On 06/21/2021 the Finance Committee was given a presentation on the results of the city’s 2020 financial audit.
Jake Lenell and Leah Lasecki, CPAs with CliftonLarsonAllen, were scheduled to give the presentation, but something came up that prevented Ms. Lasecki from joining, so Jake handled it on his own.
He started out with a brief review of CliftonLarsonAllen. They work with a lot of municipalities in Wisconsin including about half of the top 10 largest cities in Wisconsin. They also work with over half of the counties in Wisconsin. He mentioned that as a way of illustrating that auditing government entities is what they do day in and day out as a firm, and their experience with local governments provides them with some perspective in terms of tailoring the audit to Wisconsin municipalities. They also have some perspectives regarding best practices.
He reviewed the team members. They all have many years of experience. Leah Lasecki was involved with every aspect of the audit process so it would have been beneficial if she had been available to give the presentation as she would have had the most knowledge to answer any questions, but Jake said he would do his best to fill in.
He reviewed the services they provided to the city. Basically, they provided financial audits of the city’s financial information for 2020 both for various stand-alone pieces as well as for the city as a whole. They issue their audit opinions both based on that and on performing testing specific to the federal and state grant programs the city participated in throughout the year. They then brought all that information together in a comprehensive report called the Single Audit Report.
In the financial statement audit results, he highlighted the fact that the city received an “Unmodified” opinion which is commonly referred to as a “clean” opinion. That is the highest level or assurance they can provide as an independent third party that the financial statements that have been prepared by the city’s management team are complete, accurate, and represent the financial activities of 2020.
In addition to that audit opinion, they also issued a report on the controls involved in the financial reporting or in the city’s federal and state grant compliance. They didn’t find anything during the audit process that would lead to them recommending changes to the city’s processes or controls. The audit process was appropriately supported, the account balances were reported correctly in the right place and the right period, and the testing that they designed to see that that’s happening throughout the year came back with no recommendations for changes related to those processes.
He said that they refer to federal and state programs as “major programs” when those programs require testing. The federal and state agencies all dictate how often the programs the city participates in need to be tested and what types of requirements are related to the grant agreements. He wanted to highlight the fact that part of the scope of the federal single audit this year was on the coronavirus relieve funds. CLA issued their report that covers the use of those funds which shows that they did not have any findings related to those funds. He wanted to highlight that while the city had no findings related to those funds, the program was new and the dollars came out first with a lot of conflicting guidance and then with staggered guidance on how best to use the funds and what Treasury was going to want to see for support related to various categories of expenditures. There was a lot for the city to get their arms around related to that, and CLA was able to issue a federal and state opinion that’s an unmodified/clean opinion. [I took this as a compliment that the city was able to navigate these confusing issues and make it through with a “clean” opinion.]
He did not read all of the bullet points on the PowerPoint slide related to Required Communications, but he did say that the first point really focused on the fact that CLA was performing these audits in accordance with very specific audit guidance from government auditing standards, federal and state agencies, and their own internal practices. As they perform these audits, if there are changes to what we would consider the scope of the audit or the timeline, they would be active in communicating that so the city could be aware of any types of potential changes. As it relates to the audit itself and evaluating the financial statement presentations, there’s a lot of that goes into that process from the standpoint of drawing the line in the sand as of 12/31/2020 and trying to reflect the activities as of that point in time. That means part of the process involves estimates. Those estimates were very consistent with what CLA has seen in the industry with what they’ve seen in the past audits of the City of Appleton. They had no changes to recommend relating to the city’s method of producing those estimates. He said that boring was good in these communication.
He said that a lot of the bullets indicated CLA had no matters to report within various audit processes which indicated that there were no difficulties in obtaining support for any of the information or in people working against the auditor. He specifically wanted to highlight that there were no uncorrected misstatements or material misstatements that CLA had to correct as part of the audit process. That means that the work the city staff pulled together regarding financial activity, did not have to be corrected to get it into a clean opinion and correct format. The information the City of Appleton received the year was consistent with what CLA saw at the end of the year, and they didn’t have to make a lot of changes to that. He said that was important to acknowledge as it spoke to the integrity of the information the city received throughout the year.
He also talked about the fact that Covid-19 had a significant impact in more ways that just the audit process. He noted this was the second audit they performed for Appleton where they had a lot of remote considerations and said that city staff was very good at incorporating that remote process into the audit and being able to still get through the process in a timely manner consistent with the original timeline.
Looking forward, although the Covid Relief Fund money did go through the audit and received a clean opinion, there is a whole other set of funds coming from the American Recovery Plan Act. Those are bigger dollars and will have new processes and procedures to ensure the same high level of compliance with federal and state guidelines. There will be a lot of planning and coordination going into future audits to ensure that they stay in sync with what the expectations are for compliance and how to then document that compliance. He said that wasn’t unique to Appleton itself, but since each community is dealing with different allotments and different individual needs, there will be a lot of individual tailoring needed to the process.
He also noted that some new standards will be going into effect for 2022, and CLA was actively watching that. They would also be working with the city’s team on that as well.
That was the end of the presentation, and he opened things up for questions.
Alderperson William Siebers (District 1) who was chairing the meeting asked if any committee members had any comments. No one did so he asked Finance Director Tony Saucerman if he had any comments.
Director Saucerman thanked Jake and his team. He noted that, as had already been mentioned, this was the second year in a row that the audit had been done virtually. He said that he used to do audits many years ago and the thought of not coming into a place with a suitcase full of paper and doing it all virtually was pretty amazing. He also thanked his own city department staff, and said that this was not a one-person job. It required people from throughout the city. They all really helped out to get information for the Finance Department and the auditors. He was very happy with the way it turned out this year and looked forward to moving forward.
View full meeting details here: https://cityofappleton.legistar.com/MeetingDetail.aspx?ID=859392&GUID=0B71BB4D-3151-4AE2-959C-2E93E930F3A8&Options=info|&Search=
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