Surprise auditors give city clean opinion on fiscal 2024 finances

City officials and an independent auditor told the Surprise City Council on Feb. 18 that the city's fiscal year 2024 financial statements received an unmodified (clean) opinion and that no federal compliance or internal control findings were identified for the major programs the auditors tested.

Eric, a city finance staff member who introduced the audit presentation, said, "First important to note is that our financials received an unmodified opinion," and described that as the highest level of assurance auditors can give.

Britney Williams, engagement partner for Heinfeld, Meech & Co., the audit firm that led the review, told the council the firm focuses on government and not-for-profit entities and described the range of reports the audit produced, including the annual comprehensive financial report, the single-audit reporting package and communications to those charged with governance. Williams said the single audit tested two federal programs this year'the Clean Water State Revolving Fund and the Coronavirus State and Local Fiscal Recovery Funds'and found no findings related to internal control or federal compliance for those programs.

Williams said the single-audit reporting package was submitted to the federal audit clearinghouse on Jan. 7 and that the city expects to receive the Government Finance Officers Association (GFOA) award again for fiscal 2024, as it did for fiscal 2023. She described the reports and standards guiding the audit work: AICPA auditing standards, OMB Uniform Guidance for federal compliance testing, GASB standards for financial reporting and government auditing standards.

When Councilman Melvin asked how the auditors pick which federal programs to test, Williams explained the selection is driven by federal thresholds and a risk analysis: programs exceeding a dollar threshold (generally $750,000) must be considered major and are tested on a rotating schedule, and some programs (including ARPA-related recovery funds) have been subject to annual review in recent years.

City staff and the auditor also noted management's internal communications: the auditors issued an auditor communication letter to the audit committee, and staff said management's estimates and any proposed adjusting journal entries were discussed with auditors.

The presentation emphasized transparency and the utility of the audited financial statements for the council's future budgeting and bond-rating decisions.

The council did not take a separate vote on the audit presentation; the item was presented and opened for council questions.