Chief Administrative Officer Bill Fawzi told the Assembly Budget and Finance Committee that the Municipality of Anchorage has not published audited consolidated financial statements since those dated Dec. 31, 2022, and that the 2022 audit took 554 days to complete.

That delay has left the city without audited financials for later years and created immediate compliance risks, Fawzi said. “We should have more recent financials than that,” he said, adding that auditors and staff were racing to finish the next annual comprehensive financial report.

The lack of current audited statements threatens an Aug. 10 filing the municipality must make to maintain its status as a self‑insured workers’ compensation provider, Fawzi said. “We’re about to crash in to a hearing before the workers’ compensation board where they will say, where are your audited financials? We’re supposed to send our paperwork to them on August 10,” he said. If the municipality cannot supply the reports, officials warned, it may need to buy third‑party workers’ compensation insurance or face statutory penalties.

Fawzi described how the 2022 audit’s long timeline created a cascade: because the 2022 findings were not available until mid‑2024, some corrective work could not be completed before auditors began the next year’s review. He warned the committee to expect substantial audit findings for 2023 and said the complexity of recent federal grants — particularly significant FEMA, CARES Act and ARPA awards that the municipality disbursed widely to third‑party recipients — has increased the audit workload.

“2022 took 554 days,” Fawzi said. He added that grant reporting and a complicated grants schedule were a major reason the audit exchange with auditors had previously been stuck in an “infinite do loop.”

Fawzi told members that municipal staff aim to deliver the next audit draft before critical mid‑August deadlines and described three recovery scenarios: finishing in roughly 300 days (a minor recovery), returning to a roughly 272‑day timeline (comfortable recovery), or hitting a 250‑day target that would restore normal order more quickly. “That is the prize that we have our eyes on,” he said.

Committee members pressed on specific consequences. Member Baldwin Day asked about bond ratings; Fawzi said Fitch had reaffirmed the municipality’s AA rating but moved the outlook to negative, noting that continued failure to publish audited financials could eventually harm marketability of future bonds and increase borrowing costs. Member Constant asked what would happen if a negative fund balance were discovered; Fawzi said accounting changes related to SAP and the timing of debt recovery versus payments complicate fund‑balance calculations and that officials hope to provide a definitive fund‑balance figure in August.

Fawzi said staff have filled controller‑division vacancies, are automating and improving processes, and are working with auditors to finish the ACFR and the related grant schedules. He warned the committee that while staff expect to recover, the current situation is “untenable” and leaves the municipality exposed to hearings, rating‑agency scrutiny and possible insurance costs.

The committee did not take formal action; members requested updates and signaled interest in receiving the 2023 audited financials as soon as possible.