[00:00:02] CALL TO ORDER THE MEETING OF THE AUDIT COMMITTEE. COULD I GET A ROLL CALL, PLEASE? [A. CALL TO ORDER] [B. ROLL CALL] YES. AUDIT COMMITTEE MEMBER CASTLE. HERE. AUDIT COMMITTEE MEMBER MANZANO. HERE. AUDIT COMMITTEE MEMBER OBAGI. HERE. AUDIT COMMITTEE MEMBER SOLOMON. HERE. AUDIT COMMITTEE MEMBER CHAIR. HERE. PLEASE MAKE SURE YOUR MICS ARE ON WHEN YOU'RE TALKING. OKAY. LET'S SEE. SALUTE TO THE FLAG. EVERYBODY RISE. [C. SALUTE TO THE FLAG AND INVOCATION] I'LL DO IT. PUT YOUR HAND OVER YOUR HEART. I PLEDGE ALLEGIANCE TO THE FLAG OF THE UNITED STATES OF AMERICA. AND TO THE REPUBLIC FOR WHICH IT STANDS. ONE NATION UNDER GOD, INDIVISIBLE, WITH LIBERTY AND JUSTICE FOR ALL. AND PLEASE REMAIN STANDING FOR A MOMENT OF SILENT INVOCATION. OKAY. THANK YOU. COULD I GET A MOTION? WELL, WOULD ANYONE LIKE TO CHANGE THE ORDER OF THE AGENDA? [D. APPROVE ORDER OF AGENDA] NO. NO. OKAY. CAN I GET A MOTION TO APPROVE THE ORDER OF THE AGENDA? SO MOVED. SECOND. OKAY, WE HAVE A MOTION AND A SECOND, ALL FOR IT. AYE. ANYONE OPPOSED? I'M AN AYE. MOTION CARRIES UNANIMOUSLY. DO WE HAVE ANY BLUE FOLDER ITEMS? NO BLUE FOLDER ITEMS. OKAY. LET'S SEE. CONSENT CALENDAR. WE'VE GOT TWO ITEMS ON THE CONSENT CALENDAR. [F. CONSENT CALENDAR] THE AFFIDAVIT OF POSTING AND THE MINUTES. CAN I GET A MOTION TO APPROVE THE CONSENT CALENDAR? MOTION TO APPROVE. SECOND. OKAY, WE HAVE A MOTION, AND A SECOND. NO ONE IN THE AUDIENCE. IS ANYONE ONLINE THAT WOULD LIKE TO COMMENT TO THE CONSENT CALENDAR? NO ONE ONLINE AND NO ECOMMENTS. OKAY. THANK YOU. CAN I GET A. WELL, I'LL CALL THE VOTE. ALL FOR IT. AYE. ANYONE OPPOSED? OKAY. MOTION CARRIES. UNANIMOUSLY. JUMPING DOWN TO ITEM J. DISCUSSION AND POSSIBLE ACTION REGARDING THE ANNUAL FINANCE REPORTS FOR THE FISCAL YEAR ENDING JUNE 30, [J. ITEMS FOR DISCUSSION PRIOR TO ACTION] 2025. I'M TURNING THE FLOOR OVER TO YOU, STEPHANIE. ALL RIGHT. GOOD AFTERNOON, COMMITTEE MEMBERS. THANK YOU FOR GATHERING. WE ARE PRESENTING OUR FISCAL YEAR ENDING 2025 AUDIT RESULTS. WE HAVE ONLINE BOB CALLANAN, WHO'S THE AUDIT LEAD. HE WILL WALK YOU THROUGH A PRESENTATION. AND THEN YOU ARE WELCOME TO ASK HIM QUESTIONS. AND I'M HERE AND OUR ASSISTANT DIRECTOR AMY WU IS HERE AS WELL AND HAPPY TO RESPOND TO ANY OF YOUR QUESTIONS. OKAY. THANK YOU. GOOD AFTERNOON. YOU HAVE THE FLOOR, BOB. IS THERE A BRIEFING OR ARE WE JUST TALKING TO IT? HE HAS A PRESENTATION. YES. ARE YOU GOING TO PULL THAT UP, STEPHANIE? SO THE COMMITTEE CAN SEE THAT? SORRY MAYOR WAS THAT YOUR QUESTION? YEAH. OKAY. OKAY, WE'VE GOT IT UP. SO YOU'VE GOT THE FLOOR. GOOD AFTERNOON. JUST GO TO THE SECOND SLIDE. JUST A BRIEF AGENDA OF WHAT I WILL BE GOING THROUGH TODAY, HAVING TO DO WITH THE THE AUDIT FINANCE, THE AUDIT SCOPE, THE AUDIT PROCESS ITSELF, AUDIT OPINIONS AND RESULTS, AND THE GOVERNANCE COMMUNICATIONS. THOSE ARE REQUIRED COMMUNICATIONS THAT I NEED TO MAKE YOU AWARE OF. AND THEN UPCOMING GASB STANDARDS. NEXT SLIDE PLEASE. AS TO THE AUDIT SCOPE, WE JUST WANT TO POINT OUT THAT WE'RE AUDITING THE FINANCIAL STATEMENTS, THE CITY'S FINANCIAL STATEMENTS THAT ARE CONTAINED WITHIN THE CITY'S ANNUAL COMPREHENSIVE FINANCIAL REPORT THAT IS BEFORE YOU. WE ALSO ARE, AS I MENTIONED BEFORE, THE REQUIRED GOVERNANCE COMMUNICATIONS. I WILL GO OVER THOSE POINTS WITH YOU DURING THIS PRESENTATION. AND THEN ALSO THE REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS. AGAIN, I JUST WOULD LIKE TO REITERATE THAT OUR FINANCIAL STATEMENT AUDIT. WE ARE NOT AUDITING THE INTERNAL CONTROLS OF THE CITY, BUT WE DO NEED TO UNDERSTAND THEM TO IDENTIFY WHERE THE RISK AREAS ARE IN THE FINANCIAL REPORTING PROCESS. SO WE DO A LOT OF INQUIRY. WE DO SOME WALKTHROUGHS OF PARTICULAR INTERNAL CONTROL THINGS. AND THEN IF WE COME ACROSS ANY MATTERS THAT WE BELIEVE ARE OF A MATERIAL WEAKNESS OR SIGNIFICANT DEFICIENCY STATUS, WE ARE OBLIGATED AND REQUIRED TO REPORT THOSE TO YOU. LASTLY, THERE'S A SINGLE AUDIT AS WELL. AND THE SINGLE AUDIT HAS TO DO WITH THE CITY'S MAJOR FEDERAL FINANCIAL PROGRAMS, THE MONEY THAT YOU'RE RECEIVING FROM THE FEDERAL GOVERNMENT, WHETHER IT'S DIRECTLY OR THROUGH PASS THROUGH FROM THE STATE OR COUNTIES OR OTHER JURISDICTIONS. THAT IS NOT BEFORE YOU TODAY. THAT'S IN PROCESS AND I BELIEVE IN THE AGENDA REPORT. WE WERE SHOOTING FOR THE END OF OCTOBER TO GET THAT DONE. NEXT SLIDE PLEASE. AUDIT PROCESS. AGAIN A RISK BASED APPROACH. WE YOU KNOW, IT'S NOT FINANCIALLY FEASIBLE FOR YOU OR FOR US TO AUDIT 100% OF THE TRANSACTIONS. [00:05:02] BUT WE DO HAVE TWO SIGNIFICANT PROCESSES THAT WE WILL LOOK AT EVERY FOR EVERY SINGLE AUDIT. AND THAT HAS TO DO WITH THE OVERRIDE OF INTERNAL CONTROLS WITHIN THE FINANCIAL REPORTING PROCESS. AND THEN REVENUE RECOGNITION AND REVENUE RECOGNITION REALLY COMES INTO PLAY MAINLY WITH THE THE GRANTS THAT ARE INVOLVED IN MAKING SURE THAT GRANT REVENUE THAT'S RECEIVED, IF IT'S RECEIVED IN ADVANCE, IS IT ACCOUNTED FOR CORRECTLY IF IT'S RECEIVED ON A REIMBURSEMENT BASIS, IS THAT RECORDED ON A CORRECT BASIS IN ACCORDANCE WITH GENERALLY ACCEPTED ACCOUNTING PRINCIPLES? AND THEN LASTLY WE LOOK AT SIGNIFICANT ESTIMATES. AND AGAIN I'LL TOUCH BASE ON THIS. BUT WE GO THROUGH WHAT YOU KNOW, YOUR FINANCIAL STATEMENTS DO CONTAIN ESTIMATES. THERE'S ESTIMATES OF DEPRECIATION ON CAPITAL ASSETS. FOR INSTANCE, THERE IS ESTIMATES ON COMPENSATED ABSENCES WHICH I'LL GET INTO IN A MOMENT. THERE'S ESTIMATES OF THE THE OTHER POST-EMPLOYMENT BENEFIT LIABILITY AND ALSO THE PENSION LIABILITIES. THERE ARE LEASED RECEIVABLES THAT ARE HAVE ESTIMATES INVOLVED IN THERE. SO THERE'S A LOT OF COMPONENTS OF ESTIMATES. AND WE LOOK AT THOSE AND LOOK FOR WHERE ARE THOSE ESTIMATES ARE LIKELY TO VARY FROM THE NORM YEAR OVER YEAR. AND IN YOUR PARTICULAR FINANCIAL STATEMENTS, THE TWO THAT ARE MOST SIGNIFICANT ARE GOING TO BE YOUR CLAIMS PAYABLE NUMBER, YOUR CLAIMS LIABILITY FOR GENERAL LIABILITY AND WORKERS COMP, AND THEN THE OTHER POST-EMPLOYMENT BENEFIT LIABILITY. AND I'LL GO INTO THOSE ON A FUTURE SLIDE HERE. NEXT SLIDE PLEASE. WHAT EVERYBODY WANTS TO KNOW IS, YOU KNOW, WHAT'S OUR OPINION ON YOUR FINANCIAL STATEMENTS. SO I'M PLEASED TO REPORT THAT WE HAVE UNMODIFIED OPINIONS ON YOUR CITY'S FINANCIAL STATEMENTS. THAT IS THE HIGHEST FORM OF OPINION THAT CAN BE PROVIDED FOR IN ACCORDANCE WITH GENERALLY ACCEPTED AUDITING STANDARDS. AND THEN ON THE INTERNAL CONTROL SIDE, THE LETTER ON WHETHER WE HAVE SIGNIFICANT ISSUES WITH INTERNAL CONTROLS AND COMPLIANCE, WE DID NOTE ONE MATERIAL WEAKNESS. AND THAT HAS TO DO WITH ERROR CORRECTIONS. AND THOSE ERROR CORRECTIONS ARE NOTED IN NOTE 17 TO THE FINANCIAL STATEMENTS. AND BASICALLY THERE WAS THREE AREAS. THERE WAS SOME INTERFUND BALANCES THAT WENT BACK, YOU KNOW, FOUR PLUS YEARS. THERE WAS SOME TRANSIT FUND VEHICLES THAT WERE NO LONGER BEING UTILIZED BY THE CITY. THEY HAD BEEN DISPOSED OF SEVERAL YEARS AGO. AND THEN THERE WAS A METRO GRANT OVERPAYMENT WHERE THE CITY HAD RECEIVED A DUPLICATE REIMBURSEMENT ON SOME MONEY AND THEY DIDN'T HAVE A LIABILITY RECORDED AS OF YEAR END FOR THAT. BUT AGAIN, THAT'S A PROJECT THAT WENT OVER MULTIPLE YEARS PRIOR TO 2024. SO IN ALL THOSE INSTANCES, THE DOLLAR AMOUNTS ARE MATERIAL. AND THEREFORE, I THINK MY ASSESSMENT OF THE REASON FOR THIS, WHICH IS, YOU KNOW, WAS DESCRIBED AS JUST THE STAFF TURNOVER THAT HAS OCCURRED IN THE FINANCE DEPARTMENT AND PROBABLY OTHER DEPARTMENTS OVER THE LAST COUPLE OF YEARS, ESPECIALLY THE ONES PRIOR TO FISCAL YEAR 24 THAT THAT CREATED THIS. BUT DURING THE COURSE OF GETTING THE CITY STAFF GETTING READY FOR THE 25 AUDIT, THEY CAME ACROSS THESE ERROR CORRECTIONS AND BROUGHT THEM TO OUR ATTENTION. SO THESE ERROR CORRECTIONS WERE NOT A RESULT OF AUDIT PROCEDURES. THEY WERE THE RESULT OF CITY STAFF DOING THEIR MONITORING AND YEAR END CLOSE PROCESS AND IDENTIFYING ERRORS AND CORRECTING THEM. WE HAD TWO SIGNIFICANT DEFICIENCIES. ONE RELATED TO DEPOSITS PAYABLE AND ONE RELATED TO FINANCIAL STATEMENT CLOSING PROCESS. THESE COMMENTS WERE IN THE PRIOR YEAR, ALTHOUGH THERE WAS SIGNIFICANT IMPROVEMENT MADE, I STILL FELT IT NECESSARY TO LEAVE THEM IN THERE BECAUSE THERE'S STILL A LITTLE MORE WORK THAT CAN BE DONE WITH THE DEPOSITS PAYABLE. AND THEN OBVIOUSLY, THE FINANCIAL STATEMENT CLOSING PROCESS GETTING US TO A POINT WHERE THE AUDIT COULD BE FINALIZED IN A MORE TIMELY MANNER FOR FISCAL YEAR 26, WHICH I THINK CITY STAFF IS DILIGENTLY WORKING TO MOVE FORWARD ON THAT TO MAKE SURE WE CAN GET BACK ON TRACK FOR FISCAL YEAR 26. NEXT SLIDE PLEASE. OVERALL, WITH THE GOVERNANCE COMMUNICATIONS WE HAD AN ACCOUNTING POLICY CHANGE GASB STATEMENT 101. AND THAT HAS TO DO WITH THE COMPENSATED ABSENCES. AND I HAVE ANOTHER SLIDE WHERE I WILL GET INTO THE NUANCES OF THAT, BUT ESSENTIALLY THAT REQUIRED A RESTATEMENT OF BEGINNING NET POSITION THAT OCCURRED AS A RESULT OF COMPLYING WITH THE NEW STANDARDS IN COMPUTING THAT ESTIMATE OF COMPENSATED ABSENCES, LIABILITY. THERE WERE NO UNUSUAL TRANSACTIONS THAT WERE IDENTIFIED DURING THE COURSE OF OUR AUDIT. WE ARE RECEIVING THE MANAGEMENT REPRESENTATION LETTER FROM STEPHANIE. [00:10:05] AND THE CITY MANAGER WILL SIGN THAT. AND ESSENTIALLY THERE'S SEVERAL THERE'S OVER 20 BULLET POINTS SAYING THAT THEY PROVIDED US ESSENTIALLY UNFETTERED ACCESS TO ANYTHING WE NEEDED IN ORDER FOR US TO FORM AN OPINION ON THE CITY'S FINANCIAL STATEMENTS. DIFFICULTIES, WE DID NOT HAVE ANY SIGNIFICANT DIFFICULTIES IN PERFORMING THE AUDIT. THERE WERE NO DISAGREEMENTS WITH MANAGEMENT ON ANY ISSUES. AND WE'RE NOT AWARE OF ANY CONSULTATIONS WITH OTHER ACCOUNTANTS THAT MANAGEMENT HAD RELATED TO ISSUES THAT THEY MAY NOT HAVE AGREED WITH US ON. I TOLD YOU THOSE MOST SENSITIVE ESTIMATES ALREADY. THE OPEB LIABILITY WHICH YOU CAN FIND MORE INFORMATION, DETAILED INFORMATION IN NOTE 12 B AS WELL AS THE REQUIRED SUPPLEMENTARY INFORMATION SECTION OF THE REPORT ALSO HAS TEN YEAR DATA ON THE NUANCES RELATED TO THAT. ALSO CLAIMS PAYABLE. THERE IS INFORMATION ON THAT IN NOTE 11. OTHER THINGS THAT I REQUIRED TO COMMUNICATE TO YOU IS THAT WHETHER WE HAVE UNCORRECTED MISSTATEMENTS, NONE WERE IDENTIFIED DURING THE PROCESS HERE. WE DID HAVE SOME CORRECTED MISSTATEMENTS, BUT NONE OF THE ONES THAT WERE PROPOSED AS A RESULT OF AUDIT PROCEDURES WERE MATERIAL TO THE FINANCIAL STATEMENTS BEFORE YOU. MATERIAL WEAKNESSES. WE ALREADY DISCUSSED THAT AND THE SIGNIFICANT DEFICIENCIES. I'VE DISCUSSED THAT BRIEFLY ON THE PREVIOUS SLIDE. NEXT SLIDE PLEASE. IMPLEMENTATION OF GASB, GASB STANDARDS. SO NEXT SLIDE. THIS IS THE GASB STATEMENT COMPENSATED ABSENCES NUMBER 101, AGAIN EFFECTIVE DECEMBER 31, 2024. SO IT WAS APPLICABLE FOR THE YEAR ENDING JUNE 30TH, 2025. AND ESSENTIALLY IT REEVALUATED WHAT LEAVES. AND THEY WANT TO HAVE MORE CONSISTENCY IN REPORTING OF COMPENSATED ABSENCES. SO THEY ASKED ALL ENTITIES TO REEVALUATE ALL THEIR LEAVE POLICIES AND DETERMINE WHETHER THERE SHOULD BE LIABILITIES ACCUMULATED FOR THIS LEAVE OR NOT, AND THEN ENHANCE THE FOOTNOTE DISCLOSURE AS WELL. SO EXAMPLES ARE VACATION TIME, COMPENSATORY TIME, HOLIDAY TIME. AND THEN THE BIG ONE IS SICK LEAVE. IN THE PRIOR YEARS THE CITY DID NOT RECORD A LIABILITY ASSOCIATED WITH SICK LEAVE BECAUSE IT WAS NOT PAID AT TERMINATION. WELL, THE RULES CHANGED UNDER THIS NEW STANDARD. THAT SAID, LET'S LOOK AT THESE LIABILITIES IN A MORE LIKELY THAN NOT CAPACITY. SO IS IT YOU KNOW, IF I'M AN EMPLOYEE AND I HAVE A BALANCE OF 20 SICK LEAVE HOURS, AM I MORE LIKELY OR NOT GOING TO USE THAT WITHIN THE NEXT YEAR? I MEAN, LET'S NOT TALK TERMINATION. IF TERMINATION, I KNOW I WON'T GET PAID FOR IT IF I HAVE UNUSED, BUT I MAY GET SICK OVER THE NEXT YEAR. AND BASED ON MY HISTORY OF TAKING SICK LEAVE OVER A LOOKBACK PERIOD, THERE MAY BE A LIABILITY THAT'S IN PLAY. AND SO THAT'S ESSENTIALLY WHAT HAPPENED. CITY STAFF, I BELIEVE, CONTRACTED OUT TO GET AN ESTIMATION OF WHAT THE IMPACT OF GASB STATEMENT 101 HAD ON THE BEGINNING, BALANCES THAT WERE IN LAST YEAR'S FINANCIAL STATEMENTS. AND THE EFFECTS ARE IN THAT RIGHT HAND COLUMN, YOU KNOW, ESSENTIALLY $7.8 MILLION INCREASE IN THE LIABILITY FOR COMPENSATED ABSENCES AND A $400,000 INCREASE IN THE BUSINESS TYPE ACTIVITIES. THE MAJOR COMPONENT WAS THAT SICK LEAVE ACCOUNTING FOR SICK LEAVE LIABILITY AND 0.8 MILLION RELATED TO THE HOLIDAY LEAVE, WHICH WASN'T TRACKED IN PREVIOUS YEARS AS WELL. ON TOP OF ALL THIS, THE GASB ALSO SAID, WELL, YOU'RE NOT ONLY GOING TO PROBABLY PAY THIS, BUT YOU'RE PROBABLY HAVE SOME SALARY RELATED COSTS ASSOCIATED WHEN YOU MAKE THESE PAYMENTS. SO LET'S TACK ON THE FICA CHARGE AND THEN ANY OTHER SALARY RELATED PAYMENTS. AND IN THIS INSTANCE, CERTAIN EMPLOYEES WERE ELIGIBLE FOR A DEFINED CONTRIBUTION PERCENTAGE OF 0.05 DEPENDING ON WHAT EMPLOYEE GROUP THEY'RE IN. SO THAT'S IN A NUTSHELL, THE 7.8 MILLION OF THE RESTATEMENT AND NOTES 17 HAS TO DO WITH IMPLEMENTING A NEW ACCOUNTING STANDARD. NEXT SLIDE PLEASE. THERE ARE 102 WAS ALSO REQUIRED TO BE IMPLEMENTED FOR THE CURRENT FISCAL YEAR 25. HOWEVER, IT HAD NO IMPACT ON YOUR CITY AT THIS TIME. IT JUST ASKS FOR MORE DISCLOSURE WHEN THERE IS SIGNIFICANT EVENTS THAT OCCUR OR CONCENTRATIONS THAT, THAT CHANGE THAT YOU HAVE TO HAVE ADDITIONAL INFORMATION. AND FOR INSTANCE, THE, YOU KNOW IN ONE OF THOSE, THE SECOND TO LAST BULLET POINT IMPACT OF A MAJOR EMPLOYER LEAVING THE COMMUNITY. SO IF THAT WAS A MAJOR TAX BASE WITH THAT EMPLOYER YOU KNOW, THEM LEAVING COULD HAVE A SIGNIFICANT IMPACT ON THE CITY'S BUDGET. AND THAT NEEDS TO BE DISCUSSED IN A NOTE DISCLOSURE ON A GOING FORWARD BASIS. SO AGAIN, I JUST REITERATE, YES, THIS GASB STANDARD 102 WAS CONSIDERED FOR THIS YEAR, BUT IT DID NOT HAVE ANY IMPACT ON YOUR FINANCIAL STATEMENTS [00:15:09] FOR JUNE 30, 2025. SO SO IF WE HAVE A COLLECTIVE BARGAINING AGREEMENT WE APPROVED DURING THE YEAR, HOW DOES THAT HOW WOULD THAT GET FOOTNOTED. THAT WOULD THAT UNLESS IT WAS A MATERIAL SHIFT, IT'S UP, YOU KNOW, YOU COULD OR YOU DO OR YOU'RE NOT REQUIRED TO DISCLOSE THAT, PARTICULARLY IF IT'S JUST THAT THAT WE'RE LOOKING FOR MAJOR, MAJOR IMPACT THINGS. AND SO IF YOU HAD ONE OF THOSE AND YOU WERE DOUBLING EVERYBODY'S SALARY, THEN THAT WOULD BE SOMETHING THAT WOULD NEED TO GET DISCLOSED FOR SURE. BUT IF YOU'RE JUST IF THIS IS STANDARD OPERATING, YOU KNOW, CONSIDERING SALARY INCREASES FOR COST OF LIVING ADJUSTMENTS OR OTHER THINGS THAT DOES NOT NEED TO GET DISCLOSED. OKAY. THANK YOU. OKAY. NEXT SLIDE. OKAY. YES. JUST A THING. AND SO THEN WE HAVE GASB STATEMENT. SO THE UPCOMING FINANCIAL STATEMENTS HAVE TO DO WITH THE FINANCIAL REPORTING MODEL. THE GASB REASSESSED GASB 34 AND HAVE MANDATED THAT WE HAVE SOME NEW CHANGES TO THE PRESENTATION FOR FISCAL YEAR 26. AND SO A LOT OF IT, THE MANAGEMENT'S DISCUSSION AND ANALYSIS SECTION IS GOING TO CHANGE. THERE'S SOME MORE DEFINITION OF UNUSUAL OR INFREQUENT ITEMS AS TO WHEN TO DISCLOSE THOSE AND WHEN NOT TO. THE PROPRIETARY FUND STATEMENTS WILL CHANGE, SOME TERMINOLOGY WILL CHANGE, AND THE CASH FLOW PRESENTATION IS GOING TO CHANGE A LITTLE BIT AS WELL. AND BUDGETARY COMPARISON INFORMATION IS GOING TO BE ADJUSTED SLIGHTLY. IN YOUR CASE, IT DOES NOT, YOU'RE NOT IMPACTED BY THAT BECAUSE THAT PARTICULAR PROVISION IS FOR THOSE ENTITIES THAT USED TO PUT THEIR GENERAL FUND BUDGETARY STATEMENT IN THE MAIN FINANCIAL STATEMENTS AND NOT IN THE BACK REQUIRED SUPPLEMENTARY INFORMATION. SO THAT'S JUST SOMETHING TO KEEP OUT AN EYE ON FOR NEXT YEAR. AND THEN THE NEXT SLIDE IS ANOTHER DISCLOSURE ON CERTAIN CAPITAL ASSETS IS ALSO BEING REQUIRED TO BE IMPLEMENTED. AND THE PRESENTATION BEFORE YOU ON YOUR JUNE 30, 25 NOTE DISCLOSURE FOR CAPITAL ASSETS IS COMPLIANT WITH 104. WE JUST HAVEN'T IMPLEMENTED IT FULLY BECAUSE THERE'S OTHER PIECES RELATED TO DISCLOSURES OF ASSETS HELD FOR SALE THAT'S AND RELATED TO PLEDGED DEBT. AND SO THERE IF YOU HAVE THAT SITUATION IN 26, THEN THERE'S SOME ADDITIONAL NOTE DISCLOSURES THAT NEED TO BE ADDED TO THE CAPITAL ASSET FOOTNOTE IN YOUR FINANCIAL STATEMENTS. OKAY. SO WITH THAT, I THINK THAT WAS THE LAST SLIDE. I OPEN IT. OPEN IT UP TO ANY QUESTIONS YOU MAY HAVE RELATED TO THE AUDIT PROCESS. OKAY. I'LL JUST GO DOWN THE LINE. COMMITTEE MEMBER SOLOMON ANYTHING? JUST. THANK YOU, MR. MAYOR. STEPHANIE, IF YOU WANTED TO ADDRESS OR HAVE THE OPPORTUNITY TO ADDRESS WHERE THERE WERE THE DEFICIENCIES WITH REGARD TO THE RECONCILIATION OF DEPOSITS, THAT FINDING, IF YOU WANT TO TALK ABOUT HOW YOU CHANGED YOUR CONTROLS TO IMPROVE THAT REPEAT FINDING. SURE. AND I CAN LET OR CAN LET AMY COMMENT ON THIS AS WELL. THIS IS SOMETHING THAT WE'RE AWARE OF. AS BOB NOTED, WE HAVE MADE SOME PROGRESS ON THIS ITEM OVER THE OVER THE YEARS. WHAT WE'RE DOING IS PREPARING DETAILED SCHEDULES FOR EACH OF THESE ITEMS ASSIGNING SPECIFIC STAFF MEMBERS RESPONSIBILITY OVER THOSE AND JUST ENSURING THAT EACH YEAR WE DO A FULL ANALYSIS OF THE OUTSTANDING DEPOSIT BALANCES. I DON'T KNOW IF AMY IF YOU HAVE ANYTHING TO ADD THERE. YES. WE ALSO MOVE THE MICROPHONE OVER TO YOU. OKAY. AND WE ALSO REQUIRE THE DEPARTMENT TO MAKE A DOCUMENTATION FOR EACH TYPE OF DEPOSIT AND THE PURPOSE AND SHARE THE INFORMATION WITH THE FINANCE DEPARTMENT. SO WE CAN CHECK THE BALANCE AT THE END OF THE YEAR TO MAKE ADJUSTMENTS AS NEEDED. SO WE ALSO LIKE TO PROVIDE TRAINING TO THE. WHEN WE MADE THIS CORRECTION, WE ALSO PROVIDED TRAINING TO THE STAFF TO ADDRESS THIS ISSUE AND WHAT NEEDS TO BE DONE IN THE FUTURE. HOW TO MONITOR THIS KIND OF BALANCES. SO OKAY. DOES THAT ANSWER YOUR QUESTION? IT DOES. ONE LAST PART TO THAT PLEASE. WITH SOME OF THE STAFFING CHANGES, WE HAVE A LOT OF FLUID CHANGES WITHIN STAFF. IS THERE A REDUNDANCY THAT'S ALSO BEING BUILT IN WHERE THE PERSON RESPONSIBLE FOR THOSE CHANGES THERE'S A BACKUP TO THAT. WE TRY TO I THINK STARTING FROM 2025, I ALREADY STARTED CROSS-TRAINING FOR [00:20:01] CERTAIN DUTIES. AND WHEN WE PROVIDE THE TRAINING, WE ALSO RECORD IT. AND WE ALSO REQUIRE THE STAFF START DOCUMENTING ALL THE PROCEDURES AND THE SAVE THE PROCEDURES AND POLICIES AND ALL SAMPLE JOURNAL ENTRIES IN THE FOLDERS TO SHARE WITH THE TEAM, AND WE ALSO PROVIDE ONGOING PROFESSIONAL TRAININGS TO THE STAFF TOO. SO I THINK THE OUR CURRENT TEAM IS VERY STRONG. I MEAN, WE'RE HAPPY TO HAVE THOSE TEAM MEMBERS. AND WE ALSO KNOW THAT ONGOING CONTINUING TRAINING IS NECESSARY. SO WE CONSTANTLY SEND THE INFORMATION TO THE TEAM MEMBERS TO ASK THEM TO SIGN UP THE CSMFO GFOA TRAININGS AS NEEDED. SO THANK YOU. AND IF I COULD ADD AMY'S DONE A LOT TO HELP IMPROVE OUR INTERNAL SYSTEMS, BUT BEYOND JUST HER WORK, MAYBE STEPHANIE CAN SPEAK TO JUST THE NUMBER OF ACCOUNTING PERSONNEL THAT WE NOW HAVE ACTUALLY ASSIGNED AND HIRED AT THE START OF THE FISCAL YEAR 24-25 PERIOD, WE HAD A MUCH LESSER COUNT OF ACCOUNTANTS. SO, STEPHANIE, WHY DON'T YOU TALK A LITTLE BIT ABOUT WHAT WE'VE DONE INSIDE THE ORGANIZATION OVER THE LAST TWO YEARS AS WELL? SURE. SO THAT WAS ONE OF OUR GOALS KIND OF BUILD OUR TECHNICAL CAPACITY. WE HAD A COUPLE OF ACCOUNTING VACANCIES AND WE HAD ACTUALLY ONLY ONE SENIOR ACCOUNTANT POSITION IN THE ENTIRE CITY. STARTING I THINK THE BEGINNING OF FISCAL YEAR 24-25. SO WE HAVE SINCE ADDED A QUALIFIED ENTRY LEVEL ACCOUNTANT POSITION. WE NOW HAVE TWO VERY STRONG SENIOR ACCOUNTANTS AND HAVE ALSO BEEN ABLE TO HIRE WITH AMY AN ACCOUNTANT WITH OVER 20 YEARS OF EXPERIENCE. SO I THINK WE FEEL REALLY GOOD ABOUT THE TECHNICAL ABILITY OF OUR TEAM. IT'S DEFINITELY THE STRONGEST THAT IT'S BEEN IN THE CITY. AND I THINK AS AMY ALLUDED TO, I THINK WE'VE BEEN ABLE TO USE THAT TO EFFECTIVELY TRAIN, MEMBERS OF OUR TEAM THAT DON'T HAVE THAT SAME BACKGROUND. OKAY. AND I WOULD ADD THAT, YOU KNOW, THE ACCOUNTING REQUIREMENTS HAVE ONLY GROWN, AS YOU JUST HEARD BOB SAY, WITH THE NEW GASB STANDARDS COMING ONLINE, THEY EVERY YEAR IT'S GETTING MORE AND MORE COMPLICATED TO PRODUCE OUR ANNUAL REPORT. AND THAT'S PART OF THE REASON WE'VE INVESTED IN ADDITIONAL ACCOUNTING PERSONNEL TO HELP WITH THIS. IT'S REALLY THE WORK THAT'S PERFORMED BY THE ACCOUNTING TEAM THROUGHOUT THE YEAR IN REAL TIME THAT ALLOWS US TO PRODUCE ULTIMATELY A TIMELY ACFR YOU KNOW, YOU CAN ONLY DO SO MUCH CATCH UP AND RECONCILIATION TO GET THERE. AND I'M LOOKING FORWARD TO THE 25-26 AUDIT BECAUSE I BELIEVE THE FOUNDATION IS IN PLACE NOW FOR US TO HAVE SUSTAINABLE TIMELY AUDITS HERE GOING FORWARD. THANK YOU, MR. MAYOR. THAT'S ALL I HAD. AND YEAH, JUST. OKAY. GO AHEAD. OH I JUST HAD, BECAUSE I HAD MY QUESTIONS ARE ALSO SIMILAR TO MEMBER SOLOMON RELATED TO. I MEAN, THIS IS WHY I WAS IN FINANCE, AS EVERYBODY KNOWS. AND THESE WERE THE SAME ISSUES BACK THEN AS IT IS NOW. AND I THINK IT'S GREAT THAT WE'RE, YOU KNOW, HAVING MORE EMPLOYEES TO HELP OUT WITH THAT. BUT I THINK THE OTHER THING TOO IS MAYBE LOOK INTO THE SYSTEM, YOU KNOW, TYLER UPDATING IT, MAKING IT, SEE IF THERE'S SOME AUTOMATION TO SOME OF THESE ISSUES DOWN THE LINE. I THINK THAT'S IT FOR, FOR THAT PART. OKAY. THANK YOU. AND BOB, WHAT'S YOUR ASSESSMENT OF THE RESPONSES? ARE YOU BASED ON YOUR AUDIT? ARE THOSE SATISFACTORY? I USUALLY DON'T AUDIT THEIR RESPONSES UNTIL NEXT YEAR'S AUDIT WHEN I GO THROUGH AND SEE WHAT THE CHANGES ARE. BUT THAT BEING SAID YOU KNOW, WE DID THE SAME PROCESS FOR THE 24. WE HAD I THINK SEVERAL MATERIAL WEAKNESSES AND A COUPLE SIGNIFICANT DEFICIENCIES, AND SEVERAL OF THOSE MATERIAL WEAKNESSES DID DROP OFF THE BOARD THIS YEAR BECAUSE OF THE IMPROVEMENTS THAT WERE MADE DURING THE CLOSING PROCESS. SO YOU KNOW, I ONLY HAD ONE MATERIAL WEAKNESS, AND THAT WAS BY VIRTUE. AGAIN, IT WAS THE DOLLAR AMOUNTS INVOLVED. AND THAT'S WHY I'M OBLIGATED TO REPORT THAT. BUT JUST KEEP IN MIND, THOSE WERE ERROR CORRECTIONS THAT CITY STAFF FOUND. IT WASN'T MY MY TEAM ASKING QUESTIONS. AND THEN ALL OF A SUDDEN, OH, THERE IS AN ERROR HERE. WE NEED TO FIX IT. SO THERE WAS A PROACTIVE NATURE TO THAT COMMENT. AND SO THAT, YOU KNOW, I THINK THAT'S ENCOURAGING. AND THERE'S NOTHING IN THE RESPONSES FOR THIS YEARS THAT REALLY CAUGHT MY EYE THAT SAYS, NO, THAT'S NOT EXACTLY RIGHT BASED ON WHAT I'VE SEEN. BUT WE WILL VET THOSE DURING THE COURSE OF THE 25-26 AUDIT TO MAKE SURE THAT THOSE IMPROVEMENTS KEPT GOING, [00:25:01] ESPECIALLY ON THE TWO SIGNIFICANT DEFICIENCIES. AND JUST TO BE CLEAR, THE MATERIAL WEAKNESSES ARE THE, THE MORE CONCERNING ONES FROM AN AUDIT STANDPOINT, EVEN THOUGH SIGNIFICANT DEFICIENCY SOUNDS WORSE. SO JUST KEEP IN MIND AND THEN THERE'S OTHER MATTERS. AND THERE WAS REALLY NOT, NOT ANY OTHER MATTERS TO PRESENT TO YOU AT THIS TIME. OKAY. THANK YOU. MEMBER OBAGI ANYTHING ON YOUR END? NOT ON MY END, MAYOR. THANK YOU. OKAY. ANYTHING ELSE? MEMBER MANZANO. YEAH, NO I'M FINE. OKAY. SO JUST TO TO FOLLOW UP ON ALL OF THAT. MEMBER CASTLE. THANK YOU. THANK YOU, MAYOR OR MEMBER CHAIR. JUST TO FOLLOW UP AND TO FLIP IT AROUND. SO FOR THE FISCAL YEAR THAT'S ENDED 26, WE SHOULD BE BACK ON OUR REGULAR SCHEDULE FOR AUDITS AND CLOSING AND EVERYTHING ELSE. WE ARE TRYING TO RIGHT NOW, WE HAVE ONE SENIOR'S TAKING MATERNITY LEAVE FOR PROBABLY MORE THAN SIX MONTHS. SO WE ONLY HAVE ONE SENIOR MEMBER RIGHT NOW, ONE SENIOR ACCOUNTANT, ONE PART TIME ACCOUNTANT. OKAY. BUT WE ARE TRYING TO GET THIS POSITION TO BE FULL TIME. SO BUT YOU KNOW, THE EXISTING TEAM MEMBERS, THEY ARE VERY STRONG AND WE'RE WORKING ON NOT JUST THE DOING THE WORK, WE'RE TRYING TO MAKE ALL THE PROCEDURES. WE TRY TO STREAMLINE ALL THE PROCEDURES TO MAKE IT MORE EFFICIENT, IMPROVE THE ACCURACY AND MEANWHILE, WE ARE NOT JUST CLOSING THE BOOK. AND MY GUIDANCE TO THE TEAM IS NOT JUST TO FOLLOW PRIOR YEARS PROCEDURES. IT'S TO ASK QUESTIONS TO SEE IF THE PROCESS MAY PROGRESS. THAT'S HOW WE IDENTIFY THOSE PRIOR YEAR ERRORS. WE'RE NOT JUST FOLLOWING WHAT PEOPLE DID IN THE PAST. SO THANK YOU. AND I'LL SAY FOR 26, I MEAN, IT IS DEFINITELY OUR GOAL TO GET BACK ON A MORE REGULAR SCHEDULE. I THINK, YOU KNOW, WE'VE HAD A LOT OF CONVERSATIONS WITH THE AUDITORS ABOUT THIS. I THINK WE'RE IN A SIGNIFICANTLY BETTER POSITION THAN LAST YEAR. ALTHOUGH WE PRESENTED TO YOU AROUND THE SAME TIME LAST YEAR, WE DIDN'T ACTUALLY FINALIZE OUR AUDIT UNTIL DECEMBER, AND THEN WE FINALIZED THE SINGLE AUDIT AFTER THAT. SO WE REALLY ONLY STARTED THIS AUDIT PROCESS PROBABLY AROUND. THREE MONTHS OR PROBABLY. YEAH, MAYBE MARCH OR APRIL. SO. YEAH. THEN THE AMOUNT OF TIME IT TOOK TO FINALIZE THIS ONE WAS A SIGNIFICANT IMPROVEMENT OVER THE LAST ONE. WE'VE ALREADY BEGUN MANY OF THE CLOSING PROCEDURES FOR 26. SO WE DO FEEL A LOT BETTER THIS YEAR. AND AGAIN, I THINK EVEN WITH, YOU KNOW, WHAT AMY MENTIONED, OUR WE'RE ABLE TO PULL IN KIND OF ADDITIONAL SUPPORT AND EVEN THE DOCUMENTATION THAT WE'VE BEEN ABLE TO ACHIEVE OVER THE LAST YEAR, I THINK HAS PUT US ON A GOOD FOOTING. OKAY. ALL RIGHT. THANK YOU. THAT'S ALL I HAVE. OKAY. THANK YOU. IN LIGHT OF MEMBER MANZANO'S QUESTION, DO YOU THINK THERE ARE IMPROVEMENTS YOU CAN DO ON THE AUTOMATED FEATURES WITHIN OUR SOFTWARE, OR IS THAT SOMETHING YOU'RE GOING TO LOOK AT OR? WE TRY TO AUTOMATE MANY REPORTS ALREADY, ESPECIALLY THE RECONCILIATION. WE TRY TO SET UP THE TEMPLATE. SO TO MAKE STUFF EASY TO IDENTIFY THE VARIANCES. BUT WE, WE DO HOPE THAT WE CAN DO MORE ON MUNIS BECAUSE WE FEEL THAT A LOT OF THE REPORTS ON MUNIS, IT IS LIKE A STANDARDIZED REPORT. WE MAY TALK TO IT TO SEE WHAT ARE THE OPTIONS THERE THAT WE CAN USE THE TOOLS TO DO LARGE DATA ANALYSIS TO IMPROVE THE EFFICIENCY, BUT FOR OURSELVES, FOR OUR RECONCILIATIONS, WE TRY TO SET OUR OWN TEMPLATE TO REDUCE THAT MANUAL WORK. SO. THANK YOU. ARE YOU GOOD WITH THAT ANSWER? YEAH. WELL, I KNOW THE SYSTEM HASN'T BEEN WELL, ACTUALLY, I WAS PART OF THE IMPLEMENTATION OF TYLER, SO THAT WAS OKAY 25 YEARS AGO. AND SO I THINK IT NEEDS AN OVERHAUL AND REALLY NEED TO BE UPGRADED TO BE UP TO THIS. YOU KNOW, THE LEVEL THAT IT'S GOING ON NOW. YOU MEAN THE SOFTWARE. THE SOFTWARE? THE SOFTWARE? YEAH. THAT WOULD BE A PROCUREMENT. CORRECT. SO I THINK WE'D PROBABLY TALK TO IT ABOUT THIS. AND WHAT'S AN OPTION. I MEAN I THINK WE'RE CLOSE TO THE MOST RECENT VERSION THAT'S AVAILABLE IN MUNIS. I THINK THERE ARE PROBABLY FUNCTIONS THAT WE COULD TAKE A LOOK AT AND IMPROVE. WE ACTUALLY HAD AN OVERALL INVESTMENT ASSESSMENT LAST YEAR WHERE MUNIS KIND OF WALKED US THROUGH WHAT WE HAVE AND WHAT WE'RE USING, AND THAT ACTUALLY PRODUCED A FEW EFFICIENCIES. BUT YEAH, WE'RE ALWAYS LOOKING FOR THAT. WE CAN TALK TO OUR IT DIRECTOR ABOUT THAT. AND SIMILAR TO WHAT AMY WAS SAYING, I THINK WE COULD LOOK AT SOME ADDITIONAL REPORT WRITING. WE HAVE THAT CAPACITY THROUGH OUR CONSULTANTS AND JUST FIGURING OUT, YOU KNOW, BETTER AND MORE EFFECTIVE WAYS TO GET THE DATA. [00:30:01] AND I THINK OUR AUDITORS WILL APPRECIATE THAT AS WELL. OKAY. AND SO WE STILL HAVE ONE PIECE OF THIS THAT'S LEFT THAT WILL COME BACK ON NOVEMBER. OR DOES IT COME BACK TO US OR? THE SINGLE AUDIT. IT'LL COME BACK. SINGLE AUDIT IN NOVEMBER OR ON OR ABOUT. I THINK BOB SAID IT WAS OCTOBER. YEAH. WE'RE AIMING FOR THE END OF OCTOBER I THINK. YEAH. AS FAR AS WE KNOW THAT'S FINE. SO YEAH PROBABLY NOVEMBER. AND WE DON'T TYPICALLY CONVENE RECONVENE THE AUDIT COMMITTEE FOR THE SINGLE AUDIT ITEM. IT'S VERY SPECIFIC. SO WHAT DO WE DO WITH IT. IT JUST COMES BACK AS AN APPROVAL ON YOUR CONSENT CALENDAR. ON FROM THE COUNCIL. YEAH. OKAY. ANYONE ELSE HAVE QUESTIONS, CONCERNS, ANYTHING? SPEAK NOW OR FOREVER HOLD YOUR PEACE. DOES ANY MEMBER OF THE PUBLIC WISH TO ADDRESS THE COMMITTEE ON THIS ITEM? THERE'S NO ONE ON ZOOM AND THERE'S ONE ECOMMENT NEUTRAL. OKAY. THANK YOU. SO YOU'RE LOOKING FOR A VOTE TO RECOMMEND APPROVAL BY THE COUNCIL, CORRECT? OKAY. WELL, SINCE I CAN MAKE MOTIONS HERE, I WILL MAKE A MOTION TO RECOMMEND TO THE COUNCIL TO APPROVE THE ACFR. SO THE AUDIT. SECOND. SECOND. SECOND. SO WE HAVE A SECOND FROM MEMBER MANZANO. ALL FOR IT. AYE. ANYONE OPPOSED? WOW, I GOT TO MAKE A MOTION. OKAY. THANK YOU. THE MOTION CARRIES UNANIMOUSLY. GOOD WORK. APPRECIATE THE WORK. YOU KNOW, IMPROVEMENTS. YOU'VE ONLY BEEN HERE A SHORT TIME, AND WE'RE SEEING THINGS TURN AROUND, SO KEEP UP THE GREAT WORK. SO WITH THAT, ANY ITEMS FROM STAFF? NO. OKAY, THEN I'LL TAKE A MOTION TO ADJOURN. SO MOVED. SECOND. OKAY, A MOTION AND A SECOND. ALL FOR IT. AYE. ANYONE OPPOSED? OKAY, WE ARE ADJOURNED. THANK YOU VERY MUCH. GOOD JOB. THANKS. * This transcript was compiled from uncorrected Closed Captioning.