Auditors give Kenai Peninsula Borough a clean opinion on FY25 financial statements

Joy Mariner, lead engagement principal for BDO, told the Kenai Peninsula Borough Finance Committee that auditors issued an unmodified opinion on the borough’s FY25 financial statements and an unmodified opinion on the state single audit, with no state findings identified. "We did issue an unmodified opinion on the financial statements," Mariner said. "This is the highest level opinion you can receive. Most people call it a clean opinion."

Mariner told the committee the federal single-audit supplement work was complete but its final release was delayed by federal timing; auditors issued the borough and state opinions so state funding would not be jeopardized and described the federal supplement as expected to be issued shortly. She said two programs were added to the federal schedule this year (related to remaining ARPA and LAMPO items) and that the auditors found no corrected or uncorrected misstatements on the borough financial statements.

On controls, Mariner said auditors review design and operation of key internal controls and did not identify any significant deficiencies or material weaknesses this year. She noted two recurring IT-control items (administrative "super user" accounts and password policies) at the school/hospital systems and characterized those as management advice suggestions rather than formal findings. "The only risk financially ... is that administrative-level access could create a new user," she said, explaining that segregation of duties and detective monitoring help mitigate that risk.

Mariner walked the committee through headline numbers in the statements of net position, noting roughly $540 million in total assets and about $164.3 million in total liabilities; she also flagged large pension liabilities that contribute to the school district showing a deficit net position on a stand-alone basis (she cited a pension liability in the order of $76 million at the school). On the borough general fund, she said total fund balance was about $50.9 million, with roughly $22 million set aside under the borough's minimum fund-balance policy and about $21.9 million unassigned — roughly half a year's typical general-fund expenditures.

Committee members thanked finance staff for the turnaround and asked follow-up questions. When asked to explain the practical risk of "superuser" accounts, Mariner summarized the trade-off: superusers improve operational flexibility but create a longer period before certain administrative changes would be detected if preventive controls are absent; the borough’s current segregation of duties and audit-trail monitoring reduce that exposure.

Mariner closed by noting the borough will submit required filings (including the state single-audit report already submitted) and that the federal supplement, once officially released, will follow; she offered to provide a longer work-session presentation for members who want more detail. The Finance Committee did not take a formal vote on the audit presentation during the meeting.