SUBJECT:
Title
Update on the 2023 Annual Comprehensive Financial Report and Audit Report
Body
DEPARTMENT: Finance
Department
PRESENTER(S): Sara Hancock, Director of Finance
Alli Ventre, Director, CliftonLarsonAllen, LLP
Allison Slife, Principal, CliftonLarsonAllen, LLP
First Name Last Name, Title
TIME ESTIMATE: 45 minutes
only required for non-consent items
FISCAL SUMMARY: Not Applicable
POLICY ISSUES:
Understanding and awareness of annual comprehensive financial report for 2023 and finalization timeline.
STAFF RECOMMENDATION:
Recommendation
No action required - information purposes only.
End
SUMMARY AND BACKGROUND OF SUBJECT MATTER:
The Annual Comprehensive Financial Report (ACFR) is the Town of Erie’s official annual financial report. The audit of the financial statements for the year ended Dec. 31, 2023 was performed by CliftonLarsonAllen LLP (CLA). This report is still in draft form, as representatives from CLA will discuss. The finalization of the document has no impact on the overall financials or the Town’s overall position. The Town has an anticipated favorable report (i.e., an unmodified opinion).
Included is a brief commentary on the annual audit report status. Representatives from CLA will also provide comments on the audit and internal control findings and will be available for questions.
ACFR & Audit Extension for 2023 Filing
CLA requested that the Town apply for an extension with the State of Colorado Auditor’s Office for the 2023 filing. This was due to several factors, which CLA and Finance will discuss. Currently, CLA is able to report:
• The Town is on track for September issuance with tentative clean opinion, with one major program in the current year for single audit.
• There are two preliminary audit findings:
o Turnover at the leadership level revealed several succession gaps for the overall year-end close. CLA is recommending that the Town formalize year-end processes and ensure cross-training between staff for smooth transitions in the future.
o A single audit suspension and debarment finding - Finance was made aware of this finding last Fall and has already addressed it. Finance will speak to the resolution in the response to findings.
• Delays with turnover in key Town personnel and change in CLA’s engagement team slowed the process. However, CLA reported the Town’s team to been very responsive and helpful to work with. CLA had several discussions with the Finance team on internal controls and the financial reporting process and improvements will be made moving forward.
Annual Comprehensive Financial Report Summary
The ACFR consists of four sections, as follows:
• The introductory section includes a table of contents, a letter of transmittal, the GFOA Certificate of Achievement, and a list of Town officials.
• The financial section includes the auditors’ opinion, management’s discussion and analysis (MD&A), financial statements, and notes to the financial statements. Also included in this section are schedules for those funds considered non-major (as defined by accounting standards), combining schedules, and budget variance schedules for the various funds.
• The statistical section includes required and optional statistical tables containing various types of information related to the Town’s financial trends, revenue and debt capacity, demographic and economic data, and operating information.
• The compliance section consists of required disclosures related to certain outstanding bonds, the auditors’ report on internal control and compliance, the auditors’ report on compliance for each major federal program, the schedule of expenditures of federal awards and related notes, the schedule of findings and questioned costs, the Town’s corrective action plan, and the Local Highway Finance Report.
The ACFR is prepared in accordance with generally accepted accounting principles (GAAP), as issued by the Governmental Accounting Standards Board (GASB). The objective of the audit performed by CLA was to provide assurance that the Annual Report is in conformity with those standards in all material respects. CLA anticipates issuing an unmodified opinion on the Town’s financials for 2023, a so-called “clean” opinion.
The Town also strives to prepare the ACFR to meet the standards of the Government Finance Officers Association’s (GFOA) Certificate of Achievement for Excellence in Financial Reporting award program. This program encourages preparers of ACFRs to go beyond the minimum requirements of GAAP and strive for transparency and full disclosure in their ACFR. The Town has received this award for the years 2004-2022 and will submit the 2023 Annual Report to GFOA for consideration for the award.
For readers new to ACFRs, reading MD&A provides a good starting point. MD&A provides an analysis and overview of the financial statements and results of operations. It also provides explanations of the various sections of the ACFR. In addition to the financial statements themselves, the footnotes are also a critical part of the ACFR. The footnotes provide information on accounting policies followed by the Town in preparation of the ACFR, details on specific financial statement items (e.g., deposits and investments), along with other important disclosures.
The Single Audit Act requires that a non-Federal entity that expends $750,000 or more in a fiscal year in Federal awards must have a single audit conducted in accordance with 2 CFR 200. The Town exceeded this threshold for 2023, and the single audit information is included in the Compliance Section of the ACFR.
TOWN COUNCIL PRIORITY(S) ADDRESSED:
ü Prosperous Economy
ü Effective Governance
ü Environmentally Sustainable
ü Fiscally Responsible
ATTACHMENT(S):
1. Audit Extension Confirmation