Independent audit finds Prescott's FY2025 financial statements materially correct; no compliance findings

The City of Prescott’s independent auditors presented the fiscal year 2025 audit results at the Jan. 13 council meeting and reported a clean set of financial statements and no compliance findings.

Brian Hemerly, partner with Baker Tilly, told the council the annual comprehensive financial report received an "unmodified opinion," meaning the auditors found no material misstatements. He said the Yellow Book compliance review identified no instances of noncompliance with laws or regulations and that the city’s single-audit review of federal grant spending (including Airport Improvement Program awards and related COVID funding) produced no findings.

Key figures and context: Hemerly reported the city's general fund fund balance increased by approximately $15.7 million for the year ending June 30, 2025, citing stronger-than-expected collections on local taxes and building-related charges; the water and wastewater enterprise funds produced net position increases (water +$9.8 million; wastewater +$4.1 million). The airport fund’s operating expenses exceeded operating revenues, but grant activity and transfers contributed to a reported net position increase tied largely to capital contributions.

Audit scope and internal controls: Hemerly said auditors provide reasonable — not absolute — assurance and use materiality thresholds, noting one accounting standard change related to compensated absences increased recorded liabilities for vacation and sick time. The auditors reported no internal control matters to communicate this year and no identified fraud.

What this means: The clean opinions and lack of audit findings reduce immediate fiscal or compliance concerns for the city, but council members and staff may continue monitoring enterprise fund performance (notably the airport fund) and implementation of voter-approved dedicated public-safety sales tax spending.