Internal audit and external auditors say grant-management gaps and SAP reporting problems are delaying Anchorage audits

At an Anchorage Municipality audit committee meeting, internal audit and external auditors warned that gaps in grant administration, missing training and limitations in the city's SAP setup are delaying completion of the single audit and complicating federal and state grant reconciliation.

Paul Verne, director of internal audit, told committee members that inconsistent grant accounting across multiple points of contact and staff turnover have left the city without a trusted master list of active grants pulled directly from SAP. "When we asked for a complete listing of all the grants, they were unable to provide them out of the system," Verne said, adding that the problem makes it difficult to reconcile grant revenue, receivables and expenditures for federal and state reporting.

The controller's office representative said the division is building policy manuals, desk procedures and quarterly reminders and expects a summer training push led by a new grants staffer, Michelle Nelson. "We're trying to develop cohesive policy manuals and desk procedures, not only for our division, but unit-wide," the representative said, and noted the office is creating a transitional master list of grants outside of SAP while they work with IT to improve reporting.

An external auditor who addressed the committee said the auditors cannot complete the single audit until grant amounts and listings are finalized. "We can't really do the single audit until you know what your grant numbers are," the auditor said, describing challenges reconciling FEMA and other program reimbursements and the need to resolve differences before issuing an opinion on the financial statements.

Committee members asked whether the controller's office has authority to require grants-related SAP training for department staff. The committee discussed that HR, IT and department directors must coordinate to flag employees who need training and that the grants team should monitor completion. One member noted an HR initiative under the CAO to create a system for identifying required training and said a timeline will be provided when available.

Auditors also flagged SAP configuration and reporting complexity: the external auditor described multiple trial-balance outputs and customizations that require manual manipulation to produce an accrual-basis trial balance suitable for financial statements; some trial balances still did not balance at the time of the update. The external auditor said draft components of the annual comprehensive financial report have been received, but support for some accrual entries and a complete reconciliation of grant activity remained outstanding.

Committee members raised the practical consequences of delayed audits, asking whether granting agencies might withhold funds or whether the city could face difficulties issuing bonds. A committee member responded that rating agencies sometimes accept draft financials if the city shows progress, but staff said the timing and consequences vary by agency and situation.

Next steps described at the meeting included expanding the controller's master list of grants, having the grants team and SAP staff work to produce reliable reports, circulating draft policies and procedures for review, and advancing training-registration and completion monitoring. Auditors said they are prioritizing components to move the financial statements toward issuance; the controller's office cited an internal target to work toward the statutory/administrative deadline for issuance of the comprehensive financial report.

No formal votes were taken at the meeting. The committee heard a brief public comment from Bruce Ferguson and adjourned.