Johnson Block CPAs auditor Marissa Powers told the Prescott City Council on Nov. 24 that the firm issued an unmodified opinion on the city's 2024 financial statements, a result she described as "the opinion you want." The council also received a single-audit report required after the city received more than $750,000 in federal awards this year.

Powers said the audit covered government-wide and fund financial statements, required supplementary information and a schedule of expenditures of federal awards. She told council the firm identified a material weakness for material audit adjustments, driven largely by large journal entries related to a debt reallocation and accounting for a major plant/utility project. She said that the city's size and limited accounting staff make segregation of duties difficult in some areas.

On program compliance, Powers said auditors reviewed the Safe Drinking Water Loan and the federal emerging contaminants grant and found no program-level compliance findings. She also noted a procedural finding for not having a federal procedure manual in place; the council had already approved the manual and the auditors said that finding should be resolved.

Financial highlights presented by the auditors included total city assets of about $5.8 million, total liabilities near $2.7 million and a general fund balance of roughly $3.1 million. The presentation showed an actual net increase in the general fund of $168,000 versus a budgeted $50,000 draw on reserves. Utility results showed an operating loss for water of about $134,000 and operating income for sewer and stormwater of about $75,000 and $9,000, respectively. The auditors also reported a general-obligation (G.O.) debt-limit capacity of roughly $33.4 million, with outstanding G.O. debt just over $10 million and about $23.4 million of remaining capacity.

Powers recommended council members review the Management's Discussion and Analysis in the audit packet for an accessible summary of the financial statements and asked council to contact finance staff with any follow-up questions. The council did not take action on the audit presentation; the report was provided for review and record.