Auditors issue unmodified opinions for CBJ, Bartlett and Juneau School District; reporting controls flagged for improvement

Karen Tarver, audit partner, presented the FY24 audit results for the City and Borough of Juneau, Bartlett Regional Hospital and the Juneau School District to the Assembly Finance Committee on March 5. Tarver said auditors issued unmodified (clean) opinions on the financial statements for each entity but identified a material weakness tied to timely and accurate reconciliations for specific accounts and a significant deficiency involving presentation controls for leases and subscription‑based information technology agreements.

"In our opinion, the [financial] statements present fairly...in all material respects," Tarver told the committee, summarizing the firm’s formal audit letter and required communications under government auditing standards.

Why it matters: An unmodified opinion means the audited financial statements can be relied on as materially correct under generally accepted accounting principles. However, the auditors’ material weakness and significant deficiencies signal internal control and reporting processes that city and component unit management will need to remediate to reduce the risk of material misstatements in future years.

Primary findings and adjustments

- Unmodified opinions: All three entities — the city, Bartlett and the Juneau School District — received unmodified opinions on the FY24 financial statements.

- Material weakness: Auditors recorded a material weakness related to the timely reconciliation and accurate reporting of certain accounts; Tarver said the finding is narrower in scope than last year’s broader issue but that, absent auditors’ intervention, specific accounts would have been misstated.

- Significant deficiency: The audit found controls over the presentation of leases and subscription‑based IT arrangements have not been fully implemented; the city was asked to ensure correct presentation of principal and interest for reportable leases.

- Corrected and proposed adjustments: Auditors and management agreed on multiple adjustments; Tarver highlighted two reclassifications that affected amounts reported in the city report: a $1.8 million adjustment tied to allocation of internal service funds affecting school district presentation, and a $1.2 million change in accounting entity related to a library endowment fund reclassification from fiduciary to special revenue presentation. Auditors said management is taking steps to correct and document these items going forward.

Related component‑unit and program matters

- Bartlett: Unmodified opinion; one significant deficiency and other control items related to post‑merger accounting details, inventory procedures and self‑pay collections were disclosed. Auditors recommended policy and documentation improvements.

- Juneau School District: Unmodified opinion on financial statements and federal/state programs. Auditors reported findings tied to budgetary documentation and one required pupil‑transportation report that had not been filed. Tarver said the school district had turnover and was implementing system changes that complicated some filings but had made progress.

Management response and next steps

Controller Joey DeLuca and Finance Director (city staff) told the committee the finance and treasury teams have focused on closing backlogs and strengthening documentation, and the city has hired and promoted staff to stabilize operations. The city said it reduced audit turnaround time compared with prior years and will continue training and policies development to address auditors’ recommendations.

The auditors said federal and state compliance reports remain in draft but will be issued shortly; auditors and staff agreed to follow up on the material weakness remediation and improved documentation for leases and reporting.