Independent audit finds Sedona’s FY2025 financial reports clean; council asks about revenue volatility and grants risk

External auditors from CliftonLarsonAllen presented Sedona’s FY2025 annual comprehensive financial report at the March 10 council meeting and issued clean (unmodified) opinions on the city’s financial statements and on internal control over financial reporting. Jean Marie Dietrich of CLA told council the firm did not identify material weaknesses or significant deficiencies and found no evidence of management bias in estimates.

Dietrich said auditors made one immaterial adjustment to the net investment in capital assets and discussed implementation of a governmental accounting change (compensated absences). Councilors asked whether the audit identified vulnerabilities tied to Sedona’s reliance on sales and bed taxes. The auditor said the audit work does not include a formal vulnerability analysis; Deputy City Manager Barbara Whitehorn told council the city maintains a conservative reserve policy (30% policy target compared with a common minimum of roughly two months, or about 16%) and that current reserves are above that policy level to hedge against sales‑tax volatility.

Auditors also flagged higher grant‑management risk and information‑system/cyber risk as areas for ongoing attention; staff noted Sedona’s limited federal grant exposure but affirmed the need for stronger grant compliance workflows and preservation of institutional knowledge. Councilors pressed about GASB 103 reporting changes; auditors and staff said the city and its ERP vendor are preparing for required changes in presentation and data collection.

There were no formal findings that required corrective action beyond standard reporting; council thanked the finance team and recognized the Government Finance Officers Association certificate of excellence that the city has received for 25 consecutive years.