1 00:00:01,280 --> 00:00:02,320 Yeah, 2 00:00:02,320 --> 00:00:04,640 >> I probably can. Uh, Cody, if you want, 3 00:00:04,640 --> 00:00:06,720 it'll it'll take me a minute. So, if you 4 00:00:06,720 --> 00:00:08,960 want to uh 5 00:00:08,960 --> 00:00:11,599 I don't know if there's a you can get 6 00:00:11,599 --> 00:00:13,920 started in any way while I fiddle with 7 00:00:13,920 --> 00:00:14,960 it or 8 00:00:14,960 --> 00:00:16,480 >> Andy, I've got it handy if you want me 9 00:00:16,480 --> 00:00:17,600 to share from my side. 10 00:00:17,600 --> 00:00:19,680 >> Okay. Yeah, that would be faster for 11 00:00:19,680 --> 00:00:25,750 sure. 12 00:00:25,760 --> 00:00:27,599 » Much faster than me finding it and 13 00:00:27,599 --> 00:00:28,240 downloading. 14 00:00:28,240 --> 00:00:29,760 >> Stand up here if that work. Sure. 15 00:00:29,760 --> 00:00:32,480 >> Yeah. Yeah. And if you'd also want to 16 00:00:32,480 --> 00:00:34,000 sit, if we gonna move the chair so it's 17 00:00:34,000 --> 00:00:35,200 in a better spot. 18 00:00:35,200 --> 00:00:36,880 >> I kind of like to stand up and present. 19 00:00:36,880 --> 00:00:39,200 Honestly, it's just more normal for 20 00:00:39,200 --> 00:00:40,800 >> Okay. All right. 21 00:00:40,800 --> 00:00:43,120 >> Um, so if we want to just begin a 22 00:00:43,120 --> 00:00:46,079 slideshow 23 00:00:46,079 --> 00:00:48,160 get this screen. 24 00:00:48,160 --> 00:01:06,149 There we go. 25 00:01:06,159 --> 00:01:12,070 See, how do I expand this? 26 00:01:12,080 --> 00:01:13,680 What are you guys seeing right now? Do 27 00:01:13,680 --> 00:01:17,830 you have presenter view? 28 00:01:17,840 --> 00:01:19,920 » Yes. Yes. 29 00:01:19,920 --> 00:01:25,270 >> Okay. See if I can get this 30 00:01:25,280 --> 00:01:48,870 I don't want to see that either. 31 00:01:48,880 --> 00:01:54,469 My little dude 32 00:01:54,479 --> 00:01:55,759 Sorry, I'm trying to figure out how to 33 00:01:55,759 --> 00:01:58,640 move it over to my screen. 34 00:01:58,640 --> 00:02:11,750 Let me do this. 35 00:02:11,760 --> 00:02:13,440 » That better? 36 00:02:13,440 --> 00:02:13,840 >> Yeah. 37 00:02:13,840 --> 00:02:16,560 >> Yep. Yeah. And then if we could go back, 38 00:02:16,560 --> 00:02:19,040 I think Oh, perfect. 39 00:02:19,040 --> 00:02:20,959 All right. Well, as I said, my name is 40 00:02:20,959 --> 00:02:23,120 Cody Savvy. I'm a partner with Isler 41 00:02:23,120 --> 00:02:26,319 CPA, and I'm here to present the June 42 00:02:26,319 --> 00:02:32,550 30, 2023 audit. 43 00:02:32,560 --> 00:02:34,480 » And it's showing up blank on my side. Is 44 00:02:34,480 --> 00:02:35,599 it yours as well? 45 00:02:35,599 --> 00:02:36,080 >> Yes. 46 00:02:36,080 --> 00:02:37,280 >> Yeah. 47 00:02:37,280 --> 00:02:41,670 >> Word communic. Oh, 48 00:02:41,680 --> 00:02:44,879 » got it. It's different clicks. 49 00:02:44,879 --> 00:02:45,519 >> Perfect. 50 00:02:45,519 --> 00:02:47,440 >> Bullet point. Okay. 51 00:02:47,440 --> 00:02:49,360 >> All right. So, yep. Cody Savvy partner 52 00:02:49,360 --> 00:02:52,080 with I3 CPA here to present the audit. 53 00:02:52,080 --> 00:02:54,080 The first set of items I want to go over 54 00:02:54,080 --> 00:02:55,920 is some of our required communications 55 00:02:55,920 --> 00:02:57,920 with the board and the contents of those 56 00:02:57,920 --> 00:03:00,560 communications. The first item of which 57 00:03:00,560 --> 00:03:02,959 is management's responsibilities in an 58 00:03:02,959 --> 00:03:05,360 audit. Management really has two primary 59 00:03:05,360 --> 00:03:08,000 responsibilities in an audit. the 60 00:03:08,000 --> 00:03:10,000 preparation and fair presentation of the 61 00:03:10,000 --> 00:03:12,560 financial statements in accordance with 62 00:03:12,560 --> 00:03:14,319 US generally accepted accounting 63 00:03:14,319 --> 00:03:17,360 principles and for the design, 64 00:03:17,360 --> 00:03:19,840 implementation and maintenance of a 65 00:03:19,840 --> 00:03:22,000 system of internal control relevant to 66 00:03:22,000 --> 00:03:24,879 the preparation and fair presentation of 67 00:03:24,879 --> 00:03:26,879 the financial statements that are free 68 00:03:26,879 --> 00:03:29,200 from material misstatement whether due 69 00:03:29,200 --> 00:03:32,400 to fraud or error. So, two main 70 00:03:32,400 --> 00:03:34,480 responsibilities, but those are very 71 00:03:34,480 --> 00:03:36,560 significant large undertakings from 72 00:03:36,560 --> 00:03:37,440 management. 73 00:03:37,440 --> 00:03:38,799 >> Who's the board? 74 00:03:38,799 --> 00:03:39,599 >> What's that? 75 00:03:39,599 --> 00:03:41,120 >> Is this body the board you're talking 76 00:03:41,120 --> 00:03:41,519 about? 77 00:03:41,519 --> 00:03:45,120 >> Uh, it would be more city council. Um, 78 00:03:45,120 --> 00:03:46,959 but we are allowed under professional 79 00:03:46,959 --> 00:03:49,519 standards to communicate to subbodies, 80 00:03:49,519 --> 00:03:51,760 but typically all of our formal 81 00:03:51,760 --> 00:03:55,360 communications go to the city council. 82 00:03:55,360 --> 00:03:58,560 The next item is our responsibilities as 83 00:03:58,560 --> 00:04:01,200 auditors. First and foremost, we need to 84 00:04:01,200 --> 00:04:03,040 conduct our audit in accordance with 85 00:04:03,040 --> 00:04:05,360 professional standards. For the city's 86 00:04:05,360 --> 00:04:07,200 audit, we're applying generally accepted 87 00:04:07,200 --> 00:04:09,360 auditing standards. Under those 88 00:04:09,360 --> 00:04:11,920 standards, we're really attempting to 89 00:04:11,920 --> 00:04:14,560 obtain reasonable assurance that the 90 00:04:14,560 --> 00:04:16,160 financial statements are free of 91 00:04:16,160 --> 00:04:18,479 material misstatement. So, an important 92 00:04:18,479 --> 00:04:20,639 thing to note there, we're providing 93 00:04:20,639 --> 00:04:22,880 reasonable assurance, not absolute 94 00:04:22,880 --> 00:04:25,280 assurance. So every audit has the 95 00:04:25,280 --> 00:04:27,280 unavoidable risk that it could be 96 00:04:27,280 --> 00:04:29,919 perfectly designed, perfectly executed, 97 00:04:29,919 --> 00:04:32,720 and misstatements may still exist. It's 98 00:04:32,720 --> 00:04:34,720 one of those unavoidable inherent risks 99 00:04:34,720 --> 00:04:37,600 that's part of every audit. 100 00:04:37,600 --> 00:04:39,840 So by performing our audit under these 101 00:04:39,840 --> 00:04:42,639 standards, um again achieving the 102 00:04:42,639 --> 00:04:44,560 reasonable assurance and once we achieve 103 00:04:44,560 --> 00:04:46,240 that assurance, we should be at the 104 00:04:46,240 --> 00:04:49,199 point to issue our audit opinion. Once 105 00:04:49,199 --> 00:04:51,120 we issue the audit opinion, that 106 00:04:51,120 --> 00:04:52,240 essentially concludes our 107 00:04:52,240 --> 00:04:56,720 responsibilities as auditors. For 2023, 108 00:04:56,720 --> 00:04:59,759 we are looking at a disclaimer of 109 00:04:59,759 --> 00:05:02,320 opinion. What that really means is that 110 00:05:02,320 --> 00:05:04,320 there was a scope limitation in our 111 00:05:04,320 --> 00:05:07,039 audit where we were not able to obtain 112 00:05:07,039 --> 00:05:09,759 certain evidence to give an opinion. 113 00:05:09,759 --> 00:05:11,919 This is specifically related to 114 00:05:11,919 --> 00:05:14,479 subscription-based IT arrangements, 115 00:05:14,479 --> 00:05:17,360 which was a new Gazsby standard that 116 00:05:17,360 --> 00:05:20,479 went into effect for this fiscal year. 117 00:05:20,479 --> 00:05:22,160 Management has informed us that they 118 00:05:22,160 --> 00:05:23,919 will not be implementing that standard 119 00:05:23,919 --> 00:05:27,680 until fiscal year 25. So, the disclaimer 120 00:05:27,680 --> 00:05:30,000 just relates to subscription-based IT 121 00:05:30,000 --> 00:05:31,680 arrangements. There was nothing 122 00:05:31,680 --> 00:05:34,160 additional in our audit that would cause 123 00:05:34,160 --> 00:05:37,280 us to modify our opinion. And with that 124 00:05:37,280 --> 00:05:39,360 said, subscription-based IT 125 00:05:39,360 --> 00:05:41,840 arrangements, it was a new standard that 126 00:05:41,840 --> 00:05:45,440 Gazsby basically said if you have an IT 127 00:05:45,440 --> 00:05:47,600 arrangement that is handled more on a 128 00:05:47,600 --> 00:05:49,759 subscription basis, you need to look at 129 00:05:49,759 --> 00:05:51,919 that contract and potentially put 130 00:05:51,919 --> 00:05:54,960 something on the balance sheet. But it's 131 00:05:54,960 --> 00:05:56,880 an interesting standard because although 132 00:05:56,880 --> 00:05:58,639 you say, "Okay, we have this asset 133 00:05:58,639 --> 00:06:01,120 through this subscription, you also then 134 00:06:01,120 --> 00:06:04,319 put a liability on the balance sheet. 135 00:06:04,319 --> 00:06:07,840 It's not a 100% offset, but it's fairly 136 00:06:07,840 --> 00:06:10,080 close." So yes, you say we have this 137 00:06:10,080 --> 00:06:12,800 asset, but then you say down below, we 138 00:06:12,800 --> 00:06:15,759 also have to pay for this asset. So 139 00:06:15,759 --> 00:06:18,080 that's really the main piece that's not 140 00:06:18,080 --> 00:06:19,600 going to be reflected on the financial 141 00:06:19,600 --> 00:06:22,560 statements where on budgetary basis 142 00:06:22,560 --> 00:06:24,319 you're still making the payments for 143 00:06:24,319 --> 00:06:26,639 those subscriptions and so they're still 144 00:06:26,639 --> 00:06:28,560 reflected in the budgetary statements 145 00:06:28,560 --> 00:06:32,479 and hitting fund balance. 146 00:06:32,479 --> 00:06:35,840 The next item is significant findings. 147 00:06:35,840 --> 00:06:38,319 This primarily relates to the system of 148 00:06:38,319 --> 00:06:40,720 internal controls. There are three 149 00:06:40,720 --> 00:06:43,280 levels of control deficiencies. Control 150 00:06:43,280 --> 00:06:46,720 deficiency is the the low level. Um 151 00:06:46,720 --> 00:06:49,199 significant deficiency is essentially 152 00:06:49,199 --> 00:06:51,440 based on professional judgment. If in 153 00:06:51,440 --> 00:06:53,360 our mind we think those charged with 154 00:06:53,360 --> 00:06:54,960 governance need to be aware of this 155 00:06:54,960 --> 00:06:57,280 deficiency, then we would classify it as 156 00:06:57,280 --> 00:06:59,599 a significant deficiency and then the 157 00:06:59,599 --> 00:07:02,080 most severe classification is a material 158 00:07:02,080 --> 00:07:04,880 weakness. Um, this essentially means 159 00:07:04,880 --> 00:07:06,880 that the control deficiency is so 160 00:07:06,880 --> 00:07:09,280 severe, there's a potential risk there 161 00:07:09,280 --> 00:07:11,599 that it will result in material 162 00:07:11,599 --> 00:07:14,400 misstatements if it's not corrected. But 163 00:07:14,400 --> 00:07:16,240 with all of that said, I'm happy to 164 00:07:16,240 --> 00:07:17,919 report that there were no significant 165 00:07:17,919 --> 00:07:21,120 efficiencies nor material weaknesses as 166 00:07:21,120 --> 00:07:24,479 part of the city's audit. 167 00:07:24,479 --> 00:07:26,960 The next item, corrected and uncorrected 168 00:07:26,960 --> 00:07:29,120 misstatements. Again, if we come across 169 00:07:29,120 --> 00:07:30,479 these, these are items that were 170 00:07:30,479 --> 00:07:32,000 required to communicate with those 171 00:07:32,000 --> 00:07:34,720 charged with governance. Um, we had no 172 00:07:34,720 --> 00:07:36,720 corrected misstatements as part of our 173 00:07:36,720 --> 00:07:38,639 audit. And the only thing that would 174 00:07:38,639 --> 00:07:40,720 fall under the uncorrected misstatement 175 00:07:40,720 --> 00:07:43,440 classification would be the 176 00:07:43,440 --> 00:07:45,520 subscription-based IT arrangements and 177 00:07:45,520 --> 00:07:49,430 those not being reflected. 178 00:07:49,440 --> 00:07:52,240 The next couple of items we can click 179 00:07:52,240 --> 00:07:55,280 twice. Summer um difficulties 180 00:07:55,280 --> 00:07:57,440 encountered during the audit or if we 181 00:07:57,440 --> 00:07:59,520 have any disagreements with management. 182 00:07:59,520 --> 00:08:01,120 Again, those are things that we need to 183 00:08:01,120 --> 00:08:03,039 communicate to those charged with 184 00:08:03,039 --> 00:08:05,360 governance. Happy to report we had no 185 00:08:05,360 --> 00:08:06,879 difficulties nor did we have any 186 00:08:06,879 --> 00:08:09,840 disagreements with management. 187 00:08:09,840 --> 00:08:13,120 >> Uh could under difficulties was that I 188 00:08:13,120 --> 00:08:14,879 understand that some of the records had 189 00:08:14,879 --> 00:08:16,960 to be reconstructed 190 00:08:16,960 --> 00:08:19,120 >> there. I I don't know necessarily about 191 00:08:19,120 --> 00:08:21,039 reconstructed, but there were items that 192 00:08:21,039 --> 00:08:23,280 we had selected during our audit that 193 00:08:23,280 --> 00:08:26,000 management had some difficulty locating. 194 00:08:26,000 --> 00:08:28,240 Um, but at the end of the day, they were 195 00:08:28,240 --> 00:08:30,319 able to provide sufficient support for 196 00:08:30,319 --> 00:08:33,200 them. Um, so maybe it took a little bit 197 00:08:33,200 --> 00:08:35,519 more effort than we're used to, but I 198 00:08:35,519 --> 00:08:36,959 think, you know, looking at the turnover 199 00:08:36,959 --> 00:08:39,039 that has happened at the city, it seemed 200 00:08:39,039 --> 00:08:41,599 pretty normal to us. And again, all 201 00:08:41,599 --> 00:08:44,000 support for items that we selected was 202 00:08:44,000 --> 00:08:45,600 eventually provided. 203 00:08:45,600 --> 00:08:48,399 >> Thank you. You're welcome. Um, the next 204 00:08:48,399 --> 00:08:50,800 item, management representations. 205 00:08:50,800 --> 00:08:52,800 This is a fairly standard piece of every 206 00:08:52,800 --> 00:08:54,800 audit. Professional standards require 207 00:08:54,800 --> 00:08:57,040 that we obtain a list of representations 208 00:08:57,040 --> 00:08:59,200 from management that were made to us 209 00:08:59,200 --> 00:09:01,120 during the course of our audit. So 210 00:09:01,120 --> 00:09:03,279 again, very standard piece of any audit 211 00:09:03,279 --> 00:09:07,350 that's conducted. 212 00:09:07,360 --> 00:09:09,120 if management consulted with other 213 00:09:09,120 --> 00:09:11,040 auditors during the course of our audit. 214 00:09:11,040 --> 00:09:12,480 Again, that's another thing that we are 215 00:09:12,480 --> 00:09:14,080 required to communicate, but to our 216 00:09:14,080 --> 00:09:15,519 knowledge, there have been no such 217 00:09:15,519 --> 00:09:18,630 consultations. 218 00:09:18,640 --> 00:09:20,640 And finally, if we have any other 219 00:09:20,640 --> 00:09:22,959 findings or issues that we encounter in 220 00:09:22,959 --> 00:09:25,760 our audit, um then we're required to 221 00:09:25,760 --> 00:09:27,680 communicate those. This is really kind 222 00:09:27,680 --> 00:09:29,839 of more of a judgment one. anything that 223 00:09:29,839 --> 00:09:32,240 we think needs to make it over to those 224 00:09:32,240 --> 00:09:35,040 charged with governance or um government 225 00:09:35,040 --> 00:09:37,279 waste and abuse if that was identified 226 00:09:37,279 --> 00:09:39,600 or if we have Oregon minimum standards 227 00:09:39,600 --> 00:09:42,000 issues it would fall under this category 228 00:09:42,000 --> 00:09:44,240 but we had nothing um as part of this 229 00:09:44,240 --> 00:09:45,920 audit that would be classified in this 230 00:09:45,920 --> 00:09:49,760 other findings or issues category 231 00:09:49,760 --> 00:09:53,680 and moving to the next slide um I think 232 00:09:53,680 --> 00:09:55,680 some of you might be aware of what we 233 00:09:55,680 --> 00:09:58,560 call Oregon minimum standards the state 234 00:09:58,560 --> 00:10:01,600 of Oregon requires auditors to apply a 235 00:10:01,600 --> 00:10:03,760 specific set of procedures over these 236 00:10:03,760 --> 00:10:06,320 Oregon minimum standards. They don't act 237 00:10:06,320 --> 00:10:09,760 exactly say what or how much you should 238 00:10:09,760 --> 00:10:12,160 do. So, it's really up to us as the 239 00:10:12,160 --> 00:10:15,120 auditors to design those procedures. And 240 00:10:15,120 --> 00:10:17,200 we are one of two states that have this 241 00:10:17,200 --> 00:10:20,800 requirement. So, lucky us. Um New Jersey 242 00:10:20,800 --> 00:10:22,959 being the other one if you're curious. 243 00:10:22,959 --> 00:10:25,680 Um so, the first item we look at is 244 00:10:25,680 --> 00:10:28,000 deposits of public funds. Pretty 245 00:10:28,000 --> 00:10:29,839 straightforward requirement here. We're 246 00:10:29,839 --> 00:10:31,519 really looking to make sure that funds 247 00:10:31,519 --> 00:10:33,279 are held in state approved financial 248 00:10:33,279 --> 00:10:38,880 institutions. So, no no issue with that. 249 00:10:38,880 --> 00:10:41,680 Debt limitations. This primarily applies 250 00:10:41,680 --> 00:10:44,800 to general obligation bonds. The state 251 00:10:44,800 --> 00:10:46,800 has state requirements on how much debt 252 00:10:46,800 --> 00:10:48,880 you can legally take out based on what 253 00:10:48,880 --> 00:10:51,600 kind of government you are. And so, we 254 00:10:51,600 --> 00:10:53,360 run through those numbers and make sure 255 00:10:53,360 --> 00:10:56,480 you're at or below that threshold. Um at 256 00:10:56,480 --> 00:10:59,760 the end of 23 I believe there were about 257 00:10:59,760 --> 00:11:02,079 two million in outstanding bonds and 258 00:11:02,079 --> 00:11:04,800 based on our calculation uh we arrived 259 00:11:04,800 --> 00:11:07,680 at a debt limit of 49 million so well 260 00:11:07,680 --> 00:11:11,509 below that requirement. 261 00:11:11,519 --> 00:11:13,600 The next item, this tends to be one of 262 00:11:13,600 --> 00:11:16,000 the more significant areas we look at as 263 00:11:16,000 --> 00:11:18,240 part of Oregon minimum standards. We 264 00:11:18,240 --> 00:11:20,000 really start with the budget committee 265 00:11:20,000 --> 00:11:22,000 and work our way all the way through 266 00:11:22,000 --> 00:11:24,480 council adoption of the budget. We look 267 00:11:24,480 --> 00:11:26,399 at things such as the affidavit of 268 00:11:26,399 --> 00:11:29,120 publications for the various meetings. 269 00:11:29,120 --> 00:11:30,560 Uh the budget committee, we're looking 270 00:11:30,560 --> 00:11:32,880 to make sure a presiding officer was 271 00:11:32,880 --> 00:11:35,839 elected. Um for the actual preparation 272 00:11:35,839 --> 00:11:37,279 of the budget, we're looking to make 273 00:11:37,279 --> 00:11:42,079 sure a budget officer was appointed. Um 274 00:11:42,079 --> 00:11:44,320 and then obviously the budget document. 275 00:11:44,320 --> 00:11:46,560 So when we do this testing, we're really 276 00:11:46,560 --> 00:11:48,320 looking at that next year's budget. So 277 00:11:48,320 --> 00:11:51,040 as we finish up fiscal year 23, these 278 00:11:51,040 --> 00:11:53,040 procedures are really looking at the 279 00:11:53,040 --> 00:11:55,760 fiscal year 24 budget. And so we go 280 00:11:55,760 --> 00:11:57,360 through that document looking at 281 00:11:57,360 --> 00:12:00,320 resources equaling requirements, making 282 00:12:00,320 --> 00:12:02,959 sure that expenditures are appropriated 283 00:12:02,959 --> 00:12:06,000 at uh state approved categories, looking 284 00:12:06,000 --> 00:12:08,240 at transfers, looking at how debt 285 00:12:08,240 --> 00:12:10,959 service debt service was budgeted for. 286 00:12:10,959 --> 00:12:13,200 And so it's really a very comprehensive 287 00:12:13,200 --> 00:12:16,320 review of the budget document. Um, as 288 00:12:16,320 --> 00:12:18,480 you say, we had no findings as part of 289 00:12:18,480 --> 00:12:20,240 that procedure. 290 00:12:20,240 --> 00:12:23,200 The next item, insurance. We're by no 291 00:12:23,200 --> 00:12:25,920 means insurance experts and the state is 292 00:12:25,920 --> 00:12:28,959 very well aware of this. Um, so more or 293 00:12:28,959 --> 00:12:30,720 less with insurance, we're doing a 294 00:12:30,720 --> 00:12:32,800 reasonableness check. One, we're looking 295 00:12:32,800 --> 00:12:35,200 to make sure you have insurance compared 296 00:12:35,200 --> 00:12:37,279 to the prior year. Ask about any 297 00:12:37,279 --> 00:12:39,760 significant changes there or really ask 298 00:12:39,760 --> 00:12:41,600 about anything that stands out to us 299 00:12:41,600 --> 00:12:43,440 just to make sure we have somewhat of an 300 00:12:43,440 --> 00:12:45,680 understanding. But again, it's more or 301 00:12:45,680 --> 00:12:49,279 less a reasonleness check. 302 00:12:49,279 --> 00:12:52,000 And moving to the next item, highway 303 00:12:52,000 --> 00:12:54,000 revenue testing. This is more 304 00:12:54,000 --> 00:12:56,560 specifically the use of highway 305 00:12:56,560 --> 00:12:59,600 revenues. Um, and it's really those ODOT 306 00:12:59,600 --> 00:13:02,000 aortionments. And so when we do our 307 00:13:02,000 --> 00:13:04,639 expense testing, we had some additional 308 00:13:04,639 --> 00:13:08,079 procedures for uh this funding source, 309 00:13:08,079 --> 00:13:09,519 looking to make sure that those are 310 00:13:09,519 --> 00:13:13,600 spent on state allowed items. Primarily 311 00:13:13,600 --> 00:13:16,079 road projects, bike paths, and really 312 00:13:16,079 --> 00:13:17,600 anything that kind of goes along with 313 00:13:17,600 --> 00:13:19,680 that. So say you're putting in a a bus 314 00:13:19,680 --> 00:13:21,920 stop or something like that, that would 315 00:13:21,920 --> 00:13:24,720 be part of that. Um and we had no 316 00:13:24,720 --> 00:13:26,639 non-compliance noted as part of that 317 00:13:26,639 --> 00:13:28,800 testing. 318 00:13:28,800 --> 00:13:33,120 Investments of public funds. Um OS 294 319 00:13:33,120 --> 00:13:35,360 governs investments for local 320 00:13:35,360 --> 00:13:37,920 governments. Um and I'm sure you 321 00:13:37,920 --> 00:13:39,519 probably are aware that they have 322 00:13:39,519 --> 00:13:42,000 requirements on what you can and cannot. 323 00:13:42,000 --> 00:13:44,000 And typically they want lowrisk 324 00:13:44,000 --> 00:13:46,480 investments. Um, seeing that the city 325 00:13:46,480 --> 00:13:48,399 held most of their funds in the local 326 00:13:48,399 --> 00:13:50,480 government investment pool and a small 327 00:13:50,480 --> 00:13:52,720 amount in a money market, there were no 328 00:13:52,720 --> 00:13:58,310 concerns or issues with this area. 329 00:13:58,320 --> 00:14:01,279 And budgeted expenditures, this is the 330 00:14:01,279 --> 00:14:03,199 one piece that is more based on the 331 00:14:03,199 --> 00:14:05,279 current year. And so for current year 332 00:14:05,279 --> 00:14:06,959 numbers, we go through and compare the 333 00:14:06,959 --> 00:14:10,000 actuals to um the legal level 334 00:14:10,000 --> 00:14:12,800 appropriations and make sure that no 335 00:14:12,800 --> 00:14:15,519 actuals exceed those levels. And if they 336 00:14:15,519 --> 00:14:17,199 do, then that is something that we have 337 00:14:17,199 --> 00:14:20,000 to report on. 338 00:14:20,000 --> 00:14:22,000 And I don't think, yeah, I didn't think 339 00:14:22,000 --> 00:14:23,839 that this one was on there. Another big 340 00:14:23,839 --> 00:14:25,680 piece of Oregon minimum minimum 341 00:14:25,680 --> 00:14:28,959 standards is public contracting. So OS 342 00:14:28,959 --> 00:14:32,000 297 governs public contracting. there is 343 00:14:32,000 --> 00:14:34,399 a ton of information to know in that 344 00:14:34,399 --> 00:14:38,560 area. Um, and so we put together a list 345 00:14:38,560 --> 00:14:41,040 of all contracts above the intermediate 346 00:14:41,040 --> 00:14:43,360 procurement threshold. We pull a sample 347 00:14:43,360 --> 00:14:45,360 of those contracts and then depending on 348 00:14:45,360 --> 00:14:48,079 the type of procure procurement, we're 349 00:14:48,079 --> 00:14:51,120 reviewing for compliance with the uh 350 00:14:51,120 --> 00:14:54,399 requirements of 297 but also the city's 351 00:14:54,399 --> 00:14:57,360 policies as well. Um, and so after doing 352 00:14:57,360 --> 00:14:59,920 that testing, we had no findings as part 353 00:14:59,920 --> 00:15:02,399 of that. 354 00:15:02,399 --> 00:15:05,040 And so on this next slide, this was just 355 00:15:05,040 --> 00:15:07,360 a kind of few items that I wanted to 356 00:15:07,360 --> 00:15:09,279 touch base on and just make sure that 357 00:15:09,279 --> 00:15:12,079 everyone's aware. Um the first of which 358 00:15:12,079 --> 00:15:14,160 is just kind of general delays in 359 00:15:14,160 --> 00:15:18,240 getting this audit issued. Um to really 360 00:15:18,240 --> 00:15:20,079 dig into this, I have to go back a 361 00:15:20,079 --> 00:15:23,519 little bit. So I became a partner in 362 00:15:23,519 --> 00:15:26,079 December of 2024. 363 00:15:26,079 --> 00:15:31,760 A few months into that, we noted some issues with uh the head of the 364 00:15:31,760 --> 00:15:33,279 audit department and the head of our 365 00:15:33,279 --> 00:15:36,399 quality control. Um we attempted to work 366 00:15:36,399 --> 00:15:40,399 through these issues um but ultimately 367 00:15:40,399 --> 00:15:43,279 mutually parted ways and so like I said 368 00:15:43,279 --> 00:15:44,639 this individual was the head of our 369 00:15:44,639 --> 00:15:47,199 audit department overse oversaw our 370 00:15:47,199 --> 00:15:50,320 quality control system and so it was a 371 00:15:50,320 --> 00:15:52,480 fairly catastrophic loss for us that 372 00:15:52,480 --> 00:15:54,399 really flipped our department upside 373 00:15:54,399 --> 00:15:58,560 down. Um while this was happening we had 374 00:15:58,560 --> 00:16:01,519 our triannual peer review going on. So 375 00:16:01,519 --> 00:16:04,399 every three years most CPA firms who 376 00:16:04,399 --> 00:16:06,079 provide assurance work will have another 377 00:16:06,079 --> 00:16:09,040 firm come in and essentially say do you 378 00:16:09,040 --> 00:16:12,000 have a system here where it allows you 379 00:16:12,000 --> 00:16:14,399 to conduct quality audits. So it's a 380 00:16:14,399 --> 00:16:16,160 pretty big engagement for us and it's a 381 00:16:16,160 --> 00:16:18,399 pretty big deal that we are successful 382 00:16:18,399 --> 00:16:21,120 in this engagement. So we had that going 383 00:16:21,120 --> 00:16:23,920 on. We were in the process of 384 00:16:23,920 --> 00:16:26,320 transitioning our audit software and 385 00:16:26,320 --> 00:16:27,920 methodology. 386 00:16:27,920 --> 00:16:30,959 Um, and we also had to implement a whole 387 00:16:30,959 --> 00:16:33,440 new system of quality management due to 388 00:16:33,440 --> 00:16:36,800 some new standards that came out. So due 389 00:16:36,800 --> 00:16:39,040 to the loss of this individual, all 390 00:16:39,040 --> 00:16:40,800 those projects in addition to running 391 00:16:40,800 --> 00:16:44,000 the department landed on my lap um 392 00:16:44,000 --> 00:16:48,560 around June July of this year. Um, we've 393 00:16:48,560 --> 00:16:50,800 done our best to really be transparent 394 00:16:50,800 --> 00:16:52,959 about what's going on and and open about 395 00:16:52,959 --> 00:16:56,240 it with management. Um, you know, I 396 00:16:56,240 --> 00:16:57,600 guess I can say, you know, we're taking 397 00:16:57,600 --> 00:16:59,360 one day at a time, doing the best we 398 00:16:59,360 --> 00:17:01,600 can, putting in as much time as we can 399 00:17:01,600 --> 00:17:03,920 to really catch up on these projects. 400 00:17:03,920 --> 00:17:05,839 And the one thing I didn't mention is, 401 00:17:05,839 --> 00:17:08,400 you know, this partner also had billable 402 00:17:08,400 --> 00:17:11,199 work that now we're responsible for. So 403 00:17:11,199 --> 00:17:13,360 in addition to these you know very large 404 00:17:13,360 --> 00:17:15,839 unique projects we have going on now we 405 00:17:15,839 --> 00:17:18,400 have a lot more client work that is 406 00:17:18,400 --> 00:17:21,439 expected of us. So um again taking one 407 00:17:21,439 --> 00:17:23,360 day at a time doing the best we can to 408 00:17:23,360 --> 00:17:26,160 catch up on this. Um I feel very 409 00:17:26,160 --> 00:17:28,000 confident you know we will get through 410 00:17:28,000 --> 00:17:30,559 this as a firm um and come out better on 411 00:17:30,559 --> 00:17:33,360 the other end of it. So um again tried 412 00:17:33,360 --> 00:17:34,960 to be very transparent with management 413 00:17:34,960 --> 00:17:36,960 about that but I felt it was appropriate 414 00:17:36,960 --> 00:17:40,960 that I inform all of you this as well. 415 00:17:40,960 --> 00:17:43,280 So, the next item that I wanted to go 416 00:17:43,280 --> 00:17:46,400 over is just kind of our thoughts on how 417 00:17:46,400 --> 00:17:48,559 to catch the city up on their audits. 418 00:17:48,559 --> 00:17:50,240 And this is something that I have ran by 419 00:17:50,240 --> 00:17:53,919 Mike as well. Um, so our our thought for 420 00:17:53,919 --> 00:17:56,960 the fiscal year 24 audit would be to 421 00:17:56,960 --> 00:17:59,919 begin that in April of this year. That 422 00:17:59,919 --> 00:18:02,400 would put us getting done probably uh 423 00:18:02,400 --> 00:18:05,679 middle mid to into summertime. And then 424 00:18:05,679 --> 00:18:08,480 we would put the fiscal year 25 audit on 425 00:18:08,480 --> 00:18:11,280 our fall 26 schedule. 426 00:18:11,280 --> 00:18:13,600 Then for the fiscal year 26, we would 427 00:18:13,600 --> 00:18:15,840 have the first half of 27 to get that 428 00:18:15,840 --> 00:18:18,400 finished. And then that fiscal year 27 429 00:18:18,400 --> 00:18:21,120 audit would be back on the fall 27 430 00:18:21,120 --> 00:18:23,200 calendar, essentially putting the city 431 00:18:23,200 --> 00:18:25,200 back on kind of their standard time 432 00:18:25,200 --> 00:18:29,510 frame for getting audits done. 433 00:18:29,520 --> 00:18:31,919 And finally, 434 00:18:31,919 --> 00:18:36,870 um, 435 00:18:36,880 --> 00:18:39,760 typically I would include a bit more on 436 00:18:39,760 --> 00:18:42,000 a financial, but seeing that we're 437 00:18:42,000 --> 00:18:45,120 looking at June 30, 2023, I didn't know 438 00:18:45,120 --> 00:18:47,280 how relevant that would be, but I wanted 439 00:18:47,280 --> 00:18:49,200 to include something. So, what we have 440 00:18:49,200 --> 00:18:52,400 on here is um, a depiction of the 441 00:18:52,400 --> 00:18:54,400 general fund over the last five years, 442 00:18:54,400 --> 00:18:58,080 the city's chief operating fund. Um we 443 00:18:58,080 --> 00:18:59,520 can see here, you know, there's not a 444 00:18:59,520 --> 00:19:02,480 huge fluctuation in these numbers. Um 445 00:19:02,480 --> 00:19:03,760 they're really staying pretty 446 00:19:03,760 --> 00:19:06,720 consistent. As revenues go up, so do 447 00:19:06,720 --> 00:19:08,320 expenditures. 448 00:19:08,320 --> 00:19:11,919 Um and so out of these years, it 449 00:19:11,919 --> 00:19:15,760 fluctuated between a negative $300,000 450 00:19:15,760 --> 00:19:17,679 decrease in fund balance and then a 451 00:19:17,679 --> 00:19:19,919 positive $400,000 452 00:19:19,919 --> 00:19:23,520 increase. And so at the end of 23, there 453 00:19:23,520 --> 00:19:25,840 was about a $216,000 454 00:19:25,840 --> 00:19:28,559 decrease which brought the ending fund 455 00:19:28,559 --> 00:19:31,840 balance to about 2.4 million. But an 456 00:19:31,840 --> 00:19:34,240 important thing that I noted when 457 00:19:34,240 --> 00:19:37,039 looking at this is historically the 458 00:19:37,039 --> 00:19:39,120 general fund is transferring out roughly 459 00:19:39,120 --> 00:19:42,000 a million dollars to supplement other 460 00:19:42,000 --> 00:19:45,120 city activities. Um and so in my mind 461 00:19:45,120 --> 00:19:46,480 that's really what's keeping these 462 00:19:46,480 --> 00:19:48,000 level. if he were to take those 463 00:19:48,000 --> 00:19:49,840 transfers out, you know, we're going to 464 00:19:49,840 --> 00:19:52,080 see that revenues far exceed the 465 00:19:52,080 --> 00:19:54,640 expenditures. And so, I thought that was 466 00:19:54,640 --> 00:19:56,400 an important thing to note as we look at 467 00:19:56,400 --> 00:19:59,760 this. And so, for 2023, there was about 468 00:19:59,760 --> 00:20:03,360 a $1.3 million transfer out. Um, so 469 00:20:03,360 --> 00:20:05,440 again, you know, we take that transfer 470 00:20:05,440 --> 00:20:07,919 out and that $216,000 471 00:20:07,919 --> 00:20:10,960 decrease now becomes a $1.1 million 472 00:20:10,960 --> 00:20:13,280 increase. But with all that said, seeing 473 00:20:13,280 --> 00:20:15,840 the ending fund balance be around $2.4 4 474 00:20:15,840 --> 00:20:18,160 million. That's a pretty healthy spot to 475 00:20:18,160 --> 00:20:20,320 be. So there's really no concerns from 476 00:20:20,320 --> 00:20:23,760 us in that area. So with that, I'd like 477 00:20:23,760 --> 00:20:25,520 to thank you for your time and open it 478 00:20:25,520 --> 00:20:28,240 up for any questions. 479 00:20:28,240 --> 00:20:30,400 Could 480 00:20:30,400 --> 00:20:34,720 you just explain that again about the 481 00:20:34,720 --> 00:20:37,039 I understand that they the funds are 482 00:20:37,039 --> 00:20:39,039 closed and that the general fund 483 00:20:39,039 --> 00:20:41,840 transfer would make these look 484 00:20:41,840 --> 00:20:45,440 differently if that was included under 485 00:20:45,440 --> 00:20:46,400 revenues. 486 00:20:46,400 --> 00:20:48,320 >> Yeah. So we can see, you know, 487 00:20:48,320 --> 00:20:50,000 historically over the five years, yeah, 488 00:20:50,000 --> 00:20:51,520 the numbers get bigger, but they're 489 00:20:51,520 --> 00:20:54,000 staying fairly level with one another. 490 00:20:54,000 --> 00:20:57,200 Um, so if we were to ignore those 491 00:20:57,200 --> 00:21:00,159 transfers in this, we're going to see 492 00:21:00,159 --> 00:21:03,600 the uh red bar significantly decrease 493 00:21:03,600 --> 00:21:05,120 there. So then we're going to see, you 494 00:21:05,120 --> 00:21:06,880 know, revenues are far exceeding those 495 00:21:06,880 --> 00:21:09,840 expenditures. Um, usually that's kind 496 00:21:09,840 --> 00:21:11,440 of, you know, the preferred what you 497 00:21:11,440 --> 00:21:13,120 want to see. It's it's a bit different, 498 00:21:13,120 --> 00:21:15,039 you know, when you're a government and 499 00:21:15,039 --> 00:21:16,880 the main purpose is more providing 500 00:21:16,880 --> 00:21:19,200 services. And so, you know, it's really 501 00:21:19,200 --> 00:21:21,600 not a concern to from us seeing that, 502 00:21:21,600 --> 00:21:23,520 you know, roughly million dollars go out 503 00:21:23,520 --> 00:21:25,919 to supplement the other activity of the 504 00:21:25,919 --> 00:21:29,360 city. Um, if we started to see that fund 505 00:21:29,360 --> 00:21:31,840 balance slowly start to decrease over 506 00:21:31,840 --> 00:21:34,320 time and not have years where it's, you 507 00:21:34,320 --> 00:21:36,720 know, jumping back up, then it would be 508 00:21:36,720 --> 00:21:39,520 a little bit more cost for for concern. 509 00:21:39,520 --> 00:21:41,200 But I think these are fairly normal 510 00:21:41,200 --> 00:21:43,360 fluctuations we see. And again, seeing 511 00:21:43,360 --> 00:21:45,600 the ending fund balance around 2.38 512 00:21:45,600 --> 00:21:47,760 million, it's really not a not a big 513 00:21:47,760 --> 00:21:50,000 concern for us. 514 00:21:50,000 --> 00:21:51,440 >> One of the things that we definitely 515 00:21:51,440 --> 00:21:53,440 wanted to do was keep this process 516 00:21:53,440 --> 00:21:56,159 moving. And so we're doing this 517 00:21:56,159 --> 00:21:58,320 presentation largely based on draft 518 00:21:58,320 --> 00:22:00,960 rather than final audit. So my question 519 00:22:00,960 --> 00:22:03,039 is at what point are we going to get the 520 00:22:03,039 --> 00:22:06,240 final, you know, paper copy audit? 521 00:22:06,240 --> 00:22:08,320 So, there's still a bit of a process to 522 00:22:08,320 --> 00:22:10,720 go through because we have to pro 523 00:22:10,720 --> 00:22:12,159 provide a draft of the financial 524 00:22:12,159 --> 00:22:13,760 statements and we need to allow you 525 00:22:13,760 --> 00:22:16,880 enough time to look at those. Um, my 526 00:22:16,880 --> 00:22:21,360 hope is by the end of this month. Um, my 527 00:22:21,360 --> 00:22:23,440 goal would be to get a draft out. I'm 528 00:22:23,440 --> 00:22:25,840 looking at probably early next week and 529 00:22:25,840 --> 00:22:27,360 then we would need time to put it 530 00:22:27,360 --> 00:22:29,520 through our internal control policy and 531 00:22:29,520 --> 00:22:31,840 we would need to allow you all time to 532 00:22:31,840 --> 00:22:34,240 review that. 533 00:22:34,240 --> 00:22:37,120 How do you uh classify or the difference 534 00:22:37,120 --> 00:22:39,280 between an expenditure from the general 535 00:22:39,280 --> 00:22:42,159 fund and a transfer out? 536 00:22:42,159 --> 00:22:45,039 >> So in the financial statements we have 537 00:22:45,039 --> 00:22:47,120 um 538 00:22:47,120 --> 00:22:49,039 few main sections there. We' start with 539 00:22:49,039 --> 00:22:52,080 revenues. We hit expenditures and then 540 00:22:52,080 --> 00:22:54,480 below here we have other financing 541 00:22:54,480 --> 00:22:56,559 sources and uses. So these are kind of 542 00:22:56,559 --> 00:22:58,559 the items that aren't really part of the 543 00:22:58,559 --> 00:23:00,880 operating activity. Um, these are kind 544 00:23:00,880 --> 00:23:02,960 of the almost the one-off type items. 545 00:23:02,960 --> 00:23:05,280 Like, you know, another example is you 546 00:23:05,280 --> 00:23:07,840 take out a loan, the loan proceeds would 547 00:23:07,840 --> 00:23:10,400 show up in other financing sources. And 548 00:23:10,400 --> 00:23:12,880 so, it's kind of just those other type 549 00:23:12,880 --> 00:23:15,039 of items that aren't really part of the 550 00:23:15,039 --> 00:23:17,200 general operating activity. 551 00:23:17,200 --> 00:23:20,080 >> And so, they're essentially subsidizing 552 00:23:20,080 --> 00:23:23,200 other non-general fund funds 553 00:23:23,200 --> 00:23:25,360 >> if they're going out. Yeah. Typically, 554 00:23:25,360 --> 00:23:27,600 yeah. 555 00:23:27,600 --> 00:23:28,240 Could 556 00:23:28,240 --> 00:23:30,400 >> Could that reflect 557 00:23:30,400 --> 00:23:32,640 the um funding that we received from the 558 00:23:32,640 --> 00:23:34,960 federal government that was around ARPA, 559 00:23:34,960 --> 00:23:37,280 you know, the programs that the federal 560 00:23:37,280 --> 00:23:39,360 government invested in communities to 561 00:23:39,360 --> 00:23:41,919 kind of get them going again after CO. 562 00:23:41,919 --> 00:23:43,600 Is that something that could have done 563 00:23:43,600 --> 00:23:44,400 the same thing? 564 00:23:44,400 --> 00:23:45,840 >> It could have potentially. I would have 565 00:23:45,840 --> 00:23:48,240 to take a look back at those years to 566 00:23:48,240 --> 00:23:50,000 see where the grant revenue was 567 00:23:50,000 --> 00:23:52,080 classified, but it very well could be up 568 00:23:52,080 --> 00:23:58,470 above with revenues as well. 569 00:23:58,480 --> 00:24:00,960 And I appreciate the transparency about 570 00:24:00,960 --> 00:24:02,640 the process, internal process that you 571 00:24:02,640 --> 00:24:06,640 guys are dealing with. Um, and sub 572 00:24:06,640 --> 00:24:08,960 sympathize with you. 573 00:24:08,960 --> 00:24:10,480 >> Um, 574 00:24:10,480 --> 00:24:13,039 were we under contract with you guys to 575 00:24:13,039 --> 00:24:14,799 remain in that? I just wondered from our 576 00:24:14,799 --> 00:24:16,000 perspective. 577 00:24:16,000 --> 00:24:19,360 >> Um, you know, what what happened there? 578 00:24:19,360 --> 00:24:20,880 Were we just we were we were just 579 00:24:20,880 --> 00:24:23,200 waiting on you guys essentially to to 580 00:24:23,200 --> 00:24:24,080 catch up? 581 00:24:24,080 --> 00:24:32,159 >> Yeah. Um so before 582 00:24:32,159 --> 00:24:35,120 current management was here, um we 583 00:24:35,120 --> 00:24:40,799 attempted to kind of do the audit at our standard time. Um I would have to 584 00:24:40,799 --> 00:24:43,279 look back, but we were informed probably 585 00:24:43,279 --> 00:24:45,120 four or five times that the city was 586 00:24:45,120 --> 00:24:47,200 ready to have their audit performed, but 587 00:24:47,200 --> 00:24:49,120 then the current management at that time 588 00:24:49,120 --> 00:24:52,480 became unresponsive. And so it kind of 589 00:24:52,480 --> 00:24:54,640 became a perfect storm. You know, there 590 00:24:54,640 --> 00:24:56,960 were things going on here at the city. 591 00:24:56,960 --> 00:24:59,039 Um I know there was some turnover in the 592 00:24:59,039 --> 00:25:01,200 finance department and then once the 593 00:25:01,200 --> 00:25:03,360 city was, you know, ready to have it 594 00:25:03,360 --> 00:25:05,679 done, then we're the ones that have, you 595 00:25:05,679 --> 00:25:07,279 know, the issues that I talked about 596 00:25:07,279 --> 00:25:09,760 going on. So really the timing was just, 597 00:25:09,760 --> 00:25:11,679 you know, very unfortunate for both of 598 00:25:11,679 --> 00:25:13,919 us. Um but to answer your question, we 599 00:25:13,919 --> 00:25:18,549 are under no contract. 600 00:25:18,559 --> 00:25:20,559 So the city could have sought audit 601 00:25:20,559 --> 00:25:23,600 services from another company. 602 00:25:23,600 --> 00:25:24,080 >> Okay. 603 00:25:24,080 --> 00:25:27,430 >> Correct. 604 00:25:27,440 --> 00:25:29,919 » And I think just a side note, the city's 605 00:25:29,919 --> 00:25:32,400 been working with GLO, I think, for very 606 00:25:32,400 --> 00:25:33,919 long time. I don't know what the number 607 00:25:33,919 --> 00:25:35,919 is, but I know you've been providing 608 00:25:35,919 --> 00:25:37,520 services to the city for an extended 609 00:25:37,520 --> 00:25:39,200 period of time, or your firm has. 610 00:25:39,200 --> 00:25:40,880 >> Yeah, I don't know the number of years. 611 00:25:40,880 --> 00:25:44,000 I've been with Isler I think about 11 612 00:25:44,000 --> 00:25:46,159 and a half years now and I believe we've 613 00:25:46,159 --> 00:25:48,640 been the auditors for all of those 614 00:25:48,640 --> 00:25:54,149 years. 615 00:25:54,159 --> 00:25:55,279 All right. Well, if there's no 616 00:25:55,279 --> 00:25:56,640 additional questions, I want to thank 617 00:25:56,640 --> 00:25:58,720 you all for your time and hope you all 618 00:25:58,720 --> 00:26:01,360 have a pleasant evening. 619 00:26:01,360 --> 00:26:04,000 >> Thank you. 620 00:26:04,000 --> 00:26:06,159 Anybody 621 00:26:06,159 --> 00:26:08,400 else have any final 622 00:26:08,400 --> 00:26:13,269 >> suggestions for where to go for dinner? 623 00:26:13,279 --> 00:26:14,400 » Is there going to be another 624 00:26:14,400 --> 00:26:16,799 presentation with like more detail or is 625 00:26:16,799 --> 00:26:18,880 this actual funds? 626 00:26:18,880 --> 00:26:20,799 >> Wasn't they mention of a draft? 627 00:26:20,799 --> 00:26:22,880 >> Yeah, this this is, you know, we wanted 628 00:26:22,880 --> 00:26:26,559 to keep this process moving. Uh and so, 629 00:26:26,559 --> 00:26:28,159 you know, we asked them to give you this 630 00:26:28,159 --> 00:26:29,679 presentation based on the draft 631 00:26:29,679 --> 00:26:33,200 materials. Once we receive the actual 632 00:26:33,200 --> 00:26:35,679 physical labor audit that you know maybe 633 00:26:35,679 --> 00:26:37,360 by the end of the month we will 634 00:26:37,360 --> 00:26:40,000 definitely circulate that to everyone 635 00:26:40,000 --> 00:26:41,600 and you know was going to be my 636 00:26:41,600 --> 00:26:43,279 suggestion at the time is we just may 637 00:26:43,279 --> 00:26:44,960 ask informally do you guys want to get 638 00:26:44,960 --> 00:26:46,559 back together again and talk about this 639 00:26:46,559 --> 00:26:48,400 is this you know is this information 640 00:26:48,400 --> 00:26:50,000 that you're able to just kind of digest 641 00:26:50,000 --> 00:26:51,279 on your own you want to have another 642 00:26:51,279 --> 00:26:54,320 meeting with Cody to talk about it but 643 00:26:54,320 --> 00:26:55,840 you know kind of wait until you have 644 00:26:55,840 --> 00:26:58,480 that paper copy in front of you uh to be 645 00:26:58,480 --> 00:26:59,520 able to do that 646 00:26:59,520 --> 00:27:01,279 >> and to answer your session. It really is 647 00:27:01,279 --> 00:27:03,679 the same presentation, but I'm very open 648 00:27:03,679 --> 00:27:05,279 to feedback. So, if there's other 649 00:27:05,279 --> 00:27:06,960 questions or stuff you want me to 650 00:27:06,960 --> 00:27:09,279 incorporate in that, I'm happy to adjust 651 00:27:09,279 --> 00:27:11,279 the presentation and tailor it to the 652 00:27:11,279 --> 00:27:12,720 specific request. 653 00:27:12,720 --> 00:27:15,679 >> Okay. Well, so, so there probably in the 654 00:27:15,679 --> 00:27:17,679 previous ones there was the traffic 655 00:27:17,679 --> 00:27:20,000 signal kind of 656 00:27:20,000 --> 00:27:23,279 reliance of, you know, at risk, good, 657 00:27:23,279 --> 00:27:26,799 moderate, um, good to go. I guess from 658 00:27:26,799 --> 00:27:30,559 the perspective of um say if we go out 659 00:27:30,559 --> 00:27:32,880 for grants or through the county or 660 00:27:32,880 --> 00:27:34,880 someone who's grading the finances and 661 00:27:34,880 --> 00:27:38,799 the health of of our organization. 662 00:27:38,799 --> 00:27:41,360 >> What are the various 663 00:27:41,360 --> 00:27:44,159 other grades to our audit? Is it just no 664 00:27:44,159 --> 00:27:47,360 findings is the best you can do is like 665 00:27:47,360 --> 00:27:49,440 how how would you qualify? 666 00:27:49,440 --> 00:27:51,360 >> Yeah, I mean really an unqualified 667 00:27:51,360 --> 00:27:53,600 opinion is the best you can achieve 668 00:27:53,600 --> 00:27:56,960 there. Um, I I can't speak for them, but 669 00:27:56,960 --> 00:27:59,679 I don't think they would, you know, view 670 00:27:59,679 --> 00:28:01,840 the disclaimer of opinion specifically 671 00:28:01,840 --> 00:28:03,840 related to the speedas as being 672 00:28:03,840 --> 00:28:06,320 something to prevent them from giving 673 00:28:06,320 --> 00:28:09,039 the city any money. But I mean, the best 674 00:28:09,039 --> 00:28:11,919 thing you can provide to whether it's 675 00:28:11,919 --> 00:28:15,200 creditors, granting agencies is your 676 00:28:15,200 --> 00:28:17,520 audit saying everything, you know, looks 677 00:28:17,520 --> 00:28:20,000 good, everything's clean, no significant 678 00:28:20,000 --> 00:28:22,640 deficiencies or material weaknesses. And 679 00:28:22,640 --> 00:28:26,240 so in in 2023, other than the Gatsby 680 00:28:26,240 --> 00:28:28,080 standards that had been adopted at the 681 00:28:28,080 --> 00:28:31,360 time on the software subscriptions, 682 00:28:31,360 --> 00:28:34,480 >> uh is a a no opinion audit. 683 00:28:34,480 --> 00:28:36,240 >> Yeah. Yeah. Everything's been clean. We 684 00:28:36,240 --> 00:28:37,919 had no significant deficiencies, 685 00:28:37,919 --> 00:28:39,840 material weaknesses, or nothing else 686 00:28:39,840 --> 00:28:42,399 that would prompt us to consider uh 687 00:28:42,399 --> 00:28:46,149 modifying our opinion. 688 00:28:46,159 --> 00:28:48,799 So the only other audit I've had any uh 689 00:28:48,799 --> 00:28:51,520 real experience with is another agency 690 00:28:51,520 --> 00:28:54,480 that I liaison is on with the city, the 691 00:28:54,480 --> 00:28:57,279 workforce council. And 692 00:28:57,279 --> 00:29:00,880 so the draft you're did you say the 693 00:29:00,880 --> 00:29:02,720 draft audit will look pretty much like 694 00:29:02,720 --> 00:29:04,720 this? 695 00:29:04,720 --> 00:29:07,840 >> Well, I mean it I guess it depends what 696 00:29:07,840 --> 00:29:09,039 you mean. Um 697 00:29:09,039 --> 00:29:11,039 >> because it was like a probably a 40page 698 00:29:11,039 --> 00:29:14,240 document, lots of numbers. This is not 699 00:29:14,240 --> 00:29:16,880 the draft at all. The draft will be I 700 00:29:16,880 --> 00:29:18,480 mean I want to say the city statements 701 00:29:18,480 --> 00:29:21,919 are 130 some pages. So it will be a very 702 00:29:21,919 --> 00:29:24,320 large extensive document 703 00:29:24,320 --> 00:29:26,720 >> but the important pieces is 704 00:29:26,720 --> 00:29:28,720 >> to the audit is what he touched on which 705 00:29:28,720 --> 00:29:31,200 is the findings and the categories. 706 00:29:31,200 --> 00:29:31,520 That's 707 00:29:31,520 --> 00:29:33,679 >> yeah that's going to all be the same. 708 00:29:33,679 --> 00:29:35,360 you're just going to have 709 00:29:35,360 --> 00:29:37,360 >> 100 plus additional pages that are going 710 00:29:37,360 --> 00:29:38,640 to give you 711 00:29:38,640 --> 00:29:42,000 >> all the detail probably their samples 712 00:29:42,000 --> 00:29:43,600 and all the various different things 713 00:29:43,600 --> 00:29:45,440 that made up this document. there 714 00:29:45,440 --> 00:29:45,840 really. 715 00:29:45,840 --> 00:29:47,440 >> Yeah. I mean, as a practical matter, 716 00:29:47,440 --> 00:29:50,640 once we get, you know, the 140 pages or 717 00:29:50,640 --> 00:29:52,399 whatever it is, we'll be working with 718 00:29:52,399 --> 00:29:54,960 summer um and our finance folks to 719 00:29:54,960 --> 00:29:58,080 review all of that. And then it'll be in 720 00:29:58,080 --> 00:30:00,320 the form of what you saw, you know, a 721 00:30:00,320 --> 00:30:02,640 final auto document. And like I said, 722 00:30:02,640 --> 00:30:04,480 I'll circulate that to this group and to 723 00:30:04,480 --> 00:30:06,480 the city council. And you know, at that 724 00:30:06,480 --> 00:30:08,399 time, people may say, "Okay, fine. This 725 00:30:08,399 --> 00:30:10,159 makes sense to me." Or they may say, 726 00:30:10,159 --> 00:30:11,919 "Hey, we want to sit down with Summer 727 00:30:11,919 --> 00:30:14,480 and Cody again and go through this." So, 728 00:30:14,480 --> 00:30:16,080 we'll have that opportunity. This isn't 729 00:30:16,080 --> 00:30:18,080 your only bite at the apple, I guess, is 730 00:30:18,080 --> 00:30:18,960 what I'm saying. 731 00:30:18,960 --> 00:30:21,039 >> And to Faze point, the items that I went 732 00:30:21,039 --> 00:30:22,880 over on uh that first slide, those 733 00:30:22,880 --> 00:30:25,039 required board communications, I've went 734 00:30:25,039 --> 00:30:26,799 through the completion section of the 735 00:30:26,799 --> 00:30:28,240 audit. So, that is stuff that I've 736 00:30:28,240 --> 00:30:29,679 worked through and I'm confident that 737 00:30:29,679 --> 00:30:32,000 there will be no changes to that. 738 00:30:32,000 --> 00:30:33,279 Really, we're down to just putting 739 00:30:33,279 --> 00:30:36,000 together the statements and uh reviewing 740 00:30:36,000 --> 00:30:38,640 those and making sure that we're issuing 741 00:30:38,640 --> 00:30:44,950 a quality product. 742 00:30:44,960 --> 00:30:45,600 Thank you. 743 00:30:45,600 --> 00:30:46,880 >> All right. Well, thank you all and have 744 00:30:46,880 --> 00:30:50,870 a wonderful evening. 745 00:30:50,880 --> 00:30:54,480 » Anything else I can be of help with? 746 00:30:54,480 --> 00:30:56,320 >> Well, I guess that is all preface is 747 00:30:56,320 --> 00:30:59,120 like you said, if that they're trusting 748 00:30:59,120 --> 00:31:02,080 that the financials are true and that 749 00:31:02,080 --> 00:31:05,279 nothing's been disguised or 750 00:31:05,279 --> 00:31:07,600 >> or you know, garbage in, garbage out 751 00:31:07,600 --> 00:31:09,840 kind of things. 752 00:31:09,840 --> 00:31:12,640 >> Yeah. based on 753 00:31:12,640 --> 00:31:14,799 what they can see, we look good. But if 754 00:31:14,799 --> 00:31:20,870 somebody was clever and able to 755 00:31:20,880 --> 00:31:22,960 » I could speak to that a little bit. So 756 00:31:22,960 --> 00:31:24,159 for what it's 757 00:31:24,159 --> 00:31:27,039 >> what it's worth, I've been working with 758 00:31:27,039 --> 00:31:30,159 municipalities doing audits for about 15 759 00:31:30,159 --> 00:31:35,440 almost 20 years now. And my role, my 760 00:31:35,440 --> 00:31:37,919 primary role for the city was getting 761 00:31:37,919 --> 00:31:40,080 the books and the accounting records 762 00:31:40,080 --> 00:31:43,039 ready for them to be able to audit. 763 00:31:43,039 --> 00:31:45,519 And you know, this is still like 2 to 3 764 00:31:45,519 --> 00:31:48,080 years ago. There was a lot of work. I'll 765 00:31:48,080 --> 00:31:50,480 be honest, there was a lot of work and 766 00:31:50,480 --> 00:31:53,279 recreation that need to be made and bank 767 00:31:53,279 --> 00:31:55,600 reconciliations that had to be completed 768 00:31:55,600 --> 00:31:58,080 in order to get the records ready for 769 00:31:58,080 --> 00:31:59,760 the audit. 770 00:31:59,760 --> 00:32:03,120 So, as far as again, assurance for fraud 771 00:32:03,120 --> 00:32:06,000 or things being hidden, I'm not a sur 772 00:32:06,000 --> 00:32:09,200 certified fraud examiner. Um, and that 773 00:32:09,200 --> 00:32:11,120 wasn't really my role was to try to find 774 00:32:11,120 --> 00:32:13,360 fraud. But as I was going through, I'm 775 00:32:13,360 --> 00:32:15,919 keeping my radar up all of the time for 776 00:32:15,919 --> 00:32:18,640 any kind of red flags that I may see. 777 00:32:18,640 --> 00:32:21,360 And truly, I didn't see anything that 778 00:32:21,360 --> 00:32:23,039 raised any flags or I would have brought 779 00:32:23,039 --> 00:32:26,559 them up with management. 780 00:32:26,559 --> 00:32:27,919 So, for what's that whatever that's 781 00:32:27,919 --> 00:32:30,799 worth, I haven't seen anything nefarious 782 00:32:30,799 --> 00:32:37,509 or that's worried me at all. 783 00:32:37,519 --> 00:32:39,200 » Well, I'm hoping there's nothing there, 784 00:32:39,200 --> 00:32:41,279 but you know, 785 00:32:41,279 --> 00:32:44,399 >> and you know, and and Summer's being 786 00:32:44,399 --> 00:32:48,480 modest, she put a ton of work into 787 00:32:48,480 --> 00:32:51,120 basically recreating a lot of these 788 00:32:51,120 --> 00:32:52,960 records. There was a lot of work that 789 00:32:52,960 --> 00:32:54,399 she did. There was a lot of work that 790 00:32:54,399 --> 00:32:56,960 city staff did uh to get to the point 791 00:32:56,960 --> 00:32:58,799 that we had the product we could then 792 00:32:58,799 --> 00:33:02,720 give to isore and say okay do the audit. 793 00:33:02,720 --> 00:33:04,799 >> Can you give an example of recreating 794 00:33:04,799 --> 00:33:06,640 the work? 795 00:33:06,640 --> 00:33:09,840 >> So I imagine that it's you've got one 796 00:33:09,840 --> 00:33:12,159 point that you can rely on. You've got 797 00:33:12,159 --> 00:33:13,760 something else over here but you have to 798 00:33:13,760 --> 00:33:18,720 recreate the records in between that to make them reconcile. 799 00:33:18,720 --> 00:33:21,279 >> That's a really great way to explain it. 800 00:33:21,279 --> 00:33:24,960 Yeah. Exactly. So we have independent 801 00:33:24,960 --> 00:33:27,360 like statements from vendors or from the 802 00:33:27,360 --> 00:33:28,880 bank of what our bank balances and 803 00:33:28,880 --> 00:33:31,200 activities should look like and that 804 00:33:31,200 --> 00:33:33,760 should if it doesn't necessarily tie to 805 00:33:33,760 --> 00:33:35,200 the accounting records we should be able 806 00:33:35,200 --> 00:33:37,440 to understand what the differences are 807 00:33:37,440 --> 00:33:39,840 and to be able to give those differences 808 00:33:39,840 --> 00:33:44,080 to the auditors and as prior management 809 00:33:44,080 --> 00:33:46,640 and staff had been going through what 810 00:33:46,640 --> 00:33:48,799 they were going through. Those are the 811 00:33:48,799 --> 00:33:51,039 kinds of things those higher level 812 00:33:51,039 --> 00:33:53,120 checks and balances that weren't able to 813 00:33:53,120 --> 00:33:58,159 be completed. Those are the things that fell behind. So my understanding is 814 00:33:58,159 --> 00:34:00,159 that bills were still paid, employees 815 00:34:00,159 --> 00:34:02,399 were still paid, deposits are still 816 00:34:02,399 --> 00:34:04,399 being, you know, deposited to the bank. 817 00:34:04,399 --> 00:34:07,120 It's just that accounting piece on top 818 00:34:07,120 --> 00:34:10,320 that had fallen behind. And so that's 819 00:34:10,320 --> 00:34:12,639 what I worked through to to catch up. 820 00:34:12,639 --> 00:34:16,560 And staff was a big help in that too. 821 00:34:16,560 --> 00:34:18,560 >> Thank you. Did that was did that answer 822 00:34:18,560 --> 00:34:19,359 your question? 823 00:34:19,359 --> 00:34:20,960 >> Quickbooks kind of 824 00:34:20,960 --> 00:34:23,440 >> entries, that kind of thing. You have 825 00:34:23,440 --> 00:34:25,359 statements, you guess. 826 00:34:25,359 --> 00:34:27,359 >> Yeah. So, for those of you that 827 00:34:27,359 --> 00:34:29,200 understand what journal entries are, 828 00:34:29,200 --> 00:34:31,280 there's so in the I can try to explain 829 00:34:31,280 --> 00:34:32,639 it. So, in the accounting system, 830 00:34:32,639 --> 00:34:34,079 there's your daily activity, your 831 00:34:34,079 --> 00:34:35,520 deposits and your checks that you cut 832 00:34:35,520 --> 00:34:39,040 and all of that good stuff. And then 833 00:34:39,040 --> 00:34:40,960 as we go through the reconciliation 834 00:34:40,960 --> 00:34:45,119 process or if there are oneoff type um 835 00:34:45,119 --> 00:34:48,320 transactions then we do instead of a 836 00:34:48,320 --> 00:34:49,839 normal type of transaction we do what's 837 00:34:49,839 --> 00:34:51,599 called a journal entry and that gets 838 00:34:51,599 --> 00:34:54,240 that activity into the system at kind of 839 00:34:54,240 --> 00:34:56,720 a different level. 840 00:34:56,720 --> 00:35:00,480 the work that I was doing, almost all of 841 00:35:00,480 --> 00:35:02,880 it, maybe all of it related or became 842 00:35:02,880 --> 00:35:05,760 down to posting journal entries. And 843 00:35:05,760 --> 00:35:10,320 there were like 250 300 journal entries 844 00:35:10,320 --> 00:35:12,480 that had to be posted just for this 845 00:35:12,480 --> 00:35:14,480 fiscal year in order to get the books in 846 00:35:14,480 --> 00:35:21,200 balance and ready for the audit. That's a lot. I would expect in a normal 847 00:35:21,200 --> 00:35:22,960 scenario where you're you're able to 848 00:35:22,960 --> 00:35:26,320 keep up more like 20 maybe 30 849 00:35:26,320 --> 00:35:28,320 >> this fiscal year being 23 that we're 850 00:35:28,320 --> 00:35:29,200 talking about. 851 00:35:29,200 --> 00:35:30,079 >> Yeah. 852 00:35:30,079 --> 00:35:32,800 >> And then that continued on presumably 853 00:35:32,800 --> 00:35:35,680 through when Eric came. 854 00:35:35,680 --> 00:35:38,160 >> Mhm. So I'm expecting to see that for 24 855 00:35:38,160 --> 00:35:41,280 as well. Now I've already been through a 856 00:35:41,280 --> 00:35:42,480 year. Staff's already been through a 857 00:35:42,480 --> 00:35:43,599 year. So we know what we're looking for 858 00:35:43,599 --> 00:35:45,119 and we know how to fix it. So it should 859 00:35:45,119 --> 00:35:48,160 be more efficient I would expect. But 860 00:35:48,160 --> 00:35:49,359 there's still a lot of clean up to do 861 00:35:49,359 --> 00:35:53,280 and catch up to do. Yeah. 862 00:35:53,280 --> 00:35:58,000 >> So at my job I we close it out month by 863 00:35:58,000 --> 00:36:00,240 month. We are in balance every month. 864 00:36:00,240 --> 00:36:03,119 The city doesn't do that. 865 00:36:03,119 --> 00:36:08,000 >> They should and they the city staff knew 866 00:36:08,000 --> 00:36:09,599 that they should but they fell too far 867 00:36:09,599 --> 00:36:12,240 behind and weren't able to get to it. 868 00:36:12,240 --> 00:36:14,800 >> Okay. Just monthtomonth balancing fiscal 869 00:36:14,800 --> 00:36:18,560 year is basically just reporting all the 870 00:36:18,560 --> 00:36:20,800 Yeah. And you know, they kind of build 871 00:36:20,800 --> 00:36:22,720 on each other, right? So, 872 00:36:22,720 --> 00:36:23,280 >> right, 873 00:36:23,280 --> 00:36:24,560 >> we're not able to do the bank 874 00:36:24,560 --> 00:36:27,200 reconciliations for these current months 875 00:36:27,200 --> 00:36:28,720 that we're in until we can catch up on 876 00:36:28,720 --> 00:36:30,720 these bank on these back ones. So, we're 877 00:36:30,720 --> 00:36:32,320 still doing other procedures to make 878 00:36:32,320 --> 00:36:33,760 sure all the activities in the books and 879 00:36:33,760 --> 00:36:36,160 catching everything big. Um, so that we 880 00:36:36,160 --> 00:36:39,280 don't have any big surprises. 881 00:36:39,280 --> 00:36:41,200 But those processes 882 00:36:41,200 --> 00:36:43,040 >> I'm sorry this audit is kind of a review 883 00:36:43,040 --> 00:36:45,359 of that reconstruction 884 00:36:45,359 --> 00:36:49,280 also not just the activity of the year. 885 00:36:49,280 --> 00:36:52,480 >> Yeah. And audits look more at balances 886 00:36:52,480 --> 00:36:54,240 as of the end of the year 887 00:36:54,240 --> 00:36:56,000 >> more than the detailed activity. Right. 888 00:36:56,000 --> 00:36:58,000 So balance sheet they're primarily 889 00:36:58,000 --> 00:36:59,839 focused on your balance sheet is are 890 00:36:59,839 --> 00:37:04,400 your receivables that you're saying you have $100,000 in receivables. 891 00:37:04,400 --> 00:37:06,000 Well do you really? And then they'll go 892 00:37:06,000 --> 00:37:07,200 through and audit that and make sure 893 00:37:07,200 --> 00:37:09,520 that that's a true number. 894 00:37:09,520 --> 00:37:10,960 >> Right. Okay. 895 00:37:10,960 --> 00:37:13,680 >> Yeah. 896 00:37:13,680 --> 00:37:15,760 >> This is the reason why we brought summer 897 00:37:15,760 --> 00:37:19,280 in as an independent CPA to help us be 898 00:37:19,280 --> 00:37:21,200 able to recreate this. 899 00:37:21,200 --> 00:37:23,200 >> So 900 00:37:23,200 --> 00:37:25,359 in our current year, are those uh 901 00:37:25,359 --> 00:37:28,800 weaknesses being 902 00:37:28,800 --> 00:37:30,640 strengthened to where we don't have that 903 00:37:30,640 --> 00:37:32,480 happening again? that that was, you 904 00:37:32,480 --> 00:37:34,400 know, that was the goal is is, you know, 905 00:37:34,400 --> 00:37:36,079 we had a turnover in our finance 906 00:37:36,079 --> 00:37:38,240 department. It was what I call a 907 00:37:38,240 --> 00:37:41,119 teachable moment for us to bring it to 908 00:37:41,119 --> 00:37:42,800 bring in Eric. 909 00:37:42,800 --> 00:37:45,040 >> Yeah. So, for us to bring in Eric as an 910 00:37:45,040 --> 00:37:47,599 interim finance director and then also 911 00:37:47,599 --> 00:37:50,079 to have Summer basically represent us 912 00:37:50,079 --> 00:37:51,839 and getting together the records, be 913 00:37:51,839 --> 00:37:54,320 able to give it to the audit. So, you 914 00:37:54,320 --> 00:37:56,240 know, to answer your question directly, 915 00:37:56,240 --> 00:37:58,400 you know, beginning with the with the 916 00:37:58,400 --> 00:38:00,320 last uh fiscal year with the current 917 00:38:00,320 --> 00:38:02,960 fiscal year, yes, I I I think we're at 918 00:38:02,960 --> 00:38:05,040 least for operationally we're there. 919 00:38:05,040 --> 00:38:07,119 >> Good. But you know one of the things 920 00:38:07,119 --> 00:38:08,400 that you know I've talked with some of 921 00:38:08,400 --> 00:38:10,560 the council members about is is that 922 00:38:10,560 --> 00:38:15,040 because we had these issues in 2023 2024 923 00:38:15,040 --> 00:38:18,000 it has impacted us as far as what our 924 00:38:18,000 --> 00:38:20,320 known starting balances are and you know 925 00:38:20,320 --> 00:38:22,560 cash reserves and that sort of thing for 926 00:38:22,560 --> 00:38:25,760 2025 and 2026. Well, moving forward, 927 00:38:25,760 --> 00:38:27,440 knowing where you are and with your 928 00:38:27,440 --> 00:38:30,720 balance and cash flow and 929 00:38:30,720 --> 00:38:33,920 >> the goal is that when we get to July 1 930 00:38:33,920 --> 00:38:35,920 of 2026, 931 00:38:35,920 --> 00:38:38,240 that we can 932 00:38:38,240 --> 00:38:40,000 have the numbers be exactly where they 933 00:38:40,000 --> 00:38:42,720 should be. Uh, so we're budgeting for 934 00:38:42,720 --> 00:38:46,480 2026. I use two years, 2026, 2027, 935 00:38:46,480 --> 00:38:48,000 because using the end of the year thing 936 00:38:48,000 --> 00:38:52,000 always confuses me. Um but so for 2026 937 00:38:52,000 --> 00:38:54,480 2027 to be able to budget based on 938 00:38:54,480 --> 00:38:57,520 actual numbers and basically have rided 939 00:38:57,520 --> 00:39:00,560 the ship um by the beginning of this 940 00:39:00,560 --> 00:39:02,400 next fiscal year. 941 00:39:02,400 --> 00:39:04,079 >> Eric and I have been talking about that 942 00:39:04,079 --> 00:39:06,079 he's been putting a lot of thought and 943 00:39:06,079 --> 00:39:09,760 energy into getting as close as he 944 00:39:09,760 --> 00:39:11,599 possibly can to the beginning balances 945 00:39:11,599 --> 00:39:12,800 that are going to go into the next 946 00:39:12,800 --> 00:39:14,880 budget process. and I've been supporting 947 00:39:14,880 --> 00:39:17,119 in him in that and kind of researching 948 00:39:17,119 --> 00:39:20,000 some of the stuff from a couple years 949 00:39:20,000 --> 00:39:22,000 ago and then we've been looking at a 950 00:39:22,000 --> 00:39:24,480 high level at major activity that could 951 00:39:24,480 --> 00:39:27,200 potentially impact those balances. So, I 952 00:39:27,200 --> 00:39:28,800 guess what I'm trying to say is that I 953 00:39:28,800 --> 00:39:31,040 know Eric is is really focused on 954 00:39:31,040 --> 00:39:33,040 getting the best possible numbers he can 955 00:39:33,040 --> 00:39:39,109 for you going into this next budget. 956 00:39:39,119 --> 00:39:41,839 So I don't have the intimate detail that 957 00:39:41,839 --> 00:39:45,280 you may be bringing into the concept 958 00:39:45,280 --> 00:39:48,720 but when we talk about 959 00:39:48,720 --> 00:39:53,190 uh everything builds on itself 960 00:39:53,200 --> 00:39:56,480 in the interim period from what's now I 961 00:39:56,480 --> 00:39:59,280 guess 20 closing out 2023. 962 00:39:59,280 --> 00:39:59,920 >> Yeah. 963 00:39:59,920 --> 00:40:01,920 >> And you're recreating journal entries as 964 00:40:01,920 --> 00:40:04,960 of the time say era came along. Is there 965 00:40:04,960 --> 00:40:07,280 like a repository of journal entries 966 00:40:07,280 --> 00:40:09,200 that are waiting for reconciliation? So 967 00:40:09,200 --> 00:40:12,079 that work's being done at a as of a 968 00:40:12,079 --> 00:40:15,599 certain point and then you meet the 969 00:40:15,599 --> 00:40:19,680 point in time from Janu of 24 to that 970 00:40:19,680 --> 00:40:22,079 and then everything that's being done up 971 00:40:22,079 --> 00:40:25,440 until that point gets 972 00:40:25,440 --> 00:40:28,079 sorted out so to speak or it's or that's 973 00:40:28,079 --> 00:40:30,320 already in in play. I guess I don't know 974 00:40:30,320 --> 00:40:32,400 enough about a journal entry to know if 975 00:40:32,400 --> 00:40:35,119 there's a I presume there's a dollar 976 00:40:35,119 --> 00:40:38,000 amount tied to each journal entry. Um so 977 00:40:38,000 --> 00:40:41,280 how much how much turbulence is there in 978 00:40:41,280 --> 00:40:44,880 the meeting of that those two points? 979 00:40:44,880 --> 00:40:49,520 >> It's really a catch-up process. So 980 00:40:49,520 --> 00:40:51,119 some of those journal entries and a lot 981 00:40:51,119 --> 00:40:52,560 of those journal entries I guess I'll 982 00:40:52,560 --> 00:40:55,440 say are only done for accounting 983 00:40:55,440 --> 00:40:57,200 reasons. 984 00:40:57,200 --> 00:40:59,280 They're not necessarily like a real 985 00:40:59,280 --> 00:41:01,680 money. They're and what I would say is 986 00:41:01,680 --> 00:41:04,079 real money. Um they don't impact your 987 00:41:04,079 --> 00:41:05,680 cash balance or what you have in the 988 00:41:05,680 --> 00:41:07,680 bank, anything like that. They are 989 00:41:07,680 --> 00:41:10,880 solely to create that statement 990 00:41:10,880 --> 00:41:12,720 um to give to the bank or to give the 991 00:41:12,720 --> 00:41:15,440 granting agency. 992 00:41:15,440 --> 00:41:17,200 Those are the for the most part are the 993 00:41:17,200 --> 00:41:19,920 type of entries that we still need to 994 00:41:19,920 --> 00:41:23,440 do. So what's happening is in current 995 00:41:23,440 --> 00:41:26,880 day as Mariah and the team go along, 996 00:41:26,880 --> 00:41:29,119 they are doing the day-to-day work. 997 00:41:29,119 --> 00:41:30,880 They're doing journal entries for now 998 00:41:30,880 --> 00:41:32,880 and doing the reconciliations they can 999 00:41:32,880 --> 00:41:35,280 for now. And then I'm going through and 1000 00:41:35,280 --> 00:41:37,680 trying to catch up to them. 1001 00:41:37,680 --> 00:41:39,280 And so they're going to keep going and 1002 00:41:39,280 --> 00:41:40,720 I'm going to keep trying to catch up and 1003 00:41:40,720 --> 00:41:43,520 at some point we will catch up. I'm 1004 00:41:43,520 --> 00:41:45,599 guessing that might be a year from now, 1005 00:41:45,599 --> 00:41:47,440 but that's what we're working toward. In 1006 00:41:47,440 --> 00:41:49,839 that point of catchup, does that then do 1007 00:41:49,839 --> 00:41:51,520 you have to catch up to where they are 1008 00:41:51,520 --> 00:41:53,040 present day? Because you're going to 1009 00:41:53,040 --> 00:41:54,960 then 1010 00:41:54,960 --> 00:41:56,720 modify their current what they're 1011 00:41:56,720 --> 00:41:58,319 currently doing as journal entries. So 1012 00:41:58,319 --> 00:42:00,240 they're doing them as a placeholder and 1013 00:42:00,240 --> 00:42:01,680 then you're going to not catch up to 1014 00:42:01,680 --> 00:42:03,119 where they started doing them, but catch 1015 00:42:03,119 --> 00:42:06,240 up to to the same point in time. 1016 00:42:06,240 --> 00:42:07,200 >> Yes. 1017 00:42:07,200 --> 00:42:08,480 >> Gotcha. 1018 00:42:08,480 --> 00:42:10,960 >> Yep. And then everything's together and 1019 00:42:10,960 --> 00:42:13,599 we move forward 1020 00:42:13,599 --> 00:42:18,630 and it's all one and the same. Yeah. 1021 00:42:18,640 --> 00:42:19,520 We will get there. 1022 00:42:19,520 --> 00:42:24,390 >> Just listen to it. 1023 00:42:24,400 --> 00:42:27,760 » Yeah. I love puzzles. I used to do 1024 00:42:27,760 --> 00:42:29,920 puzzles with my grandma growing up and 1025 00:42:29,920 --> 00:42:33,440 that's kind of what this is is a big a 1026 00:42:33,440 --> 00:42:35,200 big puzzle. 1027 00:42:35,200 --> 00:42:36,400 >> Yeah. 1028 00:42:36,400 --> 00:42:39,599 What are some of the things that uh 1029 00:42:39,599 --> 00:42:43,520 you're not sure how they might impact 1030 00:42:43,520 --> 00:42:46,880 uh the the reconciliation process? 1031 00:42:46,880 --> 00:42:50,000 Things you're watching for over 24 I 1032 00:42:50,000 --> 00:42:55,280 guess it primarily be 24 25. Yeah, I'm a 1033 00:42:55,280 --> 00:42:57,040 little nervous about and have been 1034 00:42:57,040 --> 00:42:59,440 talking with Eric about there were some 1035 00:42:59,440 --> 00:43:02,079 significant transactions like debt 1036 00:43:02,079 --> 00:43:03,920 borrowings 1037 00:43:03,920 --> 00:43:05,839 and that kind of thing that happened 1038 00:43:05,839 --> 00:43:10,800 over, you know, during fiscal 24 and 25. 1039 00:43:10,800 --> 00:43:12,640 And a couple of those items that we've 1040 00:43:12,640 --> 00:43:15,359 already looked at were not like journal 1041 00:43:15,359 --> 00:43:17,119 entries were done, but they weren't done 1042 00:43:17,119 --> 00:43:18,880 correctly. 1043 00:43:18,880 --> 00:43:21,359 and 1044 00:43:21,359 --> 00:43:23,680 correcting them is going to negatively 1045 00:43:23,680 --> 00:43:26,640 impact your cash carry forward and your 1046 00:43:26,640 --> 00:43:29,040 balances going forward in your general 1047 00:43:29,040 --> 00:43:34,000 fund to some extent. Um, 1048 00:43:34,000 --> 00:43:35,839 that's what and I think Eric may have 1049 00:43:35,839 --> 00:43:37,920 brought up some of this with you and 1050 00:43:37,920 --> 00:43:40,400 that's the stuff we're really diving in 1051 00:43:40,400 --> 00:43:43,040 and checking for because that's the 1052 00:43:43,040 --> 00:43:45,440 those are the things 1053 00:43:45,440 --> 00:43:47,119 a lot of the journal entries I said are 1054 00:43:47,119 --> 00:43:52,400 just for accounting. They're just for the report. They aren't necessarily 1055 00:43:52,400 --> 00:43:54,800 impacting the operation of the city and 1056 00:43:54,800 --> 00:43:56,800 the decisions that you're making now, 1057 00:43:56,800 --> 00:43:58,319 which is much more important in my 1058 00:43:58,319 --> 00:44:00,480 opinion. You got to get the audit done. 1059 00:44:00,480 --> 00:44:01,760 We've got to get caught up on the 1060 00:44:01,760 --> 00:44:03,440 reconciliations 1061 00:44:03,440 --> 00:44:06,240 for important reasons, 1062 00:44:06,240 --> 00:44:08,720 but you guys are living in the now and 1063 00:44:08,720 --> 00:44:11,040 making decisions strategically for the 1064 00:44:11,040 --> 00:44:13,839 city looking forward. And so that's 1065 00:44:13,839 --> 00:44:15,599 where we're focusing and that's what I'm 1066 00:44:15,599 --> 00:44:17,760 most nervous about is if we find 1067 00:44:17,760 --> 00:44:21,280 something that substantially impacts the 1068 00:44:21,280 --> 00:44:22,720 balances that you guys are making 1069 00:44:22,720 --> 00:44:25,839 decisions from. 1070 00:44:25,839 --> 00:44:27,200 That's what I would be nervous about. 1071 00:44:27,200 --> 00:44:29,359 And so that's what we are prioritizing 1072 00:44:29,359 --> 00:44:32,160 and looking at first. 1073 00:44:32,160 --> 00:44:34,000 >> We wanted to get this first audit in 1074 00:44:34,000 --> 00:44:35,839 front of the city council and the audit 1075 00:44:35,839 --> 00:44:38,560 committee. Um, and you know, we've done 1076 00:44:38,560 --> 00:44:41,359 that. But the next step, and this is 1077 00:44:41,359 --> 00:44:43,200 going to be starting at the second 1078 00:44:43,200 --> 00:44:45,920 council meeting in January, Eric's going 1079 00:44:45,920 --> 00:44:48,000 to be doing a second quarterly budget 1080 00:44:48,000 --> 00:44:50,960 update, but included in that is going to 1081 00:44:50,960 --> 00:44:55,359 be a first look at the next year's uh, 1082 00:44:55,359 --> 00:44:59,280 fiscal year budget. And, uh, FA and 1083 00:44:59,280 --> 00:45:01,280 Mindy and I have been meeting with Eric 1084 00:45:01,280 --> 00:45:03,920 regularly and we'll be getting you some 1085 00:45:03,920 --> 00:45:06,480 information. And it flows directly to 1086 00:45:06,480 --> 00:45:08,720 what, you know, Summer is talking about 1087 00:45:08,720 --> 00:45:11,599 is, you know, inaccurate information and 1088 00:45:11,599 --> 00:45:13,520 starting fund balances is snowballed a 1089 00:45:13,520 --> 00:45:16,720 little bit. And so that's why we want to 1090 00:45:16,720 --> 00:45:19,119 have, as Summer said, the most accurate 1091 00:45:19,119 --> 00:45:21,680 starting fund balances we can give you 1092 00:45:21,680 --> 00:45:25,760 July 1 of 2026 and go forward from 1093 00:45:25,760 --> 00:45:28,880 there. Uh the practical impact of that 1094 00:45:28,880 --> 00:45:31,359 is it will probably result in some sign 1095 00:45:31,359 --> 00:45:33,520 significant cuts and that's what we'll 1096 00:45:33,520 --> 00:45:35,920 be talking with the council about your 1097 00:45:35,920 --> 00:45:39,680 second meeting in January. Now uh we've 1098 00:45:39,680 --> 00:45:40,720 you know I'm going to talk with the 1099 00:45:40,720 --> 00:45:42,000 council a little bit about this on 1100 00:45:42,000 --> 00:45:44,240 Monday night as well is we've moved up 1101 00:45:44,240 --> 00:45:46,560 all of our budget dates. Usually we 1102 00:45:46,560 --> 00:45:48,640 don't start the budget committee process 1103 00:45:48,640 --> 00:45:50,400 until like mid or late May. We're 1104 00:45:50,400 --> 00:45:52,079 starting in April this year. We're 1105 00:45:52,079 --> 00:45:54,000 adding additional meetings. We're adding 1106 00:45:54,000 --> 00:45:56,000 additional time. We've added a 1107 00:45:56,000 --> 00:45:58,319 significant almost month-long time 1108 00:45:58,319 --> 00:45:59,680 between when we hope the budget 1109 00:45:59,680 --> 00:46:01,520 committee completes its work and it 1110 00:46:01,520 --> 00:46:03,359 comes to the city council. So, we've got 1111 00:46:03,359 --> 00:46:05,599 plenty of time for additional process. 1112 00:46:05,599 --> 00:46:07,359 Uh after the first budget committee 1113 00:46:07,359 --> 00:46:10,000 meeting, we've added a town hall. So, 1114 00:46:10,000 --> 00:46:11,680 you know, we can have first budget 1115 00:46:11,680 --> 00:46:12,800 committee meeting, do all the 1116 00:46:12,800 --> 00:46:15,359 introductions of the material and and uh 1117 00:46:15,359 --> 00:46:17,119 members. Then we can have a town hall 1118 00:46:17,119 --> 00:46:18,560 meeting and if something comes out of 1119 00:46:18,560 --> 00:46:20,400 that town hall meeting, we've got a 1120 00:46:20,400 --> 00:46:21,920 second budget committee meeting and a 1121 00:46:21,920 --> 00:46:23,440 third budget committee meeting to be 1122 00:46:23,440 --> 00:46:27,990 able to integrate it into it. 1123 00:46:28,000 --> 00:46:31,839 So I know if I'm, you know, I I go to my 1124 00:46:31,839 --> 00:46:34,640 bank account balance if I want to know 1125 00:46:34,640 --> 00:46:36,400 the kind of the truth of the situation 1126 00:46:36,400 --> 00:46:39,839 beyond the other financials. Um, and go 1127 00:46:39,839 --> 00:46:41,520 and then kind of work backwards from 1128 00:46:41,520 --> 00:46:43,119 there like that's what I actually have 1129 00:46:43,119 --> 00:46:45,839 in there. doesn't matter what my budget 1130 00:46:45,839 --> 00:46:49,839 or projections say. Um, is that how this 1131 00:46:49,839 --> 00:46:52,160 was discovered? Like how I mean, how 1132 00:46:52,160 --> 00:46:54,640 many bank accounts does the city have? 1133 00:46:54,640 --> 00:46:58,160 How often do they get inspected 1134 00:46:58,160 --> 00:47:00,560 um to see if they match what the 1135 00:47:00,560 --> 00:47:02,800 projections are? Like I I wonder how 1136 00:47:02,800 --> 00:47:05,359 this 1137 00:47:05,359 --> 00:47:07,599 >> where was the focus that this gets 1138 00:47:07,599 --> 00:47:10,319 discovered. Now, 1139 00:47:10,319 --> 00:47:12,000 >> the piece that we discovered that's 1140 00:47:12,000 --> 00:47:15,280 going to impact the the fund balance, 1141 00:47:15,280 --> 00:47:19,589 >> um, 1142 00:47:19,599 --> 00:47:23,040 so the city does not have very many 1143 00:47:23,040 --> 00:47:26,000 actual bank accounts. 1144 00:47:26,000 --> 00:47:27,280 I think there are just a couple 1145 00:47:27,280 --> 00:47:28,960 actually. There's a money market and 1146 00:47:28,960 --> 00:47:30,880 then there are a couple different well 1147 00:47:30,880 --> 00:47:33,440 there's I'm sorry, there are one or two 1148 00:47:33,440 --> 00:47:37,200 local government investment pool funds. 1149 00:47:37,200 --> 00:47:39,520 This transaction, 1150 00:47:39,520 --> 00:47:41,040 this one transaction that's going to 1151 00:47:41,040 --> 00:47:44,550 have some impact 1152 00:47:44,560 --> 00:47:47,839 was was the city went out for debt and 1153 00:47:47,839 --> 00:47:50,880 they got a couple million dollars of 1154 00:47:50,880 --> 00:47:54,240 cash coming into their account. 1155 00:47:54,240 --> 00:47:56,000 And 1156 00:47:56,000 --> 00:47:58,240 when that transaction was put into the 1157 00:47:58,240 --> 00:48:00,240 accounting system, it was not put into 1158 00:48:00,240 --> 00:48:03,040 the accounting system correctly 1159 00:48:03,040 --> 00:48:05,280 and it was shown over here instead of 1160 00:48:05,280 --> 00:48:06,960 over here. And it really should have 1161 00:48:06,960 --> 00:48:10,480 been over here because if it's over here 1162 00:48:10,480 --> 00:48:13,760 then it looks one way and and it doesn't 1163 00:48:13,760 --> 00:48:15,839 impact your fund balance and if it's 1164 00:48:15,839 --> 00:48:18,800 over here it looks a different way and 1165 00:48:18,800 --> 00:48:27,040 does impact your fund balance. So looking at the bank statement and the 1166 00:48:27,040 --> 00:48:28,880 activity wouldn't have necessarily 1167 00:48:28,880 --> 00:48:32,400 caught this. It would be looking at the 1168 00:48:32,400 --> 00:48:34,640 balances of the debt and how much of 1169 00:48:34,640 --> 00:48:37,440 that debt, the $2 million or whatever 1170 00:48:37,440 --> 00:48:39,920 that came in had actually been spent as 1171 00:48:39,920 --> 00:48:42,240 of a given time and what that looks like 1172 00:48:42,240 --> 00:48:45,280 in your accounting system. And it didn't 1173 00:48:45,280 --> 00:48:48,240 look right. And so we went and looked at 1174 00:48:48,240 --> 00:48:50,079 it and said, "Okay, this this wasn't 1175 00:48:50,079 --> 00:48:51,760 right. What do we need to do to fix it? 1176 00:48:51,760 --> 00:48:54,640 And what's the impact of that?" 1177 00:48:54,640 --> 00:48:56,720 >> So how much of an impact are are you 1178 00:48:56,720 --> 00:48:58,880 guys talking about? 1179 00:48:58,880 --> 00:49:00,400 I don't think we're there yet, but I 1180 00:49:00,400 --> 00:49:00,720 could 1181 00:49:00,720 --> 00:49:02,880 >> I don't think so either. 1182 00:49:02,880 --> 00:49:06,800 >> Uh but the point is that you our goal is 1183 00:49:06,800 --> 00:49:09,520 to know that answer uh by the time we 1184 00:49:09,520 --> 00:49:11,839 finalize the budget for this year. So 1185 00:49:11,839 --> 00:49:14,880 going into next year, 1186 00:49:14,880 --> 00:49:16,720 like I said, we've writed the the goal 1187 00:49:16,720 --> 00:49:20,160 is to write the ship um by July 1. So 1188 00:49:20,160 --> 00:49:22,400 that's kind of why you guys are okay 1189 00:49:22,400 --> 00:49:23,680 with the draft because there's no 1190 00:49:23,680 --> 00:49:25,680 finding here so we can move on to the 1191 00:49:25,680 --> 00:49:27,040 next one because that's where we're 1192 00:49:27,040 --> 00:49:27,920 going to really dig in. 1193 00:49:27,920 --> 00:49:30,640 >> Yeah. And and like I said earlier, I 1194 00:49:30,640 --> 00:49:32,079 just want to keep this process going 1195 00:49:32,079 --> 00:49:33,520 forward. You know, I mean, we talked 1196 00:49:33,520 --> 00:49:35,599 about, you know, been you've been on the 1197 00:49:35,599 --> 00:49:37,599 audit committee now for two terms and 1198 00:49:37,599 --> 00:49:41,200 haven't done an audit. Uh so, you know, 1199 00:49:41,200 --> 00:49:43,359 conversation I had with Cody was is that 1200 00:49:43,359 --> 00:49:44,480 he's like, "Well, we don't know the 1201 00:49:44,480 --> 00:49:45,920 final version yet. We've got the draft. 1202 00:49:45,920 --> 00:49:47,200 You haven't been able to review our 1203 00:49:47,200 --> 00:49:48,559 statements. the city hasn't been able to 1204 00:49:48,559 --> 00:49:49,760 review the statements on it. You're 1205 00:49:49,760 --> 00:49:51,680 right. Let's get this process keep 1206 00:49:51,680 --> 00:49:53,599 moving forward. You know, I wanted to 1207 00:49:53,599 --> 00:49:55,119 get the council an outline that's 1208 00:49:55,119 --> 00:49:56,720 included in the PowerPoint of this is 1209 00:49:56,720 --> 00:49:59,040 how we're going to get over the next two 1210 00:49:59,040 --> 00:50:00,720 years back to where we are for the 1211 00:50:00,720 --> 00:50:03,760 timeline for the audits. 1212 00:50:03,760 --> 00:50:06,160 >> And as that audit report is being 1213 00:50:06,160 --> 00:50:08,800 drafted and finalized, Mariah and I are 1214 00:50:08,800 --> 00:50:11,040 already moving forward. We're like, so 1215 00:50:11,040 --> 00:50:12,319 we've already finished all the bank 1216 00:50:12,319 --> 00:50:15,440 reconciliations for fiscal 24 and we're 1217 00:50:15,440 --> 00:50:16,640 going through and doing some of the 1218 00:50:16,640 --> 00:50:18,559 other reconciliations and work we need 1219 00:50:18,559 --> 00:50:20,880 to do to prepare for the audit and have 1220 00:50:20,880 --> 00:50:22,400 it ready so that when the auditors are 1221 00:50:22,400 --> 00:50:24,640 ready to go, we can just hand it to them 1222 00:50:24,640 --> 00:50:27,119 and be good to go. So 1223 00:50:27,119 --> 00:50:30,480 >> So I'm So they're expecting there to be 1224 00:50:30,480 --> 00:50:34,800 a shortage in cash flow. 1225 00:50:34,800 --> 00:50:38,079 Is is that correct within what they 1226 00:50:38,079 --> 00:50:40,240 perceive it to be? 1227 00:50:40,240 --> 00:50:42,640 >> Not necessarily. Like Mike said, we're 1228 00:50:42,640 --> 00:50:44,160 trying to we're still trying to work 1229 00:50:44,160 --> 00:50:45,520 through 1230 00:50:45,520 --> 00:50:47,040 >> the actual impact and what it's going to 1231 00:50:47,040 --> 00:50:49,359 look like on the fund balance. I 1232 00:50:49,359 --> 00:50:51,119 apologize. I don't have that information 1233 00:50:51,119 --> 00:50:52,480 yet, but we are still working through 1234 00:50:52,480 --> 00:50:53,359 it. 1235 00:50:53,359 --> 00:50:55,920 >> I was just thinking that is is there a 1236 00:50:55,920 --> 00:50:58,960 fund available in the budget to cover 1237 00:50:58,960 --> 00:51:04,160 any kind of gaps or anything like that? 1238 00:51:04,160 --> 00:51:06,480 I haven't been as involved on the budget 1239 00:51:06,480 --> 00:51:08,559 side. So, I'm kind of looking backwards 1240 00:51:08,559 --> 00:51:10,400 for the city and Eric is the one who's 1241 00:51:10,400 --> 00:51:12,160 looking at now and then looking at the 1242 00:51:12,160 --> 00:51:14,319 budget and then we we coordinate where 1243 00:51:14,319 --> 00:51:15,839 we need to. But that's going to be a 1244 00:51:15,839 --> 00:51:17,200 good question for Eric at that meeting 1245 00:51:17,200 --> 00:51:18,559 later this month. 1246 00:51:18,559 --> 00:51:20,800 >> Yeah, I say this is why we've invited 1247 00:51:20,800 --> 00:51:23,200 all of you guys to be part of the uh 1248 00:51:23,200 --> 00:51:24,720 committee. We're inviting the budget 1249 00:51:24,720 --> 00:51:27,520 committee members as well. budget 1250 00:51:27,520 --> 00:51:30,160 committee members uh you know budget 1251 00:51:30,160 --> 00:51:31,920 committee members as well to be part of 1252 00:51:31,920 --> 00:51:34,800 Eric's presentation and discussion and 1253 00:51:34,800 --> 00:51:36,720 you know I'm also meeting starting in 1254 00:51:36,720 --> 00:51:38,559 February with I call it the leadership 1255 00:51:38,559 --> 00:51:40,800 team of the budget committee um you know 1256 00:51:40,800 --> 00:51:42,480 they have their own officers and you 1257 00:51:42,480 --> 00:51:43,920 know there's a couple folks who have 1258 00:51:43,920 --> 00:51:45,359 been on the committee for an extended 1259 00:51:45,359 --> 00:51:47,040 period of time I'm going to start 1260 00:51:47,040 --> 00:51:48,720 meeting with them and talking through 1261 00:51:48,720 --> 00:51:51,280 this with them because what I don't want 1262 00:51:51,280 --> 00:51:52,960 to do is is have budget committee 1263 00:51:52,960 --> 00:51:54,480 members that are starting off at ground 1264 00:51:54,480 --> 00:51:56,319 zero I mean the goal is to get everybody 1265 00:51:56,319 --> 00:51:58,000 to the same level of knowledge and 1266 00:51:58,000 --> 00:51:59,680 information so that we can work 1267 00:51:59,680 --> 00:52:02,400 together. 1268 00:52:02,400 --> 00:52:04,559 >> So, was it just this last budget that 1269 00:52:04,559 --> 00:52:06,319 was 1270 00:52:06,319 --> 00:52:08,800 put together and passed with the 1271 00:52:08,800 --> 00:52:11,760 mclassification of those funds or was it 1272 00:52:11,760 --> 00:52:12,400 back in 201? 1273 00:52:12,400 --> 00:52:14,160 >> I think it's I think it's going back a 1274 00:52:14,160 --> 00:52:17,280 ways. Yeah. And it's not just this one 1275 00:52:17,280 --> 00:52:20,079 item. And there have been there have 1276 00:52:20,079 --> 00:52:22,880 been other things. And 1277 00:52:22,880 --> 00:52:24,400 you know, part of this is going back and 1278 00:52:24,400 --> 00:52:26,800 looking at prior records and the work 1279 00:52:26,800 --> 00:52:28,960 that the prior finance director did and 1280 00:52:28,960 --> 00:52:31,359 understanding how she came up with some 1281 00:52:31,359 --> 00:52:33,359 of the numbers that she came up with. 1282 00:52:33,359 --> 00:52:35,440 And there there are some notes there and 1283 00:52:35,440 --> 00:52:36,960 we're still trying to kind of decipher 1284 00:52:36,960 --> 00:52:41,280 that and figure out where where her 1285 00:52:41,280 --> 00:52:45,349 um 1286 00:52:45,359 --> 00:52:47,280 what was going what was going on in her 1287 00:52:47,280 --> 00:52:50,400 mind, what information she knew that we 1288 00:52:50,400 --> 00:52:52,720 don't know right now that went into 1289 00:52:52,720 --> 00:52:56,069 those budgets. 1290 00:52:56,079 --> 00:52:57,119 » So if it goes back 1291 00:52:57,119 --> 00:52:59,040 >> So I think it does go back I think it 1292 00:52:59,040 --> 00:53:00,640 goes back a few years. It's not like all 1293 00:53:00,640 --> 00:53:03,680 of a sudden there's this huge hit. Um 1294 00:53:03,680 --> 00:53:05,040 it's going to look like that because 1295 00:53:05,040 --> 00:53:08,000 we're just now trueing those numbers up, 1296 00:53:08,000 --> 00:53:11,119 but it's the underlying issue has been 1297 00:53:11,119 --> 00:53:14,079 accumulating over several years. 1298 00:53:14,079 --> 00:53:16,079 >> It's my understanding. Again, I'm not 1299 00:53:16,079 --> 00:53:17,920 >> that 1300 00:53:17,920 --> 00:53:19,839 a thing like this happening doesn't 1301 00:53:19,839 --> 00:53:21,760 manifest itself as a finding in the 1302 00:53:21,760 --> 00:53:24,559 audit process or would it 1303 00:53:24,559 --> 00:53:27,520 >> it's been it would so a couple things. 1304 00:53:27,520 --> 00:53:30,710 So 1305 00:53:30,720 --> 00:53:32,880 they don't really the auditors don't 1306 00:53:32,880 --> 00:53:34,960 really look at how a budget is developed 1307 00:53:34,960 --> 00:53:39,920 as far as how how the city comes up with 1308 00:53:39,920 --> 00:53:41,839 numbers as far as the budget's 1309 00:53:41,839 --> 00:53:44,480 concerned. All they really care about is 1310 00:53:44,480 --> 00:53:46,880 council authorized management to spend 1311 00:53:46,880 --> 00:53:49,520 this many dollars in this in these 1312 00:53:49,520 --> 00:53:53,119 specific buckets and did management stay 1313 00:53:53,119 --> 00:53:55,520 within those buckets. That's all they 1314 00:53:55,520 --> 00:53:56,800 really care about from a budget 1315 00:53:56,800 --> 00:53:59,200 standpoint, 1316 00:53:59,200 --> 00:54:00,880 if that makes sense. 1317 00:54:00,880 --> 00:54:03,920 >> So, so the challenge that I think we're 1318 00:54:03,920 --> 00:54:05,440 going to face is is that we'll find a 1319 00:54:05,440 --> 00:54:07,760 fund that we thought had a higher carry 1320 00:54:07,760 --> 00:54:10,480 forward or a starting balance than what 1321 00:54:10,480 --> 00:54:13,040 we did. We created our budget. We stayed 1322 00:54:13,040 --> 00:54:14,720 within our budget. We spent everything 1323 00:54:14,720 --> 00:54:16,640 that was budgetally approved, but 1324 00:54:16,640 --> 00:54:18,559 unfortunately for us, hypothetically, 1325 00:54:18,559 --> 00:54:21,359 $50,000 less dollars were available in 1326 00:54:21,359 --> 00:54:23,119 the carry forward, which we budgeted to 1327 00:54:23,119 --> 00:54:23,839 spend. 1328 00:54:23,839 --> 00:54:26,960 >> Mhm. And now we're just finding out a 1329 00:54:26,960 --> 00:54:29,920 couple years later that we potentially 1330 00:54:29,920 --> 00:54:32,480 over spent the available resources that 1331 00:54:32,480 --> 00:54:34,240 were in that fund. 1332 00:54:34,240 --> 00:54:36,800 >> So does that require a reopening of the 1333 00:54:36,800 --> 00:54:40,559 books so to speak to go in to make those 1334 00:54:40,559 --> 00:54:42,400 adjustments and then does that trigger 1335 00:54:42,400 --> 00:54:46,720 the necessity of a re of a new audit? 1336 00:54:46,720 --> 00:54:47,680 >> No. Because 1337 00:54:47,680 --> 00:54:49,520 >> if the IRS finds an issue on my, you 1338 00:54:49,520 --> 00:54:51,760 know, tax, I'm just taking that context. 1339 00:54:51,760 --> 00:54:54,079 >> Yeah. then I need to amend prior year's 1340 00:54:54,079 --> 00:54:56,400 taxes if I misreported. 1341 00:54:56,400 --> 00:54:57,920 We're not dealing with a situation like 1342 00:54:57,920 --> 00:55:01,839 that or it's just we overspent. It shows 1343 00:55:01,839 --> 00:55:04,079 >> I think what happens is it it carries 1344 00:55:04,079 --> 00:55:05,599 forward. 1345 00:55:05,599 --> 00:55:07,520 So because we had the wrong carry 1346 00:55:07,520 --> 00:55:10,000 forward specific year then the next year 1347 00:55:10,000 --> 00:55:13,599 >> it's wrong. If we haven't been able to 1348 00:55:13,599 --> 00:55:15,599 re reflect that correction in the 1349 00:55:15,599 --> 00:55:18,400 change, we've carried that um problem 1350 00:55:18,400 --> 00:55:20,079 forward another year, then it kind of 1351 00:55:20,079 --> 00:55:21,760 compounds. 1352 00:55:21,760 --> 00:55:23,839 And so, you know, as Summer said, we're 1353 00:55:23,839 --> 00:55:27,119 probably looking at a multi-year period 1354 00:55:27,119 --> 00:55:29,920 where we've compounded a problem that we 1355 00:55:29,920 --> 00:55:32,640 should have caught hypothetically in 1356 00:55:32,640 --> 00:55:35,119 2024. That's kind of why I was talking 1357 00:55:35,119 --> 00:55:37,040 about the bank accounts because I mean 1358 00:55:37,040 --> 00:55:38,640 if everything had its own account you 1359 00:55:38,640 --> 00:55:40,319 would eventually come to a zero if you 1360 00:55:40,319 --> 00:55:42,240 didn't have enough you would overdraft 1361 00:55:42,240 --> 00:55:44,800 or something but is this because it it's 1362 00:55:44,800 --> 00:55:47,440 we have common accounts that I mean the 1363 00:55:47,440 --> 00:55:48,880 pool it's all coming out of a big enough 1364 00:55:48,880 --> 00:55:51,680 pool that it's we're not kept like 1365 00:55:51,680 --> 00:55:53,680 noticing it or 1366 00:55:53,680 --> 00:55:56,480 >> so there are different ways to sorry did 1367 00:55:56,480 --> 00:55:58,720 you want to go ahead 1368 00:55:58,720 --> 00:56:01,200 >> I it's fine I can ask it in a minute 1369 00:56:01,200 --> 00:56:01,520 >> okay 1370 00:56:01,520 --> 00:56:02,400 >> go ahead 1371 00:56:02,400 --> 00:56:04,559 >> but let me take a shot at it and and you 1372 00:56:04,559 --> 00:56:06,880 may have some some input or a different 1373 00:56:06,880 --> 00:56:09,200 way to say this. Um, so there are 1374 00:56:09,200 --> 00:56:11,920 different ways for businesses, 1375 00:56:11,920 --> 00:56:13,760 companies, and municipalities to keep 1376 00:56:13,760 --> 00:56:16,880 their accounting records. And when 1377 00:56:16,880 --> 00:56:19,040 you're looking at your checkbook, you're 1378 00:56:19,040 --> 00:56:21,599 saying, "Here was my cash balance, and I 1379 00:56:21,599 --> 00:56:23,040 spent this much, and I got this 1380 00:56:23,040 --> 00:56:24,880 paycheck, so that went in, and here's my 1381 00:56:24,880 --> 00:56:26,799 ending balance." 1382 00:56:26,799 --> 00:56:31,359 for the city. They're not only looking 1383 00:56:31,359 --> 00:56:34,319 at the cash in and the cash out, but 1384 00:56:34,319 --> 00:56:37,440 they're looking at how much do people 1385 00:56:37,440 --> 00:56:39,920 owe us as of a certain point and how 1386 00:56:39,920 --> 00:56:43,280 much do we owe others at a certain point 1387 00:56:43,280 --> 00:56:45,440 and what kind of debt balances do we 1388 00:56:45,440 --> 00:56:48,960 owe? That kind of information. 1389 00:56:48,960 --> 00:56:51,839 And when we do the budget, we're using 1390 00:56:51,839 --> 00:56:54,160 we're including they're called acrruels. 1391 00:56:54,160 --> 00:56:56,559 So they're considering amounts that 1392 00:56:56,559 --> 00:56:59,280 people owe us and amounts that we owe 1393 00:56:59,280 --> 00:57:01,119 other people to come up with the 1394 00:57:01,119 --> 00:57:01,440 balance. 1395 00:57:01,440 --> 00:57:03,040 >> Rule based accounting, not cash. 1396 00:57:03,040 --> 00:57:05,280 >> Correct. Correct. Yeah. Yeah. Sorry 1397 00:57:05,280 --> 00:57:07,280 about that. Probably overexplained it, 1398 00:57:07,280 --> 00:57:09,040 but yes. So that's part of the 1399 00:57:09,040 --> 00:57:14,309 difference. So 1400 00:57:14,319 --> 00:57:15,920 the activity that hits the bank 1401 00:57:15,920 --> 00:57:18,559 statement, the actual cash in and cash 1402 00:57:18,559 --> 00:57:22,000 out does get reconciled. And we've 1403 00:57:22,000 --> 00:57:24,000 gotten through that for 24 and haven't 1404 00:57:24,000 --> 00:57:26,400 found like anything we've found has been 1405 00:57:26,400 --> 00:57:32,480 booked and corrected if needed. It's the other acrruel information and 1406 00:57:32,480 --> 00:57:35,040 it was an acrruel item 1407 00:57:35,040 --> 00:57:37,359 um that needed to be corrected that's 1408 00:57:37,359 --> 00:57:41,520 going to impact the carry forward. 1409 00:57:41,520 --> 00:57:44,960 >> Did that answer your question? 1410 00:57:44,960 --> 00:57:46,319 Yeah, I'm just trying to reconcile it 1411 00:57:46,319 --> 00:57:48,400 with the idea that this audit that we're 1412 00:57:48,400 --> 00:57:51,200 being presented isn't focusing it isn't 1413 00:57:51,200 --> 00:57:54,559 focusing on these aspects necessarily 1414 00:57:54,559 --> 00:57:56,400 that we're talking about now. So, it's 1415 00:57:56,400 --> 00:57:58,000 not that they wouldn't be bringing that 1416 00:57:58,000 --> 00:58:00,160 to light necessarily. It just really 1417 00:58:00,160 --> 00:58:03,359 affects how much it's it's the policy, 1418 00:58:03,359 --> 00:58:04,960 right? If you have a budget, you pass a 1419 00:58:04,960 --> 00:58:06,720 budget, you expect to have a certain 1420 00:58:06,720 --> 00:58:10,640 amount in there and that what what does 1421 00:58:10,640 --> 00:58:13,040 that fall under? Or is that just coun 1422 00:58:13,040 --> 00:58:15,920 council's fiduciary responsibility to 1423 00:58:15,920 --> 00:58:19,200 make sure management is presenting 1424 00:58:19,200 --> 00:58:21,440 accurate budgets? 1425 00:58:21,440 --> 00:58:24,079 >> Yeah, 1426 00:58:24,079 --> 00:58:26,000 that's a big piece of it. Mike, do you 1427 00:58:26,000 --> 00:58:27,440 have other thoughts on that? 1428 00:58:27,440 --> 00:58:28,960 >> No, I was going to agree with what you 1429 00:58:28,960 --> 00:58:30,559 just said. 1430 00:58:30,559 --> 00:58:35,200 >> Yeah. So on in the budget 1431 00:58:35,200 --> 00:58:37,440 meetings or this year the 1432 00:58:37,440 --> 00:58:38,960 recommendation, 1433 00:58:38,960 --> 00:58:40,480 correct me if I'm wrong, but you were 1434 00:58:40,480 --> 00:58:42,000 there. 1435 00:58:42,000 --> 00:58:43,920 The budget committee found a $ 1.5 1436 00:58:43,920 --> 00:58:46,240 million shortfall and they wanted the 1437 00:58:46,240 --> 00:58:49,760 budget cut by $500,000 for the upcoming 1438 00:58:49,760 --> 00:58:52,319 consecutive three years to balance that 1439 00:58:52,319 --> 00:58:54,559 out. Would that have anything to do with 1440 00:58:54,559 --> 00:59:00,240 the line item discrepancy move forward? 1441 00:59:00,240 --> 00:59:01,599 >> No. Anyways, 1442 00:59:01,599 --> 00:59:03,920 >> I don't know what what the budget 1443 00:59:03,920 --> 00:59:05,839 committee recommended and what the city 1444 00:59:05,839 --> 00:59:08,880 council approved was we all know that 1445 00:59:08,880 --> 00:59:12,160 the definition of a balanced budget is 1446 00:59:12,160 --> 00:59:13,760 the amount of money you have at the end 1447 00:59:13,760 --> 00:59:14,880 of the year. Yeah. 1448 00:59:14,880 --> 00:59:16,960 >> Plus the revenue equals your 1449 00:59:16,960 --> 00:59:18,960 expenditures. What the c what the 1450 00:59:18,960 --> 00:59:21,040 council, you know, what the council said 1451 00:59:21,040 --> 00:59:26,000 is is said we want to our goal is to 1452 00:59:26,000 --> 00:59:28,799 have a budget based on the revenue we 1453 00:59:28,799 --> 00:59:31,200 receive during a year is the revenue we 1454 00:59:31,200 --> 00:59:33,119 spend that year. Now, we've got to have 1455 00:59:33,119 --> 00:59:34,160 money at the beginning of the year 1456 00:59:34,160 --> 00:59:37,040 because a huge part of our of our uh 1457 00:59:37,040 --> 00:59:39,119 revenue is property taxes and we don't 1458 00:59:39,119 --> 00:59:40,880 get those till December. So, we got to 1459 00:59:40,880 --> 00:59:42,319 be able to pay our bills and meet 1460 00:59:42,319 --> 00:59:45,280 payroll between July 1 and December. So, 1461 00:59:45,280 --> 00:59:47,200 we got to have some money in the bank. 1462 00:59:47,200 --> 00:59:49,520 But if we could reduce the amount of 1463 00:59:49,520 --> 00:59:52,160 that that we rely on every year by 500 1464 00:59:52,160 --> 00:59:54,559 thou by 500,000. 1465 00:59:54,559 --> 00:59:56,000 >> Yeah. I didn't realize if it was just 1466 00:59:56,000 --> 00:59:58,000 one particular line item, but it was a 1467 00:59:58,000 --> 00:59:59,599 general overall total of 1468 00:59:59,599 --> 01:00:01,280 >> Yeah, it was the total for the general 1469 01:00:01,280 --> 01:00:03,040 fund and the idea was is to be able to 1470 01:00:03,040 --> 01:00:06,000 take some of that savings and put it 1471 01:00:06,000 --> 01:00:07,200 into a reserve fund. 1472 01:00:07,200 --> 01:00:10,160 >> Yeah. No, it' be great. So, no, I was 1473 01:00:10,160 --> 01:00:11,359 just remembering that. 1474 01:00:11,359 --> 01:00:13,760 >> Yeah. We we agreed to try to shrink the 1475 01:00:13,760 --> 01:00:16,720 gap by a third. I was going to say, but 1476 01:00:16,720 --> 01:00:18,880 I didn't know if that was one my item, 1477 01:00:18,880 --> 01:00:21,599 one area of the budget. 1478 01:00:21,599 --> 01:00:24,000 >> Yeah, we could we could do do it by 1479 01:00:24,000 --> 01:00:26,960 either increasing revenue or cuts or a 1480 01:00:26,960 --> 01:00:29,359 combination. It's the general fund, not 1481 01:00:29,359 --> 01:00:31,359 the utilities. Yeah. But yeah, I mean, 1482 01:00:31,359 --> 01:00:35,280 you're absolutely right. I mean, that's the goal is is that look, we know 1483 01:00:35,280 --> 01:00:37,119 we got to have money in the bank on July 1484 01:00:37,119 --> 01:00:38,400 one, otherwise we're not going to meet 1485 01:00:38,400 --> 01:00:39,920 payroll in September because we don't 1486 01:00:39,920 --> 01:00:42,960 get the property taxes till December. Uh 1487 01:00:42,960 --> 01:00:46,160 but if we can reduce our overall 1488 01:00:46,160 --> 01:00:48,480 expenditures to what we know is going to 1489 01:00:48,480 --> 01:00:50,559 be our revenue for that year, we can 1490 01:00:50,559 --> 01:00:53,200 siphon off some of that cash carryover 1491 01:00:53,200 --> 01:00:54,799 beginning fund balance and stick it in a 1492 01:00:54,799 --> 01:00:58,079 reserve fund. 1493 01:00:58,079 --> 01:01:01,119 >> So if we could go back to the miss we 1494 01:01:01,119 --> 01:01:05,200 assign funds to the wrong place 1495 01:01:05,200 --> 01:01:08,240 is the basis of this problem. 1496 01:01:08,240 --> 01:01:13,760 the fund. There was some loan amount or 1497 01:01:13,760 --> 01:01:16,480 that got put in the wrong category. 1498 01:01:16,480 --> 01:01:19,440 >> That's that's kind of an example of some 1499 01:01:19,440 --> 01:01:21,119 of the things that we're finding that 1500 01:01:21,119 --> 01:01:23,040 are going to impact it and that's going 1501 01:01:23,040 --> 01:01:25,920 to be a larger example, a larger impact, 1502 01:01:25,920 --> 01:01:28,160 I believe. Again, we're still trying to 1503 01:01:28,160 --> 01:01:30,880 get all the puzzle pieces put together. 1504 01:01:30,880 --> 01:01:34,309 Um, 1505 01:01:34,319 --> 01:01:37,119 but yes, it it is it is things like 1506 01:01:37,119 --> 01:01:39,920 that. It's either errors that were made 1507 01:01:39,920 --> 01:01:43,040 or information that wasn't known at the 1508 01:01:43,040 --> 01:01:46,000 time the previous budgets were were 1509 01:01:46,000 --> 01:01:47,599 built. 1510 01:01:47,599 --> 01:01:49,440 >> And I think this is part of what Eric's 1511 01:01:49,440 --> 01:01:50,799 going to be talking with you about it, 1512 01:01:50,799 --> 01:01:52,640 but you know, not not Monday, but the 1513 01:01:52,640 --> 01:01:54,319 second meeting in January. 1514 01:01:54,319 --> 01:01:55,040 >> Yes. 1515 01:01:55,040 --> 01:01:57,440 >> I think to kind of bring it back to the 1516 01:01:57,440 --> 01:01:59,839 topic of this meeting is most of those 1517 01:01:59,839 --> 01:02:02,640 errors are found in the 24 fiscal year. 1518 01:02:02,640 --> 01:02:05,520 So, a lot of the questions we're asking 1519 01:02:05,520 --> 01:02:07,200 might be a little 1520 01:02:07,200 --> 01:02:08,799 >> uh too soon because we don't have all 1521 01:02:08,799 --> 01:02:10,400 the details 1522 01:02:10,400 --> 01:02:12,880 >> of it yet. All details. 1523 01:02:12,880 --> 01:02:13,920 >> Well, is that 1524 01:02:13,920 --> 01:02:16,000 >> is that accurate? Because you said a few 1525 01:02:16,000 --> 01:02:18,319 years back, but I haven't heard how far 1526 01:02:18,319 --> 01:02:21,040 back you're finding these things. And 1527 01:02:21,040 --> 01:02:22,319 >> yeah, so 1528 01:02:22,319 --> 01:02:25,119 >> maybe it's further back. So, as far as 1529 01:02:25,119 --> 01:02:27,280 the audit is concerned, we're confident 1530 01:02:27,280 --> 01:02:30,799 through the end of 23. 1531 01:02:30,799 --> 01:02:32,400 And 1532 01:02:32,400 --> 01:02:34,319 as far as the budget goes, which is kind 1533 01:02:34,319 --> 01:02:37,200 of a different beast, I'm not sure. I 1534 01:02:37,200 --> 01:02:40,240 haven't looked at that different angle. 1535 01:02:40,240 --> 01:02:42,559 That's more Eric's world right now as 1536 01:02:42,559 --> 01:02:45,359 far as advising the city. 1537 01:02:45,359 --> 01:02:48,390 >> Um, 1538 01:02:48,400 --> 01:02:50,960 » so as the audit, as the audit goes, if 1539 01:02:50,960 --> 01:02:53,599 we I'm sorry, what was that? Was this an 1540 01:02:53,599 --> 01:02:55,760 errant practice going back as presumably 1541 01:02:55,760 --> 01:02:58,000 as you've only looked so far? 1542 01:02:58,000 --> 01:02:58,319 >> Yeah. 1543 01:02:58,319 --> 01:03:01,920 >> But it's been the same person for 20 1544 01:03:01,920 --> 01:03:05,119 something years. Like is it conceivable 1545 01:03:05,119 --> 01:03:07,680 that there you know similar errors have 1546 01:03:07,680 --> 01:03:12,640 been that go clear back into history? 1547 01:03:12,640 --> 01:03:14,640 >> Um yes saying that 1548 01:03:14,640 --> 01:03:17,359 >> it's possible to not we're not seeing 1549 01:03:17,359 --> 01:03:20,400 anything. It is possible but as soon as 1550 01:03:20,400 --> 01:03:23,119 you have audited numbers those are like 1551 01:03:23,119 --> 01:03:25,520 real actual numbers and then when you go 1552 01:03:25,520 --> 01:03:27,440 to the next budget you use those real 1553 01:03:27,440 --> 01:03:29,599 actual numbers to create your new 1554 01:03:29,599 --> 01:03:32,880 projections for going forward. So if 1555 01:03:32,880 --> 01:03:34,640 there had been errors in the process in 1556 01:03:34,640 --> 01:03:38,079 the past they wouldn't be going too far 1557 01:03:38,079 --> 01:03:42,160 back prior to an audit being completed. 1558 01:03:42,160 --> 01:03:42,880 Okay. 1559 01:03:42,880 --> 01:03:45,599 >> The last one that was completed was 22. 1560 01:03:45,599 --> 01:03:48,000 Yep. Correct. This is 23. 1561 01:03:48,000 --> 01:03:49,680 Correct. So, 1562 01:03:49,680 --> 01:03:52,079 >> yep. So, the budget for the year we're 1563 01:03:52,079 --> 01:03:55,520 in right now, the only actual 1564 01:03:55,520 --> 01:03:59,119 real audited numbers that the city had 1565 01:03:59,119 --> 01:04:01,760 to use were the 22 audit numbers. The 1566 01:04:01,760 --> 01:04:05,440 rest was all projection and entries in 1567 01:04:05,440 --> 01:04:07,599 the system and those reconciliations 1568 01:04:07,599 --> 01:04:09,359 that had been done as the best 1569 01:04:09,359 --> 01:04:11,599 information that city staff and 1570 01:04:11,599 --> 01:04:14,799 management would have had at the time. 1571 01:04:14,799 --> 01:04:16,400 And if there were errors in the 1572 01:04:16,400 --> 01:04:18,480 information that they used, then there 1573 01:04:18,480 --> 01:04:21,680 would be errors in the projections. 1574 01:04:21,680 --> 01:04:25,349 >> Carried forward. 1575 01:04:25,359 --> 01:04:27,520 » I'm sorry. 1576 01:04:27,520 --> 01:04:30,880 >> Carried forward. 1577 01:04:30,880 --> 01:04:32,480 >> It's carried forward. 1578 01:04:32,480 --> 01:04:34,640 >> So I guess another question. This audit 1579 01:04:34,640 --> 01:04:38,559 is essentially mandated by state, state 1580 01:04:38,559 --> 01:04:39,119 law, right? 1581 01:04:39,119 --> 01:04:39,599 >> Yeah. 1582 01:04:39,599 --> 01:04:43,359 >> Yep. So, are there other audits that we 1583 01:04:43,359 --> 01:04:47,200 could have in house to give us greater 1584 01:04:47,200 --> 01:04:49,280 assurance on the things that aren't 1585 01:04:49,280 --> 01:04:54,079 focused on here? um you know maybe 1586 01:04:54,079 --> 01:04:56,160 I don't even know what I'm asking really 1587 01:04:56,160 --> 01:04:57,920 but it sounds like if there's a narrow 1588 01:04:57,920 --> 01:05:00,079 scope are there broader scope audits 1589 01:05:00,079 --> 01:05:04,559 that could give us fuller assurance 1590 01:05:04,559 --> 01:05:08,240 um of the things that we would want to 1591 01:05:08,240 --> 01:05:10,240 have assurance of well 1592 01:05:10,240 --> 01:05:14,160 >> so sorry go ahead say well the the audit 1593 01:05:14,160 --> 01:05:15,760 that's being performed in front of you 1594 01:05:15,760 --> 01:05:17,839 you're right this is based on state law 1595 01:05:17,839 --> 01:05:19,839 these are the minimum standards that the 1596 01:05:19,839 --> 01:05:21,760 state requires ires. If there's 1597 01:05:21,760 --> 01:05:23,599 additional financial information that 1598 01:05:23,599 --> 01:05:25,200 the council wants and additional 1599 01:05:25,200 --> 01:05:27,359 research you'd like us to do, we'd 1600 01:05:27,359 --> 01:05:28,960 certainly hire somebody like Summer to 1601 01:05:28,960 --> 01:05:32,079 do it for us. So, 1602 01:05:32,079 --> 01:05:33,760 there's different. So, you could do a 1603 01:05:33,760 --> 01:05:37,119 forensic audit, right? If So, so Summer 1604 01:05:37,119 --> 01:05:38,960 said she's been through these accounts. 1605 01:05:38,960 --> 01:05:41,760 She doesn't feel like there's any type 1606 01:05:41,760 --> 01:05:44,400 of fraudulent activity taking place, 1607 01:05:44,400 --> 01:05:45,039 right? 1608 01:05:45,039 --> 01:05:46,000 >> Yeah, I didn't see any. 1609 01:05:46,000 --> 01:05:47,839 >> So, it probably doesn't warrant. Now, if 1610 01:05:47,839 --> 01:05:49,520 she had a red flag that popped up and 1611 01:05:49,520 --> 01:05:52,240 said, "Hey, Mike, I'm really concerned 1612 01:05:52,240 --> 01:05:55,440 because something's not right." I would 1613 01:05:55,440 --> 01:05:56,880 recommend that we bring a professional 1614 01:05:56,880 --> 01:05:59,680 in here to do a forensic audit of this. 1615 01:05:59,680 --> 01:06:00,000 >> Yeah. 1616 01:06:00,000 --> 01:06:01,359 >> You know, it's kind of like what 1617 01:06:01,359 --> 01:06:03,760 happened years ago when we had an 1618 01:06:03,760 --> 01:06:05,359 individual that was working here in the 1619 01:06:05,359 --> 01:06:08,400 finance department and ended up got 1620 01:06:08,400 --> 01:06:10,960 caught for stealing funds. 1621 01:06:10,960 --> 01:06:13,520 And it was really 1622 01:06:13,520 --> 01:06:15,520 notion, you know, somebody determined 1623 01:06:15,520 --> 01:06:16,799 something wasn't right and then they 1624 01:06:16,799 --> 01:06:19,440 brought in a forensic auditor to really 1625 01:06:19,440 --> 01:06:21,440 go through those records and found out, 1626 01:06:21,440 --> 01:06:22,799 yeah, there was a trail and it was 1627 01:06:22,799 --> 01:06:24,720 blatant. The individual had to do time 1628 01:06:24,720 --> 01:06:28,400 in jail for it, you know. Um, so those 1629 01:06:28,400 --> 01:06:29,839 would be the things that trigger. I 1630 01:06:29,839 --> 01:06:32,240 think what's important to impress here 1631 01:06:32,240 --> 01:06:34,400 is is that we got to get the we're 1632 01:06:34,400 --> 01:06:36,079 getting the staff in place to be able to 1633 01:06:36,079 --> 01:06:38,160 do the things that we do so that we can 1634 01:06:38,160 --> 01:06:40,160 reconcile our bank accounts monthly 1635 01:06:40,160 --> 01:06:42,799 which I mean they hadn't been done for 1636 01:06:42,799 --> 01:06:44,799 several months 1637 01:06:44,799 --> 01:06:47,440 and so it's because we didn't have staff 1638 01:06:47,440 --> 01:06:49,200 to do it. You know, we're finally 1639 01:06:49,200 --> 01:06:51,119 getting the staff in trained up to be 1640 01:06:51,119 --> 01:06:53,760 able to do that. We lost some some 1641 01:06:53,760 --> 01:06:56,079 individuals that were doing that. I 1642 01:06:56,079 --> 01:06:57,680 mean, Jennifer used to do that when she 1643 01:06:57,680 --> 01:06:59,680 was here. that was her job was to 1644 01:06:59,680 --> 01:07:02,400 reconcile the bank accounts. When she 1645 01:07:02,400 --> 01:07:04,640 left, it was to transfer to another 1646 01:07:04,640 --> 01:07:07,119 person and that it just didn't quite get 1647 01:07:07,119 --> 01:07:09,440 done the way it was supposed to be done. 1648 01:07:09,440 --> 01:07:11,839 You know, we do the best that we can 1649 01:07:11,839 --> 01:07:16,160 when we um like we have an expenditure 1650 01:07:16,160 --> 01:07:19,359 and we put the expenditure to an 1651 01:07:19,359 --> 01:07:22,799 account. Well, if we review that 1652 01:07:22,799 --> 01:07:25,039 expenditure and say, "Oh, geez, that 1653 01:07:25,039 --> 01:07:27,039 expenditure should have been in this 1654 01:07:27,039 --> 01:07:29,520 account, not in that account, as we 1655 01:07:29,520 --> 01:07:31,520 reviewed it closer, then we do a journal 1656 01:07:31,520 --> 01:07:33,920 entry to adjust that expenditure into 1657 01:07:33,920 --> 01:07:36,319 the right account instead of, you know, 1658 01:07:36,319 --> 01:07:39,280 to do that." So there's just processes 1659 01:07:39,280 --> 01:07:43,280 that, you know, once Summer and Eric and 1660 01:07:43,280 --> 01:07:47,119 Mariah and the folks are get this under 1661 01:07:47,119 --> 01:07:49,119 control, they'll be able you I'm pretty 1662 01:07:49,119 --> 01:07:50,640 sure you're going to have you'll be able 1663 01:07:50,640 --> 01:07:52,319 to get those asurances. It's kind of 1664 01:07:52,319 --> 01:07:53,520 like the report we're going to have on 1665 01:07:53,520 --> 01:07:55,039 Monday. We're going to have a we're 1666 01:07:55,039 --> 01:07:56,480 getting a report on where we are 1667 01:07:56,480 --> 01:07:58,240 financially for the first half of the 1668 01:07:58,240 --> 01:08:00,079 year. You're going to see how much money 1669 01:08:00,079 --> 01:08:01,359 came in. You're going to see what the 1670 01:08:01,359 --> 01:08:03,359 expenditures are. you're going to see 1671 01:08:03,359 --> 01:08:05,440 that, you know, quite frankly, I think 1672 01:08:05,440 --> 01:08:09,039 everything is um that they've taken to 1673 01:08:09,039 --> 01:08:12,079 showcase is, you know, the expenditures 1674 01:08:12,079 --> 01:08:13,520 are less than the revenue that's been 1675 01:08:13,520 --> 01:08:17,440 taken in. You know, we we brought in the 1676 01:08:17,440 --> 01:08:20,719 projected revenue and we at the 50% 1677 01:08:20,719 --> 01:08:22,640 halfway mark, we still in many of the 1678 01:08:22,640 --> 01:08:25,440 budgets have 60% of our budget left that 1679 01:08:25,440 --> 01:08:29,440 hasn't been spent. So, you know, if 1680 01:08:29,440 --> 01:08:31,279 there's, you know, red flags that come 1681 01:08:31,279 --> 01:08:35,520 up and say, "Okay, FA, why are you uh 1682 01:08:35,520 --> 01:08:37,520 only at 40% of your budget when you're 1683 01:08:37,520 --> 01:08:39,440 at the 50% mark and then I got to 1684 01:08:39,440 --> 01:08:41,120 explain, well, geez, we had that pump go 1685 01:08:41,120 --> 01:08:42,719 out or I had to do something." But 1686 01:08:42,719 --> 01:08:45,120 that's not the case at this point. I 1687 01:08:45,120 --> 01:08:46,799 think you're going to see that and 1688 01:08:46,799 --> 01:08:48,159 Mike's going to be able to present, 1689 01:08:48,159 --> 01:08:50,159 Eric's going to present that we are 1690 01:08:50,159 --> 01:08:52,640 tracking the way our budget is. It's 1691 01:08:52,640 --> 01:08:55,520 just we're trying to true up what is 1692 01:08:55,520 --> 01:08:58,719 really in that account. 1693 01:08:58,719 --> 01:09:00,400 >> I've been happy to see that council's 1694 01:09:00,400 --> 01:09:03,600 doing their fiduciary duty and keeping 1695 01:09:03,600 --> 01:09:05,440 the pressure on management to get these 1696 01:09:05,440 --> 01:09:07,440 audits done. 1697 01:09:07,440 --> 01:09:08,799 I mean, you guys are doing what you need 1698 01:09:08,799 --> 01:09:10,319 to do. There are other organizations 1699 01:09:10,319 --> 01:09:14,400 that aren't paying attention to whether 1700 01:09:14,400 --> 01:09:17,359 the audits get completed or not. And 1701 01:09:17,359 --> 01:09:19,839 this council has been very aware of that 1702 01:09:19,839 --> 01:09:21,279 and keeping the pressure on and that's 1703 01:09:21,279 --> 01:09:22,719 appropriate. That's you guys doing your 1704 01:09:22,719 --> 01:09:31,269 job. So, that's positive. 1705 01:09:31,279 --> 01:09:32,960 » Any other questions or comments? I don't 1706 01:09:32,960 --> 01:09:35,120 want to cut it off if people have other 1707 01:09:35,120 --> 01:09:37,359 uh things you want to talk about. 1708 01:09:37,359 --> 01:09:38,640 >> Yeah. 1709 01:09:38,640 --> 01:09:40,799 >> So, every month now the accounts 1710 01:09:40,799 --> 01:09:42,640 receivable and accounts payable and the 1711 01:09:42,640 --> 01:09:45,920 bank statements are all being reconciled 1712 01:09:45,920 --> 01:09:48,400 and you know to see that they're 1713 01:09:48,400 --> 01:09:51,040 basically in balance. 1714 01:09:51,040 --> 01:09:53,520 That would be an Eric question. 1715 01:09:53,520 --> 01:09:56,239 >> Yeah, I haven't I haven't stepped into 1716 01:09:56,239 --> 01:09:58,159 his world as far I know he has made a 1717 01:09:58,159 --> 01:09:59,679 lot of process improvements and he's 1718 01:09:59,679 --> 01:10:03,120 been supervising and um keeping staff 1719 01:10:03,120 --> 01:10:05,840 accountable and I believe 1720 01:10:05,840 --> 01:10:08,640 >> I mean I would I would be pretty 1721 01:10:08,640 --> 01:10:10,239 comfortable saying I'm quite sure 1722 01:10:10,239 --> 01:10:15,590 they're being done at this point. 1723 01:10:15,600 --> 01:10:17,600 We'll that'll definitely be part of the 1724 01:10:17,600 --> 01:10:19,120 conversation that we'll have Eric have 1725 01:10:19,120 --> 01:10:21,120 at the second council meeting in June. 1726 01:10:21,120 --> 01:10:23,120 >> Yeah. But he's that's one of his 1727 01:10:23,120 --> 01:10:25,199 strengths is looking at processes, 1728 01:10:25,199 --> 01:10:27,360 making sure that those processes are 1729 01:10:27,360 --> 01:10:28,800 strong and that there are internal 1730 01:10:28,800 --> 01:10:31,360 controls in place and that they are as 1731 01:10:31,360 --> 01:10:33,760 efficient as as they can be 1732 01:10:33,760 --> 01:10:36,239 realistically within within the 1733 01:10:36,239 --> 01:10:38,800 environment that you guys are in. 1734 01:10:38,800 --> 01:10:40,800 The bank reconciliations, as you know, 1735 01:10:40,800 --> 01:10:43,760 they kind of build on each other. So, at 1736 01:10:43,760 --> 01:10:45,920 this point, we're looking at each 1737 01:10:45,920 --> 01:10:48,480 month's activity and making sure that 1738 01:10:48,480 --> 01:10:50,239 the major transactions are getting in 1739 01:10:50,239 --> 01:10:52,080 the system. Those actual bank 1740 01:10:52,080 --> 01:10:54,080 reconciliations are still being caught 1741 01:10:54,080 --> 01:11:02,950 up. 1742 01:11:02,960 --> 01:11:06,000 » No, but I guess can't imagine. Thank you 1743 01:11:06,000 --> 01:11:08,239 for all you've done. 1744 01:11:08,239 --> 01:11:10,400 You're welcome. 1745 01:11:10,400 --> 01:11:12,480 You're very welcome. Happy to. This is 1746 01:11:12,480 --> 01:11:15,440 what I love doing. 1747 01:11:15,440 --> 01:11:17,040 >> And I get to visit Cottage Grove and 1748 01:11:17,040 --> 01:11:18,560 hang out in your community. 1749 01:11:18,560 --> 01:11:20,080 >> I'm so glad there's people like you in 1750 01:11:20,080 --> 01:11:22,480 this world. 1751 01:11:22,480 --> 01:11:25,280 >> Well, back at you. 1752 01:11:25,280 --> 01:11:28,080 >> I just can't imagine in my job if we 1753 01:11:28,080 --> 01:11:30,080 didn't close and balance every month and 1754 01:11:30,080 --> 01:11:32,640 have to go back years and I just this 1755 01:11:32,640 --> 01:11:34,400 would be overwhelming 1756 01:11:34,400 --> 01:11:37,199 >> and we're just a small mill. We're not a 1757 01:11:37,199 --> 01:11:38,560 city. 1758 01:11:38,560 --> 01:11:41,360 >> Yeah. Yeah. 1759 01:11:41,360 --> 01:11:45,110 But we're getting there. 1760 01:11:45,120 --> 01:11:46,800 » All right. Well, thank you very much 1761 01:11:46,800 --> 01:11:49,440 everybody. A conversation to continue. 1762 01:11:49,440 --> 01:11:51,360 >> Like I said, I encourage you to 1763 01:11:51,360 --> 01:11:52,880 participate and be part of the meeting 1764 01:11:52,880 --> 01:11:54,480 on Monday night and the next council 1765 01:11:54,480 --> 01:11:57,199 meeting where do presentation as soon as 1766 01:11:57,199 --> 01:12:02,000 I have a paper audit um all 150 pages of 1767 01:12:02,000 --> 01:12:04,159 it. We'll definitely circulate for who 1768 01:12:04,159 --> 01:12:07,040 you guys feel take a look at. 1769 01:12:07,040 --> 01:12:09,520 >> Good conversation. Thank you everyone. 1770 01:12:09,520 --> 01:12:10,719 >> Thank you. 1771 01:12:10,719 --> 01:12:13,880 >> Take care.