ITEM TITLE:
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Approval of the 2017 Financial Audit
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SUBMITTED BY: Brian Carlson, Finance Director
FISCAL NOTES:
Expenditure Required: n/a
Unencumbered Balance: n/a
Funding Source: n/a
RECOMMENDATION:
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Approve the 2017 Financial Audit
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SUMMARY STATEMENT:
The attached Basic Financial Statements, Federal and State Single Audit, and Audit Wrap-up comprise final deliverables for the 2016 third-party financial audit. Following Council approval, staff will make numerous filings, due 9/30/2018, to satisfy state statutes and bond covenants. Representatives from BDO will join the 9/18 Council meeting by phone.
For the October 2nd Council agenda, Finance staff will include both the June 30 financial summary reflecting audited year-end fund balances, and a fund balance review and analysis that will provide context for the upcoming Council budget work sessions.
BACKGROUND:
In 2017 the City engaged BDO for a new two-year contract at a set rate of $82K per year. The City will publish an RFQ for audit services in late 2019. This year's audit included two weeks of on-site work in Valdez, and regular status meetings with the Audit Committee.
ANALYSIS:
The 2017 Audit contains three findings:
1. Significant Deficiency, defined as a deficiency or combination of deficiencies in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance.
The City over-paid its 12/31 debt-service payment by $309K. The invoice itself was incorrect, as it included the full debt-service payment, when a portion of that payment was defeased and paid from the escrow agent.
2. Significant Deficiency - Staff incorrectly classified non-capital expenses as construction in progress, thereby over-stating the latter by $2.6MM.
3. Material Weakness, defined as a deficiency or combination of deficiencies in internal control, such that there is a reasonable possibility that a material misstatement...
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