only are required to test 25% of the total funds. If it's not a low risk, then we're required to test 40% of the federal funds expended during the year. So that's an identification of the amount. Um so it's and a lot of it's about risk and risk assessment also. But if if the city um you know this happens a lot where we have some government agencies that they go right along and they're having an audit because they just they need an audit. they're over the revenue threshold and they have a big water project or usually a big sewer project or something like that and they get federal funds. Now they have to have this single audit

and they haven't been audited under that in the prior two years. They automatically go to be in higher res. As auditors we would have to look at 40% of those expenditures and 40% of the group of expenditures. So it's not um but that's how it works out that very well. [laughter] There's a lot of hoo-ha that goes into going through and doing that. But yeah, I was just curious why.

No, perfect. No, that's a great question. But yes, they consider low risk. So, one of the things is when we're we're assessing that low risk that page 168, if there were some yeses in there, then it may cause you to not be able to be certain types of

Can I do it under an more [laughter] on. You should go get some rest and something to correct for. Yeah. So, um the slide presentation I had emailed a copy to Amy and the um my team who's putting that showing it on screen has a copy. So, [snorts] add to the package and then we will get that fixed. Yeah. And we won't have to do anything special on approving it tonight.

So tonight at the formal meeting, [snorts] I have a little blurb to indicate that we went through it in detail tonight, what the opinions of the reports will and then I usually the you approve the release of the financial statement. So a lot of entities will like approve the audit that kind of thing. Well, the audit is the audit is the audit, you know, but um basically the council needs to approve it to be released and what will happen after that is once we do the page fix, but um it'll be published on the website, the city will then or finance department will then send their reports or send it in with the state. Then they'll work on um for the end of March getting the application for the outstanding achievement for financial aid and anything else that you guys um

I say just but clearing house yeah the oh yeah the and the federal clearing house so when you do have a single audit there's a another requirement where it has to that information has to be loaded into the federal clearing house is I don't know a bucket where they keep [laughter] track of all that by funds and and that's done all electronically And that's the process that gets kind of taken care of after everything is done. So that will be what happens tonight. I will not talk to an hour. It'll be about three minutes. I swear [laughter] she was thrilled.

Hey counsel, any questions for the questions? If not, okay. Is there a motion to that was hint [laughter] [snorts] second by saying I stand. Thank you.