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Fiscal commission readies review of FY23 single audit, urges tracking of internal-control deficiencies
Summary
Commissioners were briefed on the structure and purpose of the ACFR and told the FY23 single audit and auditors' communications (MOIC) are expected soon; the commission discussed tracking deficiencies year-to-year and decided to await incoming documents before detailed follow-up.
The Davis Fiscal Commission on March 1 received an overview of the city's Annual Comprehensive Financial Report (ACFR) and the audit materials commissioners should prioritize, and was told the fiscal year 2023 single audit and auditor communications are expected imminently.
The director (speaker 3) explained the ACFR contains the auditor's independent opinion, the management discussion and analysis and the fund financial statements. "What you're looking for is the opinion," the director said, describing an unmodified ("clean") opinion as the primary indicator that financial statements present fairly in all material respects.
Staff reiterated that the memorandum on internal control (MOIC) and required communications from the auditors have not yet arrived. A public commenter urged pulling a consent-calendar item that presented a partial submission of audited financial statements until the full suite of reports is available; staff replied the consent item was informational and that the commission could choose to pull it.
Commissioners discussed how to handle the incoming flow of audit materials. Several said they do not want to read every page of every document but instead plan to track whether prior deficiencies remain or are corrected. "One of the biggest questions to me will be, is there anything in here that hasn't been corrected that we need to work on?" a commissioner said. Staff agreed that FY24 and FY25 reports should show incremental improvement if corrective work continues.
The director described categories auditors use to classify findings (material weaknesses and significant deficiencies) and recommended focusing on the outstanding material weaknesses. Commissioners also asked about audit firm rotation and contract terms; staff said state rules require rotation of the audit partner every six years and that audit engagements are typically procured on multi-year professional services contracts.
Staff said the FY23 single audit report is expected by the end of March and that the MOIC and related communications should follow in time for discussion at the commission's April meeting. Commissioners signaled they will prioritize unresolved or new high-severity findings for follow-up.
