Good morning, everyone, and welcome to this session of the audit committee.

Um, as a reminder, the audit committee consists of the members of the government operations and fiscal policy committee as well as our president and vice president of the council.

And I think this is the first year that this council has been seeding that we've actually had five of us because there's been uh a good deal of overlap between uh uh the different groups.

Um but we are all here ready to go.

Uh today we have two items to take up.

The first is receive a briefing from SB and Company regarding uh the who is the county's government independent auditor and uh executive branch on the audits for the county government's FY25 financial statements, financial statements of the county government's retirement plans, financial statements of the Montgomery County Consolidated, Retiree Health Benefits Trust, results of other audit-related work.

Um you will see on the top of page two uh the four different buckets of the different um audit work that is required by our county charter and what uh makes up the several components of the auditor's engagement.

When we are done with that briefing, we will also then review our contract amendment to extend SB and company's contract for an additional year.

Um I will now turn it over to Mr.

DeFasio uh for opening remarks.

Thank you.

Good morning, Madam Chair.

Uh so for the packet, the first four pages summarize the FY25 odd results with references to the attached audit documents.

So please note that the single audit, the audit of the federal grants, it's not included in the packet since it is just completed and the deadline is March 31st.

And also the audit, the financial statements of the Montgomery County Union employees deferred compensation plan.

It's not yet complete because it uses the calendar year and ends in December.

So it's usually completed by late fall, early winter.

And finally at the bottom of page four is the summary of the renewal of our contract with SB and Company, which we'll get to after the SB's presentation on the FY25 odd results.

So now I'm going to turn it over to SB and Company for the presentation of the FY25 results.

Good morning, everyone.

Thank you, Blaze.

Um my name is Bill Seymour.

I'm the overall engagement partner with SB and Company.

And this represents our required communications at the completion of an audit.

I have with me Renata Reese, who is the overall engagement manager.

I was going to walk through our presentation that highlights uh those required communications.

Please feel free to stop me at any time with any questions that you may have.

On slide two is the scope of services of which we are engaged to perform, the audit of the 25 statements for the county, performance of the uniform guidance, single audit, uh federal grant compliance audit, audit of the 911 program, uh two agreed upon procedures related to landfill as well as the national transit database requirements, audits of the employees' retirement system, retirement savings plan, the deferred compensation plan, and the consolidated retiree health benefit trust financial statements.

Additionally, we reviewed the uniform financial report that takes the county's financial statements and puts them in a fit and format for the state of Maryland.

We also prepared the data collection form, which takes the uniform guidance single audit, puts that in a fit and format for the federal government, uh as well as looking and reviewing the statements that were prepared by management, and then working with management on a year-round basis as issues and items come up.

The results uh we've issued unmodified or if you will, clean opinions on all of the financial statements.

That is the best opinion that I'm allowed to issue under generally accepted auditing standards.

Uh we had no findings on the agreed-upon procedures report.

Uh we did not discover any instances of fraud.

I would caution our audit is not a fraud audit.

That would be different in scope.

However, professional standards require that we ask questions about fraud.

We look for fraud in the areas that we tested, and through those procedures, we did not note any instances.

We discovered no material weaknesses in internal controls over financial reporting.

Effectively, that's a very fancy way of saying that if you were to remove the external audit from the process, we believe that the controls and processes that have been put in place by management would create accurate financial statements to make it even uh shorter.

The information that you would have received during the course of the year from that same system, we would believe to be correct based upon the work that was performed.

Um we received the full cooperation from management, I want to say Karen, Mike, uh, Yann, everybody uh making time for us during our uh you know, our process.

I want to thank Karen, Mike, Yann, everybody making time for us during our process.

We know that audits are not number one on their job descriptions, but they make us feel like we're number one.

We're able to get the information that we need.

Additionally, we have access into the system that we're able to run queries, look at items without talking with management, gives us a little bit more independence from an audit perspective, which helps in that overall conclusion.

We separately communicated the results for the employees retirement system and consolidated retiree health benefit trust financial statements.

There were no items that we would be required to bring to your attention.

And we noted no audit journal entries during the course of the work that we performed.

Slide four is a pictorial of our audit approach.

Effectively, the design of this, we work through it look works like a funnel.

At the very top, we identify through planning where the areas of potential material financial misstatement risk are.

Then we look and we assess how management has designed and operated controls that would mitigate those risks.

We perform various analytical procedures, substantive procedures, and then as well as audit standard required items, reporting, and the entire process is designed for us to accumulate sufficient audit evidence for us to be able to issue those unmodified opinions.

The assessment we look at controls at two levels.

Also closely mirrored to the green book from GAO.

There's five interrelated components of the control environment, risk assessment, the specific control activities, monitoring and information and communication, and all areas our assessment was effective.

We dive down a little bit deeper looking at key processes and the underlying uh supporting functions as they relate to the internal controls over financial reporting, treasury, estimation, financial reporting, revenue, expenditures, payroll and human resources, fixed assets, grant compliance, and information technology.

And in all cases, our assessment was effective.

Have we had significant issues during the course of the audit?