Okay, I'm going to call the meeting to
order of the U audit committee for the
city of Moab on March 5th, 2026.
And um
do I need to do anything else?
>> Okay.
we're done.
>> So,
all right. So, we've got a few things to
go over that we can do before Ron gets
on. Uh Ron is our auditor. He's one who
put together the report that was sent
out. We have the report. I can go over
the findings of the report whether Ron's
here or not. We did want him here, but I
don't want to not do this meeting
because he's not here. Uh we do want him
here for the city council meeting for
sure. Council wants to hear from him. Um
and we may even get him
before we end this meeting. So, okay.
So, the first thing is the approval of
the minutes. We have the January 22nd
minutes,
uh, 2025. Just anybody who read those or
wants to make a motion.
>> I'll make a motion to approve the
minutes as written.
>> Okay, Tonyie.
>> I second.
>> Need our seconds. All in favor? Think I
get to vote? Do I get to vote?
>> You're non voting member.
All right.
Fine.
>> Three.
out of three. Then passes
unanimously.
Um, we do have
What is this? Oh, so that's the minutes
item three.
So, we have the annual audit. I'm just
going to give you an overview really
quick. Um, Marcy's here. she can she can
um shed any light as well. But overall
the the audit was a clean audit. It was
unconditional. So they they were able to
give us a clean bill of health, so to
speak. That doesn't mean we didn't have
things that we needed to correct. And
I'll go over some of those things right
now and then talk about some of the
things that we've done to put in
controls to to uh resolve these going
forward. So
they uh on page uh 49 of the audit
uh he talks about cash dispersements and
uh one of the things he notes is that
certain dispersements were originally
coded to general ledger through the
system but later the coding of the
general ledger accounts was um were
manually adjusted with no audit trail.
And as I understand this, what this
means is that um that we can't tell why
things were changed or or anything like
that or what the what the reason was for
change or or anything like that. So what
the control is is um we require we're
supposed to require proper authorization
approval for the recording of cash
dispersements. So um rather than me
explain what we're doing now, who wants
to explain what we're doing now? Do you want to explain it?
>> Yeah. So basically the issue was is if
we found an invoice that was coded to a
wrong GL, we were going in and just
changing the invoice so to the correct
GL. But there after it had been approved
or after it had been sent, it hadn't
gone through the proper approvals. So
now if we find something that has a
coding error, we're doing a journal
entry and Michael approves those so that
he can see what so that there's a trail
of why we've taken it from this GL and
put it in this GL.
>> Yeah. So there's a short explanation
says these were coded incorrectly. We
don't just have a
an amount that went from one GL to
another without any explanation. And
those are those are happening. I signed
one Yes. this week I think couple of
them. Two of them this week. Yeah.
>> Okay. So those are happening that that
uh addresses the issue that the the
auditor noticed.
>> Um
let's see. So that is in place. Let's go
to
what do we have next? Uh we have
we had an issue with and I'm I'm trying
to find the page that this is on. The
issue was with uh and Marcy you can help
me explain this one. Um
this one was oh depreciation.
>> Oh yeah.
» So the the depreciation is first of all
it's not a actual transactional monetary
moving of funds. It's called a contract
account. It's an asset account and we
just inadvertently overlooked budgeting
the depreciation. And so there was no
monetary issues, but because we have to
track what our depreciation is on all of
our assets, we had not actually budgeted
the depreciation. So we are now we it's
on our radar. Every single one will be
budgeted and we did get it corrected. So
the depreciation still happened. It just
wasn't done through the budget process.
So
>> yeah,
>> very straightforward. And we had a new
uh PTIF account, the storm drain one
that um we just hadn't even put in the
system. So it was brand new. But
>> so Tonnie, you may remember that the
amendment that we did where we added the
depreciation because it wasn't in there
before. And we're putting together the
new budget for this year. Depreciation
is in there.
>> Um we've added those the places that
they need to be. And um I'll just go
through the rest of the letter. So if
you look at page I don't know what page
this is. Page 63 of 65.
Um this is a letter to the city that
states that the auditors have audited
us. Um they explain what their
responsibility is um and how they how
they go about
um what they do. Most of this is just
explaining what they're doing. Um they
do say that we met we do meet budgetary
compliance. There were some changes that
we need to make. we needed to make. Uh
we did make those changes. They um
the first one was um state law requires
the city's actual expenditure on any
given fund not exceed the expected
budget um budgeted expendure expenditure
for that fund. And what happened here
was the depreciation bumped these funds
over and I think it was only was it just
one or two? He had three, but one of
them wasn't an issue actually.
>> Storm water or I mean sewer wasn't an
issue. Water and
>> and water. So water and storm water
because the budget didn't include
depreciation when he put those in there
or water and sewer whatever it was
because when when he put those in there
it caused the those budgets to go over.
So he's saying we can't do that. We know
that um we will make sure that we put in
um
these uh depreciation numbers before
um he next thing he states is that the
city's actual expendit that's the same
thing. Um
state law requires that a city includes
general fund overhead allocation as
budgeted expenditure and the funds that
it is that is allocated for the
overhead.
Um,
and is this the is this the
um
future liabilities?
Trying to see
» future liabilities are in here
somewhere.
>> Yeah.
During the audit, we noticed that the
city did not include the general fund
overhead allocation as budgeted as a
budgeted expenditure in the parking and
transit fund.
>> Oh yeah, who's jumping on right now? He
was having trouble.
>> Well, good.
That's nice of him.
>> That was just in one account though, not
all of our accounts.
>> Okay. And the note is that we resolved
this in the current year, so it's not an
issue. Overall, this is a clean budget.
We did have to make some changes. We'll
let Ron explain what his his uh
perception is of this and we can vote on
it or ask questions.
» There are some we can map doesn't m
» Yeah, I mentioned those to Ron. You see
here
>> he's he's going to be on in a minute.
We stalled just enough to
» So, page two on the
>> You should be
>> Hello. Can everybody hear me?
>> Yes.
>> Hey, Ron.
>> Hello.
>> Hi, Ron. Can you hear me? This is
>> I can. I am so sorry, man. My I turned
on my computer and it was all ready to
go and then it just died.
>> Oh, no problem.
>> The whole thing went I stalled for you
for a little while. So,
>> um, we want you if you can go over the audit for us, explain what you did,
what the findings were, what we've done
to correct them, and how what the
outcome was of the uh of the of the
audit. We'd appreciate it. I kind of
went over it really quickly, but we'd
appreciate uh getting an explanation
from you. And then I think we have some
questions once you're done with that.
>> Okay. Um, so really quickly, let me just
grab the door really fast. Hold on just
for a second.
» Okay, so really quickly, what we do as
auditors is there's really three areas
we look at. Um, one is that the
financial statements are materially
correct and they meet accounting
standards and they can be relied upon.
Um, the second one is that, uh, internal
controls. We want to evaluate those
controls to make sure that they're
designed, that they're implemented, and
they're working effectively.
And then the third thing is that we're
in compliance with state law based on
the areas that we looked at during the
fiscal year. Um, so what I'll do is I'll
just quickly go through kind of each of
those three areas and tell you what we
did and our conclusions and how we came
to those. So, as far as the financial
statements go, um, we take the trial
balance or the the numbers of the city
and we perform a number of tests on
those balances. Um, we perform tests
like we send out confirmations. We'll
send out confirmations for cash, for
debt, um, for property taxes, sales tax,
um, other revenues that we can send out
confirmations for. Um, also for
URS allocations, and and anything that
we can think of to send a confirmation
to make sure that the third party is
their numbers match ours, and that we're
showing the right balances.
Um during the audit, we pull in a number
of invoices.
We'll pull a significant number of
invoices at the beginning of the audit.
Um we want to make sure that the invoice
matches the check. The check is posted
to the right period um and it's posted
in the right GL account. Um we also will
pull invoices for things like uh fixed
assets and and other things as we're
going through the individual audit
procedures.
We also pull a number of invoices after
the end of the year um to make sure that
the the expense is posted in the right
period. So if an expense happened in
June but we didn't pay for it until
July, we want to make sure that expense
is posted in the right year. Um so we'll
pull those invoices to make sure
accounts payable is correct.
Um there's a number of calculations on a
financial statement. um things like
depreciation expense, um compensated
absences,
uh URS allocations, crude payroll, and
so we'll go through and we'll
recalculate those balances to make sure
they meet accounting standards in
um there's also analytical reviews that
we do. We'll compare this year to last
year. Um we'll do that at the beginning
of the audit. We'll review those to make
sure that we can understand what the
differences are and what happened. Um,
as we're testing individual balances,
we'll do that a second time. Uh, we'll
compare that. For instance, if we're
testing cash, we'll look at last year,
this year, see if we can understand what
happened and why the differences are.
Um, if if we can't, then we obviously
perform more tests and ask more
questions to understand what happened
and evaluate those. And then as the
financial statements are being written
or written, um we'll do that at a final
time just kind of a high level to make
sure we can understand um where those
differences are and if we've captured
everything that we needed to.
Um and then there's a number of other
tests and procedures that we perform on
the financial statements to make sure
that they're materially correct, that
they meet accounting standards, and they
can be relied upon. So through those
evaluation, testing and um other
procedures, our opinion is that the
financial statements referred to above
present fairly in all material respects
the respective financial position of the
governmental activities, the business
type activities, each major fund and the
aggra remaining fund information of the
city as of June 30th, 2024
and the respective changes in financial
position were applicable. um and then
cash flows thereof for the year and in
accordance with accounting principles
generally accepted in the United States
of America. So that that is a clean
opinion that is a an unmodified opinion
or the best opinion that you can.
So in short what that means is that we
through our evaluations and testing we
do feel that those financial statements
are truly correct.
The second thing that we do is we look
at internal controls.
We don't give an opinion on controls,
but we do evaluate those C controls to
make sure that they're designed, that
they're implemented, and they're
working.
Um, we do that through, um, evaluations,
uh, interviews, questionnaires,
walkthroughs. Um, so we'll as we're
pulling invoices for some of those other
areas, we'll also be looking to make
sure that controls are being followed um
and that uh the the assets of the city
are being protected.
So if there's a portion of your city
that didn't have controls or those
controls were just not working as
effectively as they had been at one
time, um then we would bring that to
your attention as a significant
deficiency.
Um through our evaluations and testing
this year, we did notice that there is
one thing that we wanted to bring to
your attention and that was uh related
to cash dispersements.
Um and and then mostly it's related to
the fact that if you know once an
invoice has been processed and paid, if
there's issues on the GO account,
instead of going back and and fixing the
original coding
um that we prepare a journal entry that
has an audit trail um of how that
procedure, how that account was switched
or moved the proper account.
Um so our recommendation is that we just
put in procedures to require journal
entry to coordinate changes to the
general general ledger accounts and
those uh journal entries should be
reviewed and approved by somebody
outside of the functions of the general
man or the city manager or somebody that
can look at those entries and make sure
that they're appropriate.
Um that was the only finding. The rest
of of the internal controls we felt like
were designed and implemented and they
were protecting your your city. Um so
there's no other issues in that small
one. Um the third thing that we do is we
look at state compliance. So the state
auditor gives us certain areas to look
at every year
and those are usually on a some of them
are annually that we look at every year
and then some of them kind of rotate on
a two year threeear basis. Um this year
we looked at budgetary compliance, fund
balance, restricted taxes, fraud risk
assessment, government fees, cash
management, and the tax levy
recognition.
Um so the state gives us certain
procedures to perform. We go through
those procedures and evaluate whether um
you're in compliance with those areas.
So in this year um there was one issue
where there was a couple of enterprise
funds that we expended more than we had
budgeted for. And that one gets a little
bit that's a little bit hard sometimes
um with depreciation and other things
that aren't really cash related but are
still required to be budgeted. Um, we're
just recommending that the city look at
those and make sure that as things as
we're going throughout the year, if
funds are looking like they're going to
exceed the expenditures that we evaluate
those and make necessary budget
adjustments to make sure that we're in
compliance
and that they're not exceeding budgeted
amounts.
>> Ron, can I can I jump in there really
quick? So,
>> sure. with the with the one you're
talking about right now, which is a
state state requirement. And um we had
those two enterprise funds where we had
the issue and and you just mentioned
that these are non you say non-cash
um dispersements or or whatever the um
the depreciation. Can you can you
explain like what that means? Because in
the way I would explain it is I'd say
well we have to put down that there's
this expenditure but it actually never
leaves the it the revenue never comes in
for it. It never goes out. Um it just is
shown there but it never it never
actually depletes the fund by that same
amount. Can can you explain that in
better terms?
>> Well yeah it's a it's a non-cash. So, if
you're looking strictly on a cash basis,
there's no cash that's going to be paid
for it. What it's doing is that if you
buy a piece of equipment, um it's we say
the life of that equipment is 5 years or
20 years or whatever the life is and
then we take a parade a share of that
every year to depreciate that balance
until um basically at the end of the
life we're saying that that asset has
used up its its useful life. Um so while
yes it doesn't affect uh your cash
balance um it is an expense that is
related um on the financial statements
and what it's doing it's allocating that
cost um over the life of the asset.
So instead of picking up buying a
$50,000 piece of equipment and expensing
it in the year you do it, you put it on
the balance sheet as an asset and then
you depreciate it over those 20 years.
And so you're picking up 12th every year
as an expense. Right.
>> So, yeah, not a cash related item, but it
is it is on the financial statement.
>> Gotcha. So, on these two on these two
items or these two enterprise funds,
were it not for the depreciation, we we
would not have been over on our expenses
um for these two enterprise funds. And
so I just wanted to say that because
>> yeah because technically I mean it does
show uh the expenses are more than the
revenues but this expense doesn't go
out. It doesn't matter but I wanted to
bring that up just to say that it wasn't
like salaries or purchasing new vehicles
or anything like that where cash
actually left. Um and in future years we
definitely will have this depreciation
in there. It was actually an issue for the last two years I think and
that's why it didn't make it into the
last the budget that we're in right now
is because the year before I think that
line was blank and we were we were
pulling everything forward you know so
>> um so thanks for that explanation and
yes we have already fixed it for this
year um we've we've made a budget
amendment and so it won't be an issue in
the audit that uh is done for this
fiscal there.
>> Perfect. Okay. Yeah. So, that's that's
really kind of my review. Um that's what
we did and and our conclusions. Um so,
happy to answer any other questions
anybody.
>> Yeah. And then the the last thing I was
going to say is just to reiterate that
it is a clean opinion or an unmodified
opinion which is the the best standard,
right, for an audit,
>> right? Yep. Okay. For sure.
Okay, Dar, did you have some questions?
>> Uh, not really questions, but um, so
there are on the statements. Um, I add
up some numbers. It didn't match. So,
I'm just going to mention those are uh,
page three on the document, but the page
eight on the PDF is talk about the
9,4,887.
So when I add the numbers, this to talk
about the of this amount, this amount
must be spent blah blah and then this
one assigned for the blah blah. So when
I add those blah blas
um there's a $1,000 different so it
doesn't add up to
>> how many how many thousands?
>> 1,000 Okay, I think we can fix that.
That's
>> that's it could be a rounding thing if
it's if it's just $1,000. That's a big
rounding thousand.
>> Are you talking about $100,000?
>> 1,000.
>> Just $1,000.
>> Um, so, okay, we'll we'll take a look at
that.
>> I'm sorry. Where where are we looking on
that? Can you
>> That's page page.
>> Page three,
>> PDF number 9 million.
>> Yeah, it's the third uh second bullet
point under financial highlights.
>> Uhhuh.
reports combined fund balances of 9
million.
>> Yes. Are
>> you saying those three added together
don't add up to that 9 million?
>> Yeah. If you subtract 1,953970
and 3,303942,
the result isn't the same as what it
says the remaining
>> $5,000.
Okay. Another one is like a similar on
the page seven the PDF 12
and that one is on the top of the page
is talking about the 9 million again and
42% of um
should be assigned and assign
unassigned. So that one when you add the
numbers this time is $100 is off and
then that also doesn't make 42% it's
make 36.7%.
» Okay. All right. Well, we'll take a
let's take a look at that too, Ron, if
that's okay. That's page seven on the
report, page 12 on the PDF. It's the
first paragraph.
>> Sure.
>> And I'm getting minor again. And I think
I point that out last year that our
insuranceances talk about the city
insurance being s signal which been
changed for several years. Let's update
this time to correct it.
What it is
>> what page is or is that it just
throughout
is that on
>> it's on the page 30 let's see PDF 38 uh
report 32.
>> Okay.
Page 38 has the wrong
>> insurance provider for the city
>> report. Who is the provider now?
>> Page 32 on the report.
>> Oh,
>> PDF
>> PHP
is what we have now. It says Sigma.
Okay.
>> I'll definitely change that for next
year for sure.
Is that it? Wasn't
>> too bad.
>> It was too hard to do the rest of the
table. I couldn't plug in. So, I'm
hoping the the tables are correct.
>> I I think tables are most likely
correct. I think um thanks for pointing
those out. Sounds like there are some
discrepancies, but they're not in the
millions or hundreds of thousands of
dollars. So, we can we can figure that
out. So, whatever the result is isn't
going to affect uh the bottom line too
much, I don't think. So, any other
questions or comments or anything?
» Okay, Ron, any last words for us?
>> No, just uh thank you. Thanks for
letting me be involved with your city
and uh thanks for your staff. I know
it's it's a big process with a lot of
information that gets thrown around. Um,
we're grateful for the hard work of you
guys and grateful to be a part of it.
So, thank you.
>> Yeah, I'll just say really quick, Ron's
Maron's been very helpful, especially
this year because we've had a lot of
questions. Um, we've we've uh called him
a lot, asked him several questions about
um history of budgets and things like
that and how how what best practices are
going forward and everything. So, and
you've been great. We really appreciate
your help on these things. And um you'll
be able to make it to the city council
meeting, right?
>> Um when is that?
» 24th of March.
>> March 24th. And I promise I'll have a
computer that works. So is
electronically okay if I get to the
right.
>> All right. And what time on the 24th?
>> Well,
>> not sure.
Yeah, I think logging on at six will be
fine.
>> Yeah.
>> Okay.
>> And we'll try to get it to the front of
the meeting. So,
>> okay.
Um, any other discussion about the
reported or the budget report?
>> Okay.
Then um if we have a motion,
I think what we do is recommend approval
of this motion or this uh report to the
city council.
>> I'll let one of you guys do it with the
correction of those numbers.
>> Yes. Um well,
I yeah, I don't know that they'll be
corrected for the um for the report for
March 24th. Um, I don't I Ron, correct
me if I'm wrong, but I I think that we
can make note of the Sigma, the other
two numerical changes. I don't think
we're um
will affect, like I said, the bottom
line. Do we need to have them change for
the for the budget meeting or um how do
you
>> I mean, I can if you'd like me to.
>> Not the budget meeting. I'm sorry. The
>> Sorry, I I said the wrong thing. So go
ahead.
>> Um I can definitely make the changes on
those pages. Um they're not these are on
these pages. These are just highlights
and discussion items. They're not
actually the opinions
part where we're actually giving
opinions on. Um this is just some
additional information. But yes, I can
make those changes and I can send you a
new those new pages and you can add them
to the PDF.
>> Let's make those changes. um just so
that we we know that um there isn't
something that is incorrect in the in
the document when we present it to the
city council. It sounds like it won't be
too difficult to do that hopefully. And
then um
>> you have a PDF, so I'm just going to
send you the pages and you can just um
insert those pages into that PDF and
then resend it out.
>> Sounds good. Sounds good.
>> Um so yeah, the motion Sorry, Ron, did
you have something else?
Nope. Okay.
>> So, if we're if we're going to make a
recommendation on this motion for the
city council to approve, the motion
would be to um to forward a
recommendation of approval for the
uh present to the audit
um as presented with the changes that
were discussed.
And uh that's pretty much it.
» I'm going to give a try. Okay. I make
the motion uh to recommend the draft
annual audit to the city council with
the change that we discuss.
>> Recommend approval.
>> Recommended approval.
>> Okay.
Good. We have a second.
>> I'll second.
>> Okay. Thank you.
So, we have a motion and a second. All
in favor?
>> I
>> We don't have to do roll call or
anything like that. Okay. That was three
for three. That's unanimous. Um, so it
is recommended to the city council
uh for approval. So I believe that is
it. Um, anything else from anybody?
There's nothing else on the agenda. So
do I need a motion? And I adjourn this
meeting.
>> Thank you.
>> You're welcome.