Good evening everyone and welcome to the Sacco City Council meeting for Monday, October 20th at 6 30 p.m.

Before we call the regular meeting to order, we do have a workshop tonight, which is our fiscal year 24 audit presentation.

And with us this evening, we do have interim city administrator Cole Prescott, as well as RKO who will give us a presentation.

Thank you.

Thank you.

Appreciate your spending the time with us this evening.

As normally I brought friends.

So we have our interim treasurer as well as our interim finance director with us, as well as RKO here to go over the fiscal year 24 audit report.

Before we get too far into this, just wanted to throw it out there that we know this is a little bit uh it's been a long journey to get here, but we're here tonight.

So I really before we get started, I think we should just put it out on the table if there's anything we want to say about timing, and then just stick to the numbers tonight if we can counselor Hatch.

Thank you, Mayor McPhil.

I I just want to echo those sentiments.

I think that uh we can all acknowledge for the uh benefit of the public that uh things were not um this report was not filed in a timely fashion.

We understand that uh we've been in contact with our auditors.

Um I think there are several reasons that we understand created this this issue.

So I I agree.

I think that should not be a point of of conversation this evening.

I think we just let's look at the numbers and let's uh let's move forward.

Uh I would I would say that in hopes that our outstanding uh 2025 audit is uh in full swing and that uh we we can receive that in a in a more timely uh fashion.

So thank you.

Thank you.

Thank you.

So at this point I'll hand it off to RKO and during the presentation we may hear from Judy and Ryan as well.

Thank you.

Okay.

Thank you.

Um tonight I'm gonna go over the 2024 uh fiscal results.

Uh I'm gonna describe a little bit about the audit process, um, where we landed at the end of the fiscal year in terms of any comments in our report, any recommendations, and then also discuss some of the highlights uh for fiscal year 24 in terms of fund balance and things like that.

Um so I guess I'll just kind of dive right into the slide here, which is the summary of the audit results.

Um the purpose of an audit is basically to render an opinion as to whether or not the financial statements are fairly stated in all material respects in accordance with all accounting standards and practices.

Um I use the phrasing in all material respects because basically that's our way of saying it's there's a margin of error built into what we do.

We don't test 100% of transactions, we do a risk-based approach, we take our samples in the riskiest areas, um, consider dollar amounts, dollar thresholds, and that's where we focus our our testing.

Um so it's not an absolute opinion, um, but it we do render an opinion, and what you see in that first bullet point there is an unmodified opinion, basically means it's a clean opinion.

We don't have anything to disclose anytime we have to modify our opinion or add to our audit reports, usually indicates something's bad, and then we have to clarify it and add some additional context to it.

But an un unmodified opinion is exactly what you want to hear.

One of the other things that's kind of accompanying the audit reports is the reports required by government auditing standards.

Under those government government auditing standards, we're required to put any findings or recommendations into three categories.

These findings or recommendations are typically a result of our testing of internal controls, which is a risk assessment process.

We're trying to figure out what policies and procedures you have in place where there might be some weaknesses and chances for error or even potentially fraud.

As I mentioned, we're required to put those recommendations into three categories, the most severe being a material weakness.

Those are things that you want to take action on immediately and correct and implement policy and procedure to remedy those as soon as possible.

The next level down would be significant deficiencies.

These are things that are not quite as urgent, but still should be, you should take attention, take their pay attention to them, and create some kind of plan to correct them in a timely manner.

And then the third level is just kind of this general comments, general recommendations, kind of best practices, things that we think you can do to improve your operating efficiency and to minimize risk.

So I'm happy to report there were no material weaknesses, there were no significant deficiencies for fiscal year 24.

We did have some other comments, just kind of general recommendations falling into that lowest tier.

The first being is a federal funding comment regarding vendor documentation.

Under most federal grants, you're required to verify that the vendor you're paying is a is not suspended or debarred under the federal guidelines.

And one way you can do that is by checking the the SAM.gov website and documenting and searching and making sure that vendor is not suspended or debarred.

Another way you can verify that is by having them sign a certification and a testing that they are not suspended or debarred.

And then the last process that you could go through would be to have a contract clause when you're contracting with your vendor, and then by agreeing to that contract, they are they are certifying again that they are not suspended or barred and they're able to receive federal funds.

And again, this replacement to the federal funds that you receive that are being passed down through the vendors.

So we found that there wasn't any documentation to prove that the city or the school was going through that process.

And so we did some testing on our own to go to the sam.gov and check the vendors uh through a sample process.

We didn't find anybody that was being paid inappropriately or anything like that.

Um but we do recommend that the city and the school uh implement a process to document the fact that they check that before they process payment to a vendor.

Any questions on that one?

Councilor Hatch.

Yes, and uh I I I read in the report that management has uh addressed those actually both of these uh for you, uh giving you some feedback in terms of uh uh changes to uh these internal controls.

I suspect that in the 2025 audit, you will review the success of that of that improvement to the process.