OPENPUBLICA · PUBLIC MEETING RECORD
Record of Proceedings

Edmonds City Council Special Meeting - 2024 Annual Comprehensive Financial Report Exit Meeting (July 24, 2026)

City Council & Boards — Friday, July 24, 2026
BodyEdmonds, Washington
SessionCity Council & Boards
DateFriday, July 24, 2026
StatusFILED
Video Record
0:00 / 1:02:51

Transcript — Verbatim
0:00

Do I have the echo?

0:02

Thank you.

0:02

Good morning, everyone.

0:04

We are calling this evening of July 24th special meeting of the City Council to order.

0:11

We have one agenda item today, which is the 2024 annual property financial looking for exit meet.

0:21

And I'm going to ask we let the auditors go through their presentation first and then open it up with questions and we'll do as we do from this setting.

0:32

Use the use command cards you wish to participate.

0:37

And for those that just remotely virtual hands.

0:42

So with that, uh I will turn it over to you all.

0:45

Welcome, and if you would um uh maybe what we should do is do a quick round of introductions and you who we are uh doing thanks.

0:52

I'm Deb Sharp.

0:54

I'm on a senior account.

1:02

Micro Mayor.

1:04

Um, definitely cash city administrator.

1:08

Anyway, director by clickston uh developer.

1:14

We'll just summon the Chris Ack, uh council member.

1:23

Um Susan Payne, um council member.

1:38

Oh, I'm sorry, Becky Peterson assistant.

1:40

Teresa Simon assistant to the council.

1:44

Okay, so my name is Courtney Anderson.

1:46

I'm the audit manager for Team Emirates.

1:48

Uh with me today is Kurt Gadboy, he was the supervisor throughout the duration of the audit.

1:52

Uh Daryl Yuzan was the audit lead.

1:55

Um, and then Haji Adams is our um audit manager for North King County teams.

2:00

So thank you all for taking the time to meet with us today to go over the um exit results.

2:05

We actually do have a presentation to share.

2:09

And if I could present your memory.

2:13

So what you can do is start with the first acceptance.

2:24

Um, they're getting that up.

2:26

I do want to point out the back if you have in front of you.

2:30

Uh the information that you're saying is currently for your eyes.

2:34

Uh this information will be available uh later on available to the public on the city auditable.

2:43

Yeah, correct.

2:45

And we have a digital copy as well that we'll email out to everybody that you know you can have as well.

2:50

Uh that way you can file with a waiting for later on if you want to hold on to it.

2:54

So if this works.

3:02

There we go.

3:03

Okay.

3:04

Um, so I think you just mentioned the packet, which is great.

3:08

Um, so we'll go ahead and get started.

3:10

Uh we'd like to talk a little bit about uh just a little bit about our office in case you're not familiar, um, as the Washington State Auditors office.

3:20

We are tasked with auditing uh all state local or state and local dollars, excuse me.

3:25

And our hope with every audit is that um we are providing that independent transparency to give you as decision makers uh information about uh your city so that you can uh make that as you need to make those decisions.

3:38

Uh we hope that it's uh helpful for your citizens to have an idea of working for our city.

3:43

Um then it's also useful for external uh users as it's needed.

3:48

Um and so our goal today is really just to make sure that we are uh presenting the results but answering any questions that you might have.

3:54

Um so as the mayor mentioned, do we have time at the end set aside for questions?

3:59

Um but anything comes up, just let us know.

4:03

Um so we're gonna go ahead and start off with our accountability audit.

4:07

We looked at three different areas this year, your accountability, financial statement, and federal compliance.

4:12

Uh so your accountability audit was for it was a two-year audit.

4:15

It was for the period of January 1st, uh 2023 through December 31st, 2024.

4:21

And the goal of our accountability audit is to uh take a look at any laws, regulations, um, your own policies and procedures, uh, really whatever it is that you need to be in compliance with to make sure that you have good uh processes in place.

4:35

You have good controls to make sure that the uh funds are being used the way that they should be, that um that you're monitoring and just in compliance with all of those different areas.

4:45

But obviously, there's a lot happening at the city, and so um you know that's there's we can't do take a look at everything.

4:52

So, what we're gonna share is uh the areas that we focused on.

4:55

Um but what you're seeing on the screen is actually what comes directly from the report itself.

5:00

So what you're seeing in the results of REF is that overall we found that the city was in compliance with the areas that we took a look at.

5:08

We just have one item related to financial condition that we'll discuss a little bit further into our presentation.

5:16

So as I mentioned, we conduct what's called a risk-based audit approach.

Discussion Breakdown — Share of Meeting
Fiscal Sustainability█████████████████████████████████████████████45%
Budget Equity Analysis███████████████████████████27%
Engineering And Infrastructure███████████████████████23%
Procedural█████5%
Summary of Proceedings

Edmonds City Council Special Meeting - 2024 Annual Comprehensive Financial Report Exit Meeting (July 24, 2026)

This special meeting of the Edmonds City Council was convened on July 24, 2026, at 9:00 AM to receive the exit report from the Washington State Auditor's Office on the city's 2024 annual comprehensive financial report, covering accountability, financial statement, and federal grant compliance audits. The audit team presented results and responded to council questions.

Accountability Audit (Period: January 1, 2023 – December 31, 2024)

  • Overall finding: The city was in compliance with areas reviewed, with one management letter item related to financial condition.
  • Management letter item: Expenditures continue to exceed revenues; the general fund cash balance has declined from about 56 days of operating expenditures in fiscal year 2024 to about 27 days based on unaudited 2025 financials. A $6 million interfund loan from utility funds was taken to sustain the general fund, with repayment planned over fiscal years 2026 and 2027. The auditors noted that efforts are being made to reduce expenditures and a panel is in place to develop a plan, but the downward trend remains a concern.
  • Other areas examined (cash receipts, payroll, sensitive assets, annual report filing, professional services procurement, open public meetings) showed no issues. A prior management letter item on leave use for exempt employees was resolved.

Financial Statement Audit (Fiscal Year 2024)

  • Opinion: Clean unmodified opinion on the city's financial statements.
  • Internal controls and compliance: No significant deficiencies were identified; however, one material weakness was reported regarding capital assets.
  • Material weakness – capital asset useful lives: Approximately 97% of the city's streets were fully depreciated because they were being depreciated over 30 years. The auditors determined that a 100-year useful life is more appropriate for the full road structure (including base, curb, gutter, etc.). The resulting correction was material to the financial statements. The city has since made the adjustment; ongoing recommendations include careful evaluation of useful lives for all asset classes and improved communication between departments.
  • Other uncorrected misstatements (minor) were included in the packet; none affected the statements' readability.
  • No non-compliance with laws or agreements was identified.

Federal Grant Compliance Audit (Single Audit)

  • Program reviewed: SLFRF (State and Local Fiscal Recovery Funds), which comprised about 90% of federal expenditures.
  • Opinion: Unmodified opinion on the program.
  • Internal controls and compliance: No significant deficiencies, material weaknesses, or non-compliance were identified. This is an improvement from prior years when findings were reported.
  • A prior audit finding on SLFRF was fully corrected.

Citizen Hotline Complaint

  • One complaint regarding the procurement of a professional services contract was investigated; no issues were found.

Future Audit Team Transition

  • The State Auditor's Office is reassigning audits: the North King County team (introduced via Haji Adams) will conduct future audits for Edmonds starting with fiscal year 2025 audits, replacing the Everett team.
  • The next audit (for 2025) is scheduled for fall 2026 and will not require a federal compliance audit.

Discussion and Questions

  • Council members raised questions about the capital asset depreciation methodology, the general fund cash reserve benchmark, and recommended monitoring indicators.
  • Mayor and staff emphasized the difference between engineering and accounting perspectives on asset life and committed to improved communication.
  • Auditors clarified that the 60-day industry standard for fund balance is a benchmark; the city's trend should show improvement. They recommended monitoring revenues vs. expenditures and fund balances monthly.
  • Council member Barnett questioned how to account for future road overlays; auditors outlined options such as expensing maintenance or using componentization. The city will work with finance to refine procedures.

Key Outcomes

  • The council received the audit report; the city's financial statements received a clean opinion.
  • A material weakness in capital asset depreciation was disclosed and is being corrected going forward.
  • Management letter on financial condition remains active; city is expected to continue efforts to align expenditures with revenues and improve cash reserves.
  • Audit reports were scheduled for publication later in the day on July 24, 2026.
  • No formal council actions or votes were taken; the meeting was informational.

The meeting was adjourned at 10:02 AM.

Meeting Transcript

Do I have the echo? Thank you. Good morning, everyone. We are calling this evening of July 24th special meeting of the City Council to order. We have one agenda item today, which is the 2024 annual property financial looking for exit meet. And I'm going to ask we let the auditors go through their presentation first and then open it up with questions and we'll do as we do from this setting. Use the use command cards you wish to participate. And for those that just remotely virtual hands. So with that, uh I will turn it over to you all. Welcome, and if you would um uh maybe what we should do is do a quick round of introductions and you who we are uh doing thanks. I'm Deb Sharp. I'm on a senior account. Micro Mayor. Um, definitely cash city administrator. Anyway, director by clickston uh developer. We'll just summon the Chris Ack, uh council member. Um Susan Payne, um council member. Oh, I'm sorry, Becky Peterson assistant. Teresa Simon assistant to the council. Okay, so my name is Courtney Anderson. I'm the audit manager for Team Emirates. Uh with me today is Kurt Gadboy, he was the supervisor throughout the duration of the audit. Uh Daryl Yuzan was the audit lead. Um, and then Haji Adams is our um audit manager for North King County teams. So thank you all for taking the time to meet with us today to go over the um exit results. We actually do have a presentation to share. And if I could present your memory. So what you can do is start with the first acceptance. Um, they're getting that up. I do want to point out the back if you have in front of you. Uh the information that you're saying is currently for your eyes. Uh this information will be available uh later on available to the public on the city auditable. Yeah, correct. And we have a digital copy as well that we'll email out to everybody that you know you can have as well. Uh that way you can file with a waiting for later on if you want to hold on to it. So if this works. There we go. Okay. Um, so I think you just mentioned the packet, which is great. Um, so we'll go ahead and get started. Uh we'd like to talk a little bit about uh just a little bit about our office in case you're not familiar, um, as the Washington State Auditors office. We are tasked with auditing uh all state local or state and local dollars, excuse me. And our hope with every audit is that um we are providing that independent transparency to give you as decision makers uh information about uh your city so that you can uh make that as you need to make those decisions. Uh we hope that it's uh helpful for your citizens to have an idea of working for our city. Um then it's also useful for external uh users as it's needed. Um and so our goal today is really just to make sure that we are uh presenting the results but answering any questions that you might have. Um so as the mayor mentioned, do we have time at the end set aside for questions? Um but anything comes up, just let us know. Um so we're gonna go ahead and start off with our accountability audit. We looked at three different areas this year, your accountability, financial statement, and federal compliance.

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