Grand County Audit Committee, August 18 meeting transcript & summary

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I’m going to ask Julian to introduce his thoughts and yeah, we’re good to go.
All right, I will call this audit committee meeting.
Ask Julian or Karen if he cares.
Can you hear us online there, folks?
Very good, Julian, thank you.
I will call this audit committee meeting together.
It’s 9 a.m. on the 18th of August, 2025.
Present are Commissioners Hadler, Commissioner Martinez, and Commissioner Winfield.
Myself with other commissioners in attendance in the audience.
To hear this, some update from Mr. Haderlie from Larson’s.
And Julian, if you don’t mind, would you introduce your team just because there’s some new faces on Zoom there so that we know who we’re meeting with?
Gladly, hi commissioners, good morning.
Julian Metcalfe here with GPP Analytics.
And I’ve brought my team, Eric Svivak and Ofun Afonsen.
Both, I just wanted to put some faces to the rest of the team.
I had the opportunity to meet some of you in person recently, so I just didn’t want to be the only one represented.
Well, thank you for that and welcome, folks.
We look forward to that.
And Jon, we look forward to hearing from you in just a minute here.
We’ll get through the first part of our agenda first.
And so on our general business, I’m looking for approval of the minutes from July 7, 2025.
I’d move to approve the minutes of our July 7, 2025 audit committee meeting.
I’ll second.
Motion by Commissioner Hadler and seconded by Commissioner Martinez.
All in favor?
Aye.
That passes unanimously.
We can go on then to the presentation and recommendation to the Grand County Commission of the 2024 audit.
Jon, we’ll let you take it away if you’re ready to do so.
Yeah.
Morning, everybody.
Good morning.
Hope you guys had a good weekend.
All right.
So we have, hopefully everybody, has everybody had a chance to review the financial statement?
Right.
That’s my biggest question.
Jon, what was that again?
I’m sorry.
Has everybody had a chance to review the financial statements?
That’s our biggest question.
Yeah, I reviewed the draft.
Yeah.
Are there changes between the draft and the signed?
They haven’t been signed yet because I was waiting on you guys on your, if there were any changes to the notes, how they were presented, or the statements.
I know Gabe and Steve have gone through it quite intensely and we were just waiting for the audit committee to have their chance to review it and make any changes.
Yeah, so to answer your question, I have reviewed the draft.
Yeah, we’ve all reviewed the draft.
Okay.
Jon?
Yeah.
I as well reviewed the draft and had some questions and minor items.
I’m wondering if you received those.
I sent them on Friday.
Well, let me look.
I don’t think I received any, but it may have got caught in spam.
Well, I sent them to Grand County.
So unless they forwarded them to you, it would not have come from me.
Oh, okay.
Yeah, so I haven’t seen them.
So we can go through those before I finally sign them.
As far as us as auditors, what we’re going to issue, well, can I share my screen?
Is there a chance?
Yeah, if not, you can turn to the audit reports.
I mean, I’ll just go over our opinions.
No, Jon, you can share now.
Okay.
And Karen, could you resend that email that you sent so that pops up for us?
Absolutely.
Yes, I can.
One moment, please.
Yeah, Bill, if you guys will forward that to me and then I’ll get with Gabe and go through all of those and make sure that we’re on the same page.
Yes, sir, as soon as I see it.
All right, so I’m just going to share.
This is the first page of the audit report.
This outlines that we’ve completed the audit for 2024.
If you can throw that up for us a little bit, Jon, that would help.
Is that big enough?
A little more?
Yeah.
All right.
So this section, we’ve issued an unmodified opinion.
This is directly related to the financial statements.
This is the primary scope of our audit.
This third paragraph talks about the opinion units that we did not audit and the percentage of whether it’s the discreetly presented component unit column, and I’ll show you that.
And then the, I’m trying to read these, sorry.
So it’s GWSA, so the Water Service District, and then Thompson, and the Transportation did not receive an audit.
And those percentages are here because these percentages are so small.
We just scope these audits.
They don’t affect our opinion.
However, the other components are roughly about 90% of the net assets or the revenues of the discreetly presented component units.
Sorry.
That’s why we rely so much on the other audit reports.
We have to have, I mean, we can have the other auditors send us the financial statements, but we have to have their audit reports because we rely on those reports.
Do you want me just to support the whole commission?
That’d be great.
And if you want to include Adderley in that, that’s in your spam.
Yeah, it was in my spam.
That was where it was at.
Oop, I didn’t.
Oh, mine as well.
You got it there?
Yeah.
Yeah, I’ll get it to the entire commission, and then to.
Hey, Jon, is everybody online?
This is Quinn.
I’m going to unplug our screen for a minute, but the meeting should keep going.
I just want to reboot our screen because we keep having a blackout here.
So the meeting should keep going.
Okay.
All right.
So I have to get the audit reports for these component units.
That’s the critical part.
I think in conversations with Mark, I think that’s been pretty well hashed out.
It’s not just the financial statements.
We have to get their audit reports from their auditors.
A lot of times, I’ll actually communicate with their auditors to make sure that there aren’t any issues.
We have to get representations from those auditors that they’re performing their audits in accordance with GAAP and with government auditing standards, that they don’t have any peer review issues.
That being said, I’ll show you the column, but I just wanted to, as you go through the financial statements, there are certain sections, and they’re outlined here in this required supplementary information.
So that’s the management’s discussion analysis that always follows the audit report.
And then there’s a section after the notes of the financial statements.
These are unique to government financial statements.
They’re not part of the basic financial statements, but our governing body, GASB, says that they always have to be with the financial statements to give them more understandability and readability.
However, those sections do not fall under our audit opinion.
So we typically will note those as unaudited sections.
And then supplementary information, if you choose to include your combining statements of non-major funds, which you have, and then the treasurer’s statement on your treasurer’s trust, that statement’s in there as well as the schedule of federal awards.
That’s all considered supplementary information that always piggybacks on our opinion on the financial statements.
So that is kind of how the structure of the financial statements works and how it relates to the opinions.
I’m just going to show you.
So the MD&A starts right after the audit report.
So this section here, this is good to read.
Obviously, you guys have hopefully reviewed the financial statements.
If you don’t like to get in the weeds of the numbers, you’re not financial gurus, you don’t like to do the analysis, there’s a lot more qualitative information in here instead of just the raw numbers.
A lot of comparison between last year and this year.
In private business, a lot of times what you’ll see is comparative statements where they’ll have balances from this year and last year.
But because government financial statements are so comprehensive and there’s a lot of things going on, the statement of activities, the way it’s presented, there’s not a lot of room to do comparative statements.
And so that’s why we have the management’s discussion analysis.
So that’s a good section.
It’s kind of the Reader’s Digest version of what’s contained in the financial statements.
Okay, so I’m going to skip down.
So each column on your financial statements, this is the government-wide statements.
This is presented on the full accrual method, meaning it’s the economic resources method and or basis, meaning you have anything long term.
So all of your capital assets, infrastructure, as well as any long-term debt.
Typically, this is used by external parties.
This is how your bonds are rated.
This is if you’re going to go issue debt.
If people want to see the health of your organization, they’re going to look at this statement because all of your assets and your debt give you economic viability, right?
But as a government, you don’t care that you have $16 million of infrastructure because that doesn’t help you pay the bills in the next 12 months.
So that’s the biggest difference between why we present the government-wide financial statements versus the fund statements.
Back to what I was saying.
And so each column on the financial statements receives an opinion.
It just so happens that all the opinions are unqualified, so they roll up into one opinion.
This component unit column is primarily all of the discrete component units that we talked about, and these are the numbers that we rely on from the other auditors.
So in total, there’s $37 million of assets in other component units that we have to get validation or whatever term you want to use from other auditors, what their opinion is in their audits, on whether or not we can issue also an unmodified opinion there.
All right.
So I’m going to hop down to a couple other reports, and then you guys can ask questions.
I’m not going to spend a lot of time on this report.
This report is a report that we issued just outlines that we’ve performed your audit in accordance with government auditing standards.
As part of those standards, we have to look at your internal controls, A, to make sure you have controls, and B, they’re actually functioning.
I know that we’ve talked a lot about internal controls.
We’ve done some trainings.
It’s an ongoing risk.
One of the things that I would like to recommend to the commission this year is to start looking at and get your IT involved in cybersecurity controls.
This is a critical, critical issue for governments right now.
There are people that they’ve realized the ease of getting into governments.
In fact, there’s already been a couple of counties in Utah, as well as a couple cities who have been hit by cybersecurity issues, whether that’s phishing emails, whether it’s smishing, and if you don’t know what smishing is, I didn’t either, but that’s the phishing text that you get on your phone.
In fact, I’ve already had three this morning.
So it’s very common.
If your employees happen to click on a link, then you’re opening up all sorts of problems they can get into your system.
The biggest issues right now is they’ll hijack your data, so they’ll take over your computers.
You won’t be able to access anything.
They’ll have all of your data, and you have to pay them money to get that data back.
The problem is you’re never going to fully get that data back because of the way they encrypt it and then the way it gets sent back.
It doesn’t really come back 100% accurate anyways.
So it’s really critical that you get your IT staff up to speed.
Make sure that there’s off-site, ongoing, almost instantaneous backups because if that happens, you can tell the…
If you happen to get hijacked, you can tell them to pound the sand and that you just basically resume a backup and you’re on with normal business.
Yes, there’s notifications that you have to notify certain agencies that data has been breached and certain information has gotten out there.
However, you as a government can continue to operate.
That seems to be the biggest problem is if you don’t have that and you have to wait for somehow to get that data back, it’s probably going to be between 30 to 60 days that you’re going to be down.
So that’s our recommendation this year, and we can talk more about it.
I have a training on it that I’ve been trying to get out to all of our counties and all the governments in Utah because it’s such a critical issue right now.
Governments typically are a little bit archaic when it comes to technology compared to private businesses.
For me to log into my system, I have six different logins before I can actually start working.
Governments don’t have that, and so we’re trying to get the information out there to get governments up to speed, and it’s not happening.
And there’s also a short time.
If you have wire fraud or ACH fraud, typically as a consumer in the private market, you have about 60 days.
For a government, you only have 48 hours.
So that’s the other reason why they’re attacking governments is because if they can get money, then they only have a two-day window before they’re pretty much scot-free versus if they’re attacking private consumers or private companies, then they have that 60-day window.
So there’s a lot more waiting period, and maybe they’re not going to get all the money.
But because the governments have such a short window, and I don’t know why that is, that’s one of the reasons why they’re kind of attacking the governments right now.
All right.
All of that being said, that’s kind of a side note, but that we didn’t identify any material weaknesses or significant deficiencies in our testing that would signify rampant problems in the financial reporting causing material weaknesses.
There were a lot of journal entries that we created.
But with Squire and Gabe, a lot of those journal entries, we kind of put back on them to say, hey, look, here’s the difference.
You guys figure it out and let us know.
Some of the journal entries were just regular cleanup journal entries.
So nothing significant enough that is going to cause a misstatement in the financial statements being caused, whether by it’s a lack of education or just sheer laziness or not knowing.
So we didn’t identify anything of that nature.
So we can move on to the next report.
This report is the report we’re required to issue for the state auditor.
This is the second opinion that we give as part of our audit, and this one is on your compliance with these areas of the Utah State Code right here.
I’m sorry, I can’t keep up with you on page 81.
Thank you.
Yep.
It’s page 85 if you’re looking at the PDF numbers.
So this opinion is very specific to these areas.
It’s not an opinion on the entirety of Utah State Code.
It’s also not a legal opinion.
I know a lot of people try to refer to the compliance guide as a legal compliance guide.
We’re not attorneys.
Let’s see.
So our opinion on your compliance as well as your control over that compliance is also an unqualified or an unmodified opinion.
So this opinion incorporates your controls over that compliance.
Meaning we look at the processes that go into making sure that the entity stays in compliance with these specific areas, and as part of those processes, we identify who does what when, and that’s the controls.
So we document who’s doing what as far as budgetary compliance, public treasurer, making sure that you’re bonded correctly, the fund balance, justice courts.
So all these specific areas.
So like I said, that’s an unmodified or an unqualified opinion.
There were a couple of state compliance findings that were small enough that they’re not warrant a significant deficiency or material weakness inside this report, and we’ll talk about those two findings.
But we’ll move on to the next report.
So now we’re on page 87 of the PDF or page 83.
If you’re looking at actual page numbers, this report is going to be sent to the federal government.
This will be uploaded to the federal audit clearinghouse.
This is for your federal single audit.
And just so you know, the federal single audits is a separate audit from your financial statement audit.
It just so happens that in order to have a full single audit, you have to have audited financial statements.
And so we just do them conjoined together.
It makes it more efficient on our end as well as it’s cost savings for you guys.
And what we are looking here is we look at the federal money that you spend during the period and make sure that based on the major programs that you are in compliance with both the grant requirements as well as you have controls over those, the spending of those federal dollars to make sure that they’re spent appropriately and with any guidelines for each major program.
And just so you guys know, every federal program has different requirements.
So every year the federal government, they issue a compliance supplement.
And that compliance supplement lists every federal program that is offered or that you have the potential to receive.
And we have to look at each of the compliance requirements.
Typically there are six or seven requirements for each grant that we have to look at.
So we test both the controls over that compliance as well as the compliance itself.
And this is also an unmodified or unqualified opinion.
And we’ll go over the summary of our audit results.
But just for your information, the major program this year was the airport grant.
So you can see that that added up to about $7.6 million.
And then this lists out all the other federal programs that you received.
Some of them are small.
And if they’re under a certain dollar amount, we were told or our guidelines specify that we just kind of scope those out.
So we’re looking at the majority of what you spend as major programs.
All right.
So this whole package right here is going to get sent to the federal government.
This is a summary of kind of the audit itself, both the single audit as well as the financial statement audit.
This first section relates directly to the financial statements.
So there were no material weaknesses, no significant deficiencies, and there were no areas of noncompliance that were material to the financial statements.
This next section is related to the federal awards.
There weren’t any material weaknesses or significant deficiencies identified.
We issued an unmodified opinion.
And then this bolded number here, this is the major program.
Like I said, it’s the airport program this year.
The $750,000, that’s your minimum threshold in order to have a single audit.
So if you spend $750,000 more of federal money in any one period, then that’s what triggers a single audit.
Starting October 1st, this limitation went to a million dollars.
However, that’s grants that are engaged in from that October 1st deadline forward.
So if you have old money that was a grant that was agreed upon before last October 1st, then that dollar threshold as well as the other thresholds that changed are still going to be applicable, at least until those grants go away.
What we’ve seen is a lot of people are just redoing the grants under the new standards.
So that’s going to change in the future.
And then this last line, if you qualify as a low-risk auditee, I think we’ve talked about this before, there’s no such thing as a high risk.
You’re either low risk or you’re not low risk.
And what qualifies you as low risk is you have had single audits in each of the prior two years, not including this year.
They’ve both been filed on time.
And if you remember last year when we filed in September, this is one of the reasons why I pushed the issue to file before September 30th was because that’s when the federal audit is due.
And if you miss that deadline and you’re late, then you cannot be low risk.
And it does not bode well when you’re trying to get federal grants.
They’re going to pull any audit reports that you’ve had in the past.
They’re going to see if they’re timely filed.
They also want to see if you have reached the level of being qualified as a low-risk auditee.
The other qualification is you cannot have any federal findings or material weaknesses or significant deficiencies on your financial statement audit in the prior two periods.
So that qualifies what qualifies you as a low risk or not low risk.
All right.
So the two findings.
Can you repeat that last statement right there?
Yeah.
So what qualifies you as low risk is having an audit prior two years.
You have to have timely file audits.
So they have to be filed before September 30th of each of the two previous years.
And you cannot have any federal award findings.
And you cannot have any material weaknesses or significant efficiencies on your financial statement audit.
Thank you.
All right.
So the findings this year, there are two compliance related findings.
The first one is just budget compliance findings.
The health care sales tax fund, the Canyonlands Airport and the Debt Service Building Authority.
And then in the general fund, the Public Safety, Public Works, Community and Intergovernmental Departments all exceeded budget appropriations.
And Gabe’s provided a, I don’t know if you guys read his response.
This is probably the longest response to a finding that I’ve ever seen.
But I think it’s really good.
I think that Gabe actually went back and figured out, okay, typically what we get is, yeah, we didn’t do a good job monitoring our expenditures.
We weren’t looking at budget to actual expenditures, which is typically a control deficiency.
That is the job of management as well as the commission is to make sure that you’re looking at reports, whether it’s monthly, whether it’s quarterly, looking at the actual to budget results and where you’re at.
Black and white in the state of Utah says you cannot spend a dollar that you haven’t budgeted for.
If you do, then, and you know that you’re going over budget, then the county, really, it’s the individual who signed off on that who is ultimately responsible so that the county or the state can actually go after a person individually if they engage or commit the county to paying funds that have not been budgeted for.
And that’s written in Utah code.
Reality is most people go over budget during the year.
And this is, I don’t want to say it’s a problem.
It’s just kind of common practice.
It’s not just in the state.
It’s nationwide.
We see this with audits outside of the state of Utah as well.
Common practice is they’ll budget, but then they amend their budget later on and pass a resolution to amend and increase their budget or they’ll move budget around, all of which is fine, but black and white, if you want to live by black and white, you cannot budget or you cannot spend a dollar more than what you’ve already budgeted for.
But you can see Gabe’s response.
So, he went through each fund as well as each department that were over budget and explained why they were over budget.
Ultimately, at the end of the day, because this was a finding last year, it’s also a finding this year, you’re going to have to probably respond to the state auditor’s office.
They’re going to send you a letter that says, hey, why are you over budget again?
This should have been resolved.
What are you going to do in the future to make sure that this doesn’t happen again?
Our recommendation is that both Gabe’s office, Gabe, Steve, they’re looking at budget to actual results on an ongoing basis.
They’re the ones who should know where each department is as well as each fund is.
And then you as a commission should also be looking at those same reports, maybe not as often as Gabe’s office, but definitely you should be looking at financial reports that are showing budget to actual results.
It’s one of the reasons why the books of the county should be as accurate as possible during the period.
That way, you’re looking at good information or good data, and so you can see which departments are getting close, which funds are getting close to budget, and then you can make adjustments necessary throughout the year.
The second one, and this is highlighted, I just found a typo in it, so we’re going to get that corrected.
The second one is that there’s a deficit fund balance, and that is in the debt service building authority fund.
It’s not so much a negative thing to create a deficit.
Deficits happen.
Sometimes you’re going to go in the hole, and that’s okay.
What code says is, A, you have to budget to reduce that deficit by 5% of the revenue of that fund every year.
So, if you have a $100,000 deficit, and let’s say 5% of your revenue comes out to $20,000, so we should expect to see a $20,000 reduction in deficit each year.
And then if you follow by that budget, that’s going to result in the actual financial statements that will result in a $20,000 net income at a minimum, which is going to then decrease that deficit.
If it’s under 5%, let’s say your deficit is $18,000, and your 5% of your revenue is the $20,000, then the entire thing should be eradicated in that year.
So, the two things that we’re looking for is, A, there should be a line item in your budget, and you can call it whatever you want, budget deficit reduction.
That’s typically what I’ve normally seen, just so you know what it is, but it has to be, you have to budget to reduce that by 5%, and then you have to live or have budget integrity and live by your budget throughout the year, and then the actual results should show a reduction of that deficit on the actual financial statements.
And if there’s not, then that’s also going to trigger the funding.
So, how you get rid of this funding is just make sure that whatever deficit, and we can go look at that deficit real quick.
I think it’s in the non-major funds.
I’m going to have to shrink down for a second until I can find that fund.
Can you just give me a page when you find it?
Yep.
77.
Yep, 73.
73.
So, it’s not a large deficit, and if we look at page, I think 77 shows the income state.
No, it’s going to be this one.
So, page 76.
So, 5% of your $140,000, that’s going to be roughly, what, $30,000?
Could you go up that up a little bit, Jon, please?
Yep.
Thanks.
That should be able to show you most of it.
So, this $141,000, this is your net revenue.
Hold on.
So, 5% of this is what the deficit should be reduced by.
However, your deficit is only $14,000.
So, our expectation is this is just gone next year, because it’s less than what 5% of your revenue would be.
Excuse me, Jon?
Could you scroll up just a hair?
So, the revenue, maybe, and shrink it.
Thank you.
So, the revenue, looks like intergovernmental revenue was $161,000.
By any chance, do you know what the negative?
Yeah, I saw that.
There’s something that got credited to a miscellaneous account.
So, I mean, we could actually drop this down to, in the expenses, just the miscellaneous expense.
Because it was a miscellaneous revenue, we didn’t really know which function it actually allocated to.
And so, it just kind of, it got left there.
But I can look at the detail and see what that is.
It was just a credit posted to a miscellaneous account.
Yeah, I think that the 5% would be likely.
I’m not asking you to change that.
I’m just bringing the point that 5%, I believe, should have been of the 161, not of the 141.
Yeah, and either way, if you do 161.
Yeah, that gets you to roughly 8,000 and change.
Yeah, yep.
So, they would need to address at least 8,000 of it, right?
Okay, but not necessarily.
And it’s small enough that there’s enough revenue that, you know, this really, and in Gabe’s response, the reason why this got created to begin with, he says that the deficit in the Debt Service Building Authority Fund resulted from expenses improperly recorded or missed due to oversight as described in the Budgetary Compliance Finding.
Management must improve the processes for advanced invoicing of participating entities for the debt payment for which they’re responsible.
So, it sounds like it’s a little bit of training issue on entering and when invoices are actually recorded in the system, if they’re recording them in the proper period instead of waiting until after the period and then bringing them back where they relate.
So, there’s a couple of different things, but a lot of it looks like it just needs to be training on how things are being recorded in the system.
And that way, that’s why I was saying before, especially like on the budget side, things need to be done throughout the year correctly in the system.
That way, Gabe is looking at the most accurate information as well as you as a commission group.
You’re looking at the most accurate information in order to make appropriate decisions, not just regarding audit findings or whatever, but just operating the county, you need to be looking at the most up-to-date, accurate information possible.
And we realize that there’s going to be small errors that happen throughout the year.
I mean, we’re auditors, we deal with materiality.
We see things all the time that are off a little bit.
But you as an audit committee should recommend it to the commission and really to Gabe’s office.
I mean, that’s the whole point of having an internal audit function.
Or review controls that are actually reviewing transactions that are happening throughout the system on a monthly basis or a quarterly basis, making sure things are reconciled, investigating anything that maybe doesn’t look quite normal.
I guess that’s a good way to say it.
There’s going to be anomalies obviously, but if you investigate things, you’re going to have year over year, you’re not going to change drastically different.
And so if things are looking different than they did maybe in a previous year, then I would say that’s where the internal audit function needs to investigate.
And they may find out, okay, we have an anomaly.
We got additional grants that we didn’t have before, which now we’re spending more money.
That’s fine.
But the fact was that somebody said something doesn’t look normal and we investigated it and this is what we found, or they investigate it and say, okay, we found mistakes made in the system that we need to get corrected.
That’s what typically will result in a significant deficiency or a material weakness is if there are control deficiencies or errors in the financial data that are causing significant misstatements or mistakes inside the system that are not caught on a timely basis.
That’s what a control deficiency is.
And if they’re significant enough, then they rise to the level of material weakness or significant deficiency.
So all of that back to the deficit fund balance, it’s small enough that the smallest amount you would do is roughly about $8,000.
But because it’s 14,000, my recommendation is just correct it and move on with life and let’s just get rid of that finding.
Okay, any other questions for me?
I know that was probably kind of long-winded.
Yeah, a few.
I agree with you that we need to be getting those reports either quarterly or monthly, Jon.
And I think that’s something we’ve got to look at changing internally.
At a minimum, I think they should come to the audit committee.
And honestly, I would appreciate it if they went to the entire commission.
But we don’t see those currently and we’ve got to make some changes there.
So it’s more of a statement than a question on that one.
I did have a question on the component units.
I know there’s been a lot of discussion around that, but did you have any recommendations yourself?
I know we’re trying to make some changes internally to change their deadline date by possibly participating in their payment of their audits possibly.
But that’s an ongoing discussion and I just wondered what your thoughts were around our component units.
You know, I think it’s just expectations.
Typically, that’s what I found is, are their auditors setting clear expectations?
I mean, I know that in our last meeting, especially with like the EMS, he came running in and was a little bit excited, saying, hey, we’re on time every year.
But I think that you were setting clear expectations on what the commission expected.
And I think that needs to be vocalized on an ongoing basis.
We try to set expectations with the other auditors, but it’s kind of out of our control.
I get a little bit frustrated when we talk to the other auditors and it’s a constant same old story.
It’s always the entity’s fault.
I don’t believe that because we’ve taken entities that are consistently late or they don’t have their audits done until they’re not doing fieldwork until June because the entity is not ready.
And most of the time, it’s an expectation.
Over the last 30 years, that expectation has been set by auditors because that’s when they come do fieldwork.
The entity knows, hey, we have until June.
We don’t have to close our books in January or February.
We can wait until March or April to close our books.
I think it’s an expectation that needs to be set both on the auditor’s side as well as coming from the commission that says, hey, you guys are small enough.
There’s no reason why you should not be closing your books.
I think it’s a control deficiency if you can’t close your books within two months of year end.
That’s a control deficiency.
There’s an issue there that needs to be corrected.
And then if your auditors, if it’s their choice that they don’t want to come until May or June, then that’s up to the auditors.
But that entity is ready.
That entity is ready at the end of February to have their books audited.
Everything’s closed.
It’s a problem in the state of Utah.
I’ve talked to the state auditors time and time again.
And what causes it is there are a lot of CPA firms in the state of Utah who do government audits that also do their tax CPAs.
I mean, that’s their bread and butter is tax revenue.
So they will from, in fact, I just talked to one of the CPA firms regarding an audit this fall.
That we just picked up and they’re trying to be their outside consultant.
So he called me and said, well, how late in the fall can you do their audit and still get it done on time?
Which really frustrated me because he wants to wait until November, middle of November, and then have a two week turnaround for a city.
That’s like, in essence, us going to Squire and Squire saying, well, how late in the year can we start and do field work?
Like May, right?
So if we come in May or June, can we still get your audit done?
Probably not.
We can’t do a quality audit in two weeks.
So that being said, that’s kind of the problem.
That’s not your problem.
That’s the CPA firm’s problem.
That’s the state auditor’s problem on how they’re going to deal with that issue.
But from that time period, from February until April 15th, your auditors are going to be non-existent and they’re not going to want to do field work.
And so that’s kind of what set that expectation over the last 30 years.
And that’s something that we’re trying to change.
And we’re working with a couple of CPA firms that, I mean, we’re full-time auditors.
We do this all the time.
We don’t do tax season and then do our audits in the summertime when we have time.
Long story short, that’s kind of what it is.
It all boils down to expectations.
Okay, so I got out of there that really our books for the component units should be done by the end of February.
But what date do you see that you need these financials to use so that you can get this audit done on time?
And is there anything else other than the component units holding up these financial statements?
Because if that’s just one portion of the problem, where are the other problems so that next year we can have these financial statements done on time?
So if you look at the timeline this year, so we waited until, I think it was the first week in July, maybe second week of July, we finally got all the component units.
And so we were able to finally put a complete draft of the financial statements together for Gabe to review.
And for you as an audit committee to review.
And then there is, there’s a lot of wrap-up time from the time we’re preparing financial statements and we’re closing out the audit.
So that’s about three to four weeks.
So like we talked about in the meeting before, I wanna have all of the component units by the end of May.
And so by the 1st of June, we have a draft of the financial statements to Gabe and his team and to you as an audit committee that you have time to review them, make changes to any of the notes.
If Steve is gonna, I know he’s really excited about wanting to draft the financial statements.
My expectation is he would have all of that component unit information by the end of May and then have a draft of the financial statements so that we could start reviewing the financial statements as well as the audit committee.
But that’s gotta, we’ve gotta have all the component unit data by the end of May.
And just looking at the draft finances right there, under the opinion, it says June 30th, 2025 for the opinion.
Is that date going to change then once we formalize this?
Yeah, it’ll probably have to be up to probably today’s date.
Okay.
And then I guess just back to my other question, is there anything else, Jon, other than the component units?
What is the roadblock or hurdles other than the component units so that we get this accomplished next year on time?
I think just Gabe’s office’s involvement.
I think that this year was actually probably the best year as far as involvement with Steve and with Gabe.
And I think now that they have maybe our expectations of what a review should be on the financial statements, because ultimately, these are your financial statements, right?
And this is kind of where some of the controversy has been in the past of, you know, we’ll put them together, but we don’t really know all the information that you guys want to have in your financial statements or they’re worded a little bit different.
And so with Gabe’s involvement, I think that if we can get the component units and then everything else gets tied down, I want this done by June 30th every year.
I don’t see why it’s late other than, you know, the component units.
I think Gabe’s on board.
I think that hopefully we can get Squire down there a little bit earlier.
I would like to do field work a little bit earlier.
I know this year it was probably the beginning of May when we did field work.
If we could get down there in March or April, that way if there’s anything, any issues like capital assets typically seems to be an area where there is significant changes just because Gabe’s office is not updating that information throughout the year.
So they can either update it throughout the year or they can have a, you know, they need to have it ready by the end of the year when we get down there.
Okay, thanks, Jon.
And I’ll let him move over to Brian or Jacques if they’ve got questions.
Yeah, whoever asked that question.
So my report now is going to be August 12th.
That’s the report date.
Okay, thank you.
So a couple of questions.
So first, I just want to ask the committee, is Gabe supposed to be here when we present these financials?
I thought that when I read through the bylaws, maybe Mark, you could look that up.
Was that at the commission meeting or at the audit meeting?
I thought that, I don’t know if you could maybe look that up and just make sure.
I just want to make sure that we’re following all the procedures and that Gabe’s not supposed to be here when these are presented.
So that would be my first question right there.
And then second, I’d just like to, I have a couple of questions for Jon and I have a couple of questions for Karen right here.
But I don’t know, Karen, if you would like to go through your recommendations first, because you might answer some of my questions inside of that document that you had.
And yes, absolutely, Jon.
Are you able to put those up on the screen for us?
Well, we’re trying to get Karen’s comments up on the screen.
Oh, I don’t know who’s easiest can take it.
I can’t see the screen.
It’s not still sharing mine, is it?
It is, yes.
How do I stop it?
How do I, I thought I’d click stop share, but.
So while we’re figuring that out, I did have a question that is not in my notes.
Mr. Haderlie, regarding GASB 101, did you elect not to implement that?
Did the county elect?
I didn’t see anything in the financial statements about that.
On compensated absences?
Yes, sir.
Yeah, there was there.
They did implement it, but there wasn’t anything significantly that changed.
And so that’s why it’s not noted in the financial statements.
There wasn’t a material change to the financial statements.
OK, usually I was asking, because usually when I see financial statements, if there is a new standard implemented, it would just say it’s implemented.
Yeah, so that the reader knows.
Can we pull up?
Can we pull up those comments or I can try to share my screen and see if that works?
Yeah, see if you can share your screen.
I’m not seeing a stop share on mine.
Mine usually has a stop share from the post, but.
OK, yours did stop sharing, so let’s see.
Let’s see if this works.
And I’ve got a couple things on my screen, so let me know.
Did that work?
You’re seeing it.
I’m sorry, you can see it or you cannot.
We can’t yet.
You can maybe zoom in a little bit.
I think that’s good for me.
I don’t know.
So it’s funny when I share, I can’t see it anymore, so I’m not really sure what happened.
But OK, so you all can see my screen.
Yes, yes, yes.
OK, super.
OK, very good.
Thank you.
OK, so I’ve got some comments, some a little more significant than others, I guess.
But.
And I just scanned the pages where I had questions, so page 7 in the MDNA should be net position in the governmental activities.
Yep.
Here, restricted net position.
I believe this number should be 21,000,000,817,585.
That may have been a carry forward from the prior year.
I’m not sure.
No, I think that changed during the.
So I’m going to which I know how these numbers.
I understand how these numbers can move around on you.
This is on page 9.
It’s in the MDNA.
I thought it would be clear to talk about revenues, including transfers.
Because to get to this number, to get to 45,000,000, it’s not a number that’s just in the chart.
You know, in the in the table.
Rather, it has to include the transfers.
For the governmental activities.
Yep, so they should be in there, right?
Well, you’re you’re just saying make a little bit make it clear.
Yeah, I’m saying that the number is correct if you add in the transfers.
So I was just saying sources of revenue, including transfers.
OK, for the county’s governmental activities, if that makes sense.
The next item.
In the MDNA is on page 12.
The counties.
It’s not net investment in capital assets, of course, because that number is net of the debt, the related debt.
This is just the capital assets.
It should be just investment in capital assets.
Or just capital assets, because once you start saying investment, then it.
You’re kind of combining two different topics, right?
One is net investment, capital assets, and one is just capital assets.
So yeah, the net investment is capital asset is the fund net position component.
I can see what you’re saying.
OK, super thank you.
I just noticed a transposition here in spelling on capital.
And that’s on page 13.
OK, same on page 19.
Deferred out.
Outflows of resources was just missing a space.
You can tell I’ve been an auditor, right?
I’ll look for every little thing, but no resources.
Just we have a space in here.
We have another partner that is.
She’s a Nazi when it comes to my eyes.
Read and I have you ever seen that worry where they have like the misspelled words, but you can still read them.
That’s how I read.
And so I read so much straightening him out.
Yep, yep.
So that was on page 19.
That’s page 19.
On page 21, there were a couple of things.
So number one, repayment of bonds had a misspell or repayment of principle here.
On the reconciliation, spelling, I did get to the capital outlay number of 2,000,346 based on the roll forward.
But in skipping to the roll forward, I was confused because we have a reduction in accumulated depreciation, but not an offsetting disposal.
So normally, right?
If we have an asset that’s fully disposed, I’m just for the benefit.
Yeah, yes, you’re not used to looking at this.
We would dispose a fully depreciated asset.
And so what this is showing is that there was accumulated depreciation that was disposed, but there’s no asset.
So I was.
You may just want to check that and see, I think it would be an explanation.
I just it wasn’t clear to me what that was.
What that is, is was there was changes to the depreciation schedule.
So there was errors that they found out because that they weren’t material.
And so there was.
So I think what this this actually just needs to be.
Part of the issue is we can we can combine it with depreciation expense, but then our function breakdown is going to be a little bit off.
So if you feel like it would be better presentation, we can just lump those together and then just change the functional depreciation below.
It’s probably what I would have done.
But but again, you know, Mr. Haderlie, if you do that, of course, that.
That could change your your front government wide statements.
So I’m I’m giving you these, you know, comments, but you’re the auditor, so you want to address them.
Yeah, I’m I’m trying to provide constructive comments, but ultimately how you address them is, you know, based on on your judgment.
Going on here, this is page twenty four cash flows.
This should be net cash used by noncapital and related financing rather than net cash provided.
Page twenty four.
Got that.
I’m here.
OK.
So just headings.
This fiduciary funds should not be here because they’re custodial funds.
And this would typically say.
Actually, I was incorrect in this first note.
This should be total net position and this should be net position because it’s a statement of fiduciary net position, not a balance sheet.
So my.
Which I I cleared up after talking to one of our auditors.
But for the for the final on page 25, it should say.
Net position and total net position.
And then we would eliminate fiduciary funds.
OK, super.
And then the same thing.
I don’t know if I did it on.
I didn’t bring up this.
I don’t know if you can see this.
I moved the window over page twenty six.
We’re going to have the same issue.
Yeah, yes.
OK.
On page 40, what is this?
Thirty one.
The TRT mitigation bullet.
That should be funds used to.
I think you mean used to allocate.
I believe there’s an extra E in that word.
Page thirty one.
Page thirty five and custodial credit risk deposits.
Two items.
One, it was just missing a period at the end of the sentence.
Completely minor.
But my question was, does the county have one point three million in uncollateralized deposits or one point?
It’s actually one point three nine five less.
Two hundred and fifty thousand.
Yes, that is correct.
And I want to make sure, point that out to the commissioners that you’re aware of that.
Can you give us a little further explanation, please?
Yeah, and that’s that’s an issue across the state of Utah as well.
Um, they’re they’re not.
The governments are not allowed or not required to collateralize cash outside of the FDIC.
And that those comments have come up actually quite a bit recently.
So just audit committee.
So if you have money inside a financial institution, the FDIC limit is for each institution, two hundred and fifty thousand dollars.
Anything over that is uncollateralized.
There’s basically one point… one point two million.
That’s that’s unprotected sitting right there.
That’s at risk.
Correct.
So norm— the way we handle this in Texas is when we go out for RFP for our prime depository.
That is one of the conditions is that our funds will be collateralized at one hundred and two percent.
But that is part of the Texas Public Funds Investment Act, which evidently there is not an analogous.
Act in Utah, but doesn’t mean that you couldn’t ask for it, may not be required, but it doesn’t mean that you couldn’t ask for it.
So something to keep in mind, have no reason to think that there’s any issue here.
But I think best practice is to have the county’s funds collateralized.
May I move on?
Yep.
Page thirty seven might need you to advise me, Jon, here.
But this paragraph speaks to qualified depositories.
Was this amount, it says forty five million where the underlying securities were uninsured and held in the.
Held by the investments counterparty, the Utah Public Treasurer’s Investment Fund.
So I was thinking that that number should be forty two million, eight or seven.
You know, that number is probably different.
So I’m not sure.
Yeah, yes, I don’t know if I have the wrong number, but it it would appear that it should be forty two point eight million.
Yeah, yeah.
Right here in restricted.
That changed as well.
That didn’t get updated.
So, OK, that was one of the most recent changes.
And I probably should be looking through the ones that I have.
What page is that one?
That is on page thirty eight.
And I know these are little nits.
It’s easy to miss these during the preparation.
No, it’s fine.
And when Steve goes through and makes changes, then.
We talked about this addressing somehow.
OK, page forty three.
Transposition here in capital lease.
This is in the long term debt roll forward.
Page forty three.
That one.
All right, moving on.
Page forty seven footnote.
Yeah, I’m pounding benefit.
Page fifty five.
This is yeah, this is the restricted net position.
Grant agreements.
Page fifty six on the transfers.
A couple of questions.
Minor capital projects, the general fund had an extra E in it.
Typically, and then a couple of.
Other questions.
Typically, we would see transfers in and out agree.
If they’re not, I don’t know why they didn’t get updated to.
Yeah, I was in balance.
I don’t I need to look at that one because that’s that’s the one that they just barely did.
Gabe [Woytek] and Steve [Vowles]
They just put that together, so I’ll look at that.
They were in balance, and so I don’t know why they’re not out in balance now.
OK, look at what page is that?
Because I’m let me look online that that’s on fifty six fifty six.
Note twelve.
I still sharing.
Yep, OK, you are.
And then I had another question on this, so.
I know this TRT promotion mitigation fund has been a source of discussion over the last couple of years.
And here you discuss the one time transfer because it was a significant amount, not usually part of the financial statements.
I would bring up an item which was considered carrying forward the 2023 paragraph regarding the correcting of the correcting transfers.
This is I’m not sure if you can see this.
This is the 2023 financial statement, and there was, you know, a big paragraph in here about the transfers.
And I know that this is your audit, right?
So this is not someone else’s work.
But if this I think it might provide a little more clarity and context if there was this paragraph that was transferred into this into the twenty four audit that just says like in 2023 or per the 2023 audited financial statements.
Something along those lines.
And again, this is your judgment, your call.
Yeah, and I would and I would probably default back to.
And that’s actually and that was actually one of my requests that I was going to have.
That was one of my questions that I wanted to see if we could put forward.
I just want to make sure that we tell a clear picture or paint a clear picture.
And because it was already published, it’s not any new information, you know, just might, you know, put a bow on this.
Yeah, we can do that.
And then thank you.
And then let’s see if I’ve got anything else.
Page 68 on the budgetary funds highlight.
If you wouldn’t mind taking a look at this number, I just could not recalculate that number.
This is a difference between the final adopted expenditure budget, including transfers and the actual expenditures.
And not at this moment, but maybe take a look at it because.
I couldn’t get back to this number, so I’m not sure if that’s a prior year number or was a draft number that changed during the audit process.
OK.
And also, you know, maybe, Jon, to your point, if the transfers did agree and now they don’t.
Yeah.
Then something got changed in the transfers and that could have moved that number.
On the CFA, page 85, indirect assistance, just had a, I think it’s an extra C in there.
Page, page 88.
I know this is a lot.
These are just my personal notes, but.
I believe these two numbers should, sorry, these two words should be exchanged.
Grand County total actual expenditures exceeded budget, budgeted expenditures, right?
That’s the issue.
Yeah, you’re right.
OK.
On page 89.
On the comment regarding.
OK, this last comment, which I believe it was to address…
why
expenditures were exceeding the budget.
This comment addresses revenues.
Budgeted intergovernmental revenues were not met by actual receipts.
I think what may be happening is that expenditures.
Are designed to match revenues, so when revenues are wrong, then expenditures are wrong.
I think that was the direction whomever wrote this was heading, but perhaps one more sentence to clarify that would be helpful.
Yeah.
Do you see what I’m saying?
I’ll explain because I think I can see what because Gabe wrote this is his management response, and so I’ll answer.
I think I know what he’s trying to get at, like you were saying, but I’ll say, hey, give me another additional explanation on how that’s affecting because I think what’s happening is the expenditures are happening, but then they’re not receiving the revenue, right?
And then they’re not properly budgeting for what’s happening anyway.
Yes.
I think it just needs one or two more sentences.
I think whatever this is saying is correct.
It just needs the connection to why the expenditures are incorrect, and I think you picked up on this next one.
The deficit fund balance.
Yeah.
I think you picked up on that one.
And that’s all I had.
Let me continue on then.
Thank you so much, Karen.
Yeah, the next question would be for Karen and for Julian as well, if you want to kind of…
So in your assessment, do you have any concerns that there are any material weaknesses in the audit findings?
I didn’t note any in any of the opinions, and of course, Mr. Hatterley’s firm did the audit, so I don’t have access to any of the work papers, nor would I audit the auditor.
The audit has issued unqualified opinions, so it looks good.
I just had those comments.
I wanted to give him the opportunity to do a little bit of tidying up before the final issuance.
And then the next question is, do you think that the auditor has fulfilled his obligations as an auditor?
It appears that he has done so.
Okay, I’m just trying to make sure.
Yeah, I mean, it looks like all the opinions are in place.
And then you had mentioned the tied up with the bow for the audit from 23 to 24, right?
Do you feel that the state audit has been documented in these financials to paint that picture?
Or is there anything missing that we should have included in here?
Were there transfers in 22 that should have been included that were part of this?
Or were the transfers in 24?
Are they explained well enough?
Oh, I think the explanation is clear.
I think adding in 23 would be helpful.
Is there expected transfer in 25?
Yes.
Or was the last transfer made in 24?
No, there’s an expected transfer in 25.
But just like I said, you said we should put this all up in a bow.
And I think that would be very helpful that we would say in 23, there were these transfers.
In 24, there were these transfers.
And expected in 25 will be these transfers right here.
Just according to the findings of the audit.
Sure, I’m going to let Mr. Hadley weigh in on that.
That is really a subsequent event.
Yeah, that’s awesome.
Yeah, this audit period is through December 31st, 2024.
And so he has not audited 25, right?
Now, if the event has already occurred, in other words, the transfer has been made before the date of his audit opinion, then that would be something he could include as a subsequent event.
And again, I’ll let him weigh in on that.
But that could be a spot where that is notated without changing any of his audit work as of 12-31-24.
Yeah.
Thoughts on that, Mr. Haderlie?
Agreed.
I mean, that’s the right place to put it would be the subsequent event.
If we know what that number is, then I would say we probably should include it as a subsequent event.
Just to say this was the final entry.
I know that we did talk to Dave and went, or Gabe, and went through all of 2024 to make all the adjustments up until that point.
So I can talk to Gabe and see if he knows that amount for 2025.
That’d be great.
We did do an amendment just a few weeks ago.
So I think that that number was included in that amendment.
Another question is, Karen, you had mentioned Gabe’s response on that first finding.
On that second finding of the deficit and the fund balance, do you think that the management response in that is adequate?
Yes, I didn’t, excuse me.
Can you help me locate that?
Sorry, that would be page 89 right there.
Can you explain that?
I’m just wondering how you have a deficit fund balance for that fund.
It seems like it should be a pretty easy fund to keep track of right there.
I know that it’s only $8,000, but still it’s just wondering more about the controls.
I’m going to look at that fund balance.
It should be a pretty standard account to handle.
Give me one moment, please.
I’m going to look at that fund balance in 23.
Thanks.
And I think that’s what Gabe’s trying to explain in the response to that finding was that this should never happen in this fund.
Like these payments are scheduled in the debt service fund.
But he says that there are, but they do occur as in the case of the budgetary compliance finding.
So that fund, so there was a debt service building, library and courthouse last year, none of which had a negative fund balance.
So I agree with you, Commissioner Martinez, it should not have happened, right?
It sounds like money is coming into the debt service fund that is used to make the payments and the money that came in was not either posted to the correct period or came in late.
I’m just wondering, do we need a better response and maybe some recommended action for that?
I think the response is sufficient.
The recommended action is that, which is what Mr. Hatterley had also suggested is that quarterly financial reports are produced and reviewed.
Ideally, it would be monthly, but given that we’re at the point where we’re not even getting quarterly, let’s shoot for quarterly, get through that for a year or two, and then try to move to monthly.
And then your experience, is that usually communicated to the audit committee or to the commission as a whole?
Both.
Yeah, well, and by stakehold, you should be getting them as a commission as a whole.
And then, Jon, I have a couple of questions for you.
One of your statements that you made was that you made journal entries defending material weaknesses.
Can you go over those?
Oh, yeah.
I have to pull those up.
Do you want me to go through the journal entries that we made?
If you would, please.
Yes, thank you.
All right.
I’m going to have to, you’re going to have to give me a second so I can get into my work papers.
And then just while we’re doing that, just a quick, and you did as requested by the state auditor test the restricted console.
Yeah.
Including the TRT.
Yeah, and their major concern was the Trail Ambassador.
And so.
And is that listed in your findings?
Or I’m sorry, in your notes?
No, because none of that really.
Well, it is in the transfer notes when it talks about the TRT.
We don’t specifically address the state auditor’s audit, just that there needs to be the corrected transfers.
And then either Julian or Karen, is that something that should be noted inside there?
That statement that you just made inside the financials?
I mean, should be is.
I don’t think it would be required necessarily, but I’m a believer in noting details whenever possible to clear up ambiguity.
So I think it’s beneficial, but I don’t think there’s a requirement for GASB for something like that.
I would agree.
Yeah, thank you.
Don’t have anything additional to add.
And then whenever you’re ready for those journal entries.
So I guess my question for.
In regards to the wording on what you guys want.
I mean, that’s probably going to have to come from you or Gabe.
On what wording you guys would prefer to have in the notes.
Because we’re looking for minimum required disclosures to make sure that everything that should be required is disclosed.
Additional stuff like.
As the auditor, I would not feel comfortable wording something that management should be.
Like I don’t want to be making the management decisions.
That’s a threat to my independence is where I start in inferring or.
Maybe making that management decision for you guys.
So then that’s something that I can talk to Gabe about.
If you guys have recommended wording that you that you want.
Then I’m happy to consider it and add it in there.
And is that something that you might be able to help us out with?
Is to get Gabe that recommended wording as it was presented right now and then see if that’s something that’s am able to him and that we could include in there.
Prior to tomorrow’s meeting.
I know that it’s quick turnaround.
I can have a call with him to discuss it and we can see if we want to, you know, make some changes to that wording together.
Absolutely, I can walk him through that.
I mean, ultimately, again, exactly what Jon was saying.
It’s a management responsibility to, you know, come up with the proper wording, but I’ll be happy to.
To serve as a guide for him.
Yeah, we can have a call on that.
Thank you.
Alright, so we made a total of 14 journal entries.
The first journal entry was really just kind of clean up.
There were some fund balance accounts that didn’t roll from 2023 to 2024.
That was a total of $13,000.
So that’s below ISI for us.
Typically, we just pass on that.
But because we draft, we want to make sure that the balances are rolling.
So we roll that.
We got a reconciling entry from Squire and Company.
And that was about $170,000 that was on transfers.
Looks like for about $50,000, we recorded book additions and depreciation.
That would have come from Steve.
Gabe gave us a journal entry regarding fixed assets.
Again, the next journal entry that was made to our trial balance was, this was for transfers and fund balance deficits.
This was given to us by Gabe.
So also, that’s not a journal entry that we provided.
That’s one that Gabe did.
Okay.
A lot of that was just balancing cash.
So the way your cash works is you have primary checking accounts.
So you have one or two primary checking accounts.
And then that cash gets allocated across all the funds.
And there should be regular cash allocation updates.
But at any time, things happen between funds.
If that cash allocation doesn’t get updated, then your funds are out of balance.
So that entry was just to balance the funds.
And then Squire made an entry in Fund 76 that then put that fund out of balance.
So there was an $11,000 entry, which again was below ISI for us.
That’s just to balance that fund.
And then we recorded a grant that was received in 2025, but belonged in 2024.
That was probably the biggest.
That was $1.4 million.
And that was the AEAS grant.
And so we booked a receivable at the end of 2024.
And recorded the revenue in 2024.
But it was actually received in 2025.
So that entry is going to get reversed.
And also we made a $118,000 receivable for EMS funds.
That was SSD revenue.
They received them in 2025, but it belonged in 2024.
So we had to accrue that back.
So I would say those were the two entries that were the biggest as far as relating to 2024.
And then we recorded the fiduciary cash that isn’t recorded on your books.
That’s something that we do every year just for the financial statements.
So that’s your treasurer’s trust account.
That’s typically not recorded in your books.
They have their own accounting and reconciling for that.
So we have to add that.
So that’s an entry that we have to add every year.
And then we just did a journal entry to make sure that at the end of the audit, we pull a trial balance from both Squire.
We pull it from Gabe.
And then we have our trial balance.
We go through, make sure all the accounts are the same.
There were some immaterial differences.
So what happened was there were changes to the books after we received the trial balance.
However, it wasn’t material in any way.
What was that?
What was that total?
It was immaterial, you said that.
What was the total?
Well, in total, it’s kind of hard to tell in total.
But if I tell you like fund.
So like the general fund was $500,000 difference that went to a different fund.
$13,000 in fund 11.
$100,000 in fund 16.
But most of them are going back and forth between accounts.
So within general fund, there was the $500,000 that just went to other accounts in the general fund.
So there’s back and forth between accounts, if that makes sense.
Then we just balanced out the AR funds.
And then there was a journal entry to record the TRT money between fund 10 and fund 23.
So that was the last entry that we did.
That was a $617,000 journal entry.
And that’s the number that we got from Gabe.
So that is the mitigation number relating to the trail ambassador through 2024.
So that was that transfer right there?
Yeah, so that was a transfer between fund 10, your general fund, and then TRT mitigation fund.
Was that all of them?
I got 12.
Maybe I was missing one or two.
Yeah, I combined some of them.
Okay.
Sorry, I didn’t know you were going to, I didn’t know you were listing out individually each one.
No, that’s okay.
I just wanted to go through that.
Yeah, some of them I combined because they’re related to the same thing.
There are a couple of capital asset journal entries.
And then let’s see here, it was that.
And then the anomalies that you had mentioned right there, I just want to go over to page 10, if you would.
And I think this is important for the public, as well as for everyone here.
Are you guys there?
Yep.
Hey, if you go down in our change in net position before transfers, if we look at 2023, that was $2 million.
And then if you look at 2024, we have negative $12,000.
And then I went and I looked at, I looked at 2023 financials.
I pulled that up and that’s on page 10.
As well.
Oh, shoot.
Maybe I lost it.
Sorry, I can’t share my screen here.
But when I looked at the 2023 financials, I’ll just give those numbers.
Second here, I lost it.
It’s actually on page.
Sorry, give me a second to look it up.
Yep.
So our change in net position from 2022 to 2023, it was $8,347,385 in 2022.
In 2023, we see the $2,033,619.
And then 2024, we see a negative $12,172.
Can you explain a little bit to that?
Maybe both Karen and Jon Hatterley, is that something that we should be paying attention to?
Or is that something that should be noted or mentioned?
I mean, obviously it’s worth paying attention to.
But everything in the NDNA, these schedules, all relate to the government-wide financial statements.
So there are a lot of adjustments that happen to your books to get it to the government-wide financial statements.
I don’t have 2023s open, but I would be interested to see comparative.
And I’ve looked, sorry, I’ve looked at so many financial statements, I can’t remember what the 2023, the fund balance changes were.
But I would have to probably dig into the details of what is getting adjusted out of the fund statements to the government-wide statements to make that difference.
I’m seeing something that may be of use.
Capital grants and contributions are fluctuating significantly, but they’re going up.
So about 2.1 million, 2.9, and then 8.3. So revenue is going up.
The expenditures have increased significantly, primarily in public works.
They’re going up community, intergovernmental.
But to Jon’s point, Gatsby 68, the pension adjustments can be significant and those are going to affect the government-wide statements.
So we would really need to kind of dig into this to give you a clearer picture of why that change is being done.
But I wouldn’t be surprised if it was related to the government-wide adjusting entries, likely pensions.
And in addition to the pensions, I mean, it depends on like, if you’re during certain periods, you’re going to invest heavily in capital assets.
So all of those expenditures in the fund statements are going to get pulled out.
Or if there’s additional debt payments, they’re going to get taken out of the expenses.
So there’s adjustments, like I’m saying, like everything in the MD&A, it relates to the government-wide financial statements, which is full accrual.
And what you’re typically used to seeing inside the government is everything operating inside the fund statements.
I do know that the pension liability is all over the map.
And this is one frustration that I’ve had with all of our entities is just that net pension liability.
It seems to fluctuate uncontrollable every year.
One day, one year, it’s a net pension asset.
And then the very next year, it’s a net pension liability, meaning it’s fully funded.
And then all of a sudden, it’s not fully funded.
So that’s going to affect your government-wide financial statements significantly every year as well.
Yeah, I’m just seeing this trend going from eight to two to negative 12,000, right?
And then there has to be some, there has to be, it can’t be uncontrollable.
There has to be some control that we can actually set so that we’re not seeing that happen.
I mean, whether it’s pensions, having some kind of foresight into what is causing that drop right there.
I mean, it’s concerning as we’re seeing right now, currently a 4% drop in our revenue, that we’re seeing this depletion right here in our net position.
But a few years ago, you got a huge influx of COVID money and ARPA money that really bolstered everybody’s net income.
Exactly.
And so that’s what I’m trying to make sure is that we’re able to live within our means, right?
That money is gone, right?
I mean, everybody who got COVID money, right, that’s the past right there.
Nobody’s living in that reality anymore.
And I just want to make sure when I look at the net position, that’s where I looked at to see if you are living within your means.
And currently it does not look like we’re living within our means.
Well, I would say- I don’t know.
Can you guys do me a favor just for the other commissioners?
Is there any way that we could put up page 10 so that folks could look at that sheet as well?
Yeah, but I think that if you go to the fund statements, if you look at what’s happening inside your governmental funds, you actually have an increase of $1.5 million.
So that’s what I’m saying.
There’s a lot of adjustments that happen to get to the government-wide that in your government operations, looking, okay, are we living within our means?
If you look at the fund statements in total, your governmental funds increased by $1.5 million.
Am I sharing my screen now?
No.
Okay.
So sometimes one thing I’ll point out, Commissioner Martinez, interest in 23 was $1.7 million.
It went down to $500,000 in 24.
There was a gain on capital asset.
This must’ve been a one-time sale or disposal of $2 million.
That went down to $27 million.
Excuse me, $27,000.
Now they were offsetting increases, but there’s $3.5 million right there of changes in revenue.
And you can see this public works expense went from basically $11.5 million to $13 million.
And community went from $6.5 to almost $9 million in expenditures.
So there’s some major fluctuations.
And Jon, would you like me to bring up the fund statements?
Yeah, just one more statement.
No, that’s it.
Sorry.
Well, here, yeah.
Okay, this doesn’t give you a comparative though, but the fund balance as adjusted was $37 million.
And then go a couple of numbers up, Karen.
Just that $1.4 million.
Yes.
So that’s what you increased as a government in your funds during the year.
Now, if you go to the next page, you can see all the changes that happened between the fund statements and the government-wide statements that you’re looking at in the…
So all of these are things that get adjusted out.
So you go from $1.4 million in change in net assets down to 43,000.
A portion of that is depreciation expense.
I mean, that’s going to be the majority of it.
The more you invest in capital assets, your depreciation is going to be higher.
That’s not an expense that you have.
That’s a non-cash expense that gets reflected in the financial statements.
That’s not reflected in the fund statements.
And commissioners, if I could jump in with a recommendation here.
It just seems to be coming up a lot.
And in my opinion, if you can move to this quarterly and eventually monthly budget to actual financial reporting, I feel like it might give you a better day-to-day handle on the operational finances.
And then when it comes to the annual audits, where you have some of these accounting principles applied to the funds to get to the governmental-wide statements, which don’t read in the same day-to-day sense as normal kind of fund accounting does, it might help separate some of these out and identify some of the factors.
Because looking at this couldn’t tell you if it was pensions and exactly what is driving it.
And we’ve zeroed in on a couple issues.
But I think that practice of more real-time information, more regular real-time information on a monthly and quarterly basis would help.
And then there are these more abstractions, which would say, well, are there things driving it beyond that?
But starting with the practical day-to-day, I think would be a strong place to start.
I agree with that.
I was going to bring up this statement for 23.
There was a big pickup in pensions, and that’s due to the GASB 68 statements, requirements, just pensions, that this increased your change in net position $946,000.
So that was the pension entry in 23.
So almost a million-dollar pickup.
And then if you compare that to 24, that number was only less than $200,000.
So those are non-cash adjustments that are required by the standards.
And I think that to Mr. Hatterley’s point, looking at the fund financial statements is really giving you a truer picture of the activities of the government.
Sure, I understand, but I also think that we need to have some kind of foresight into those coming up into the next year.
A lot of that is based on market activity.
The pension entries in some ways require increases and decreases in the value of your pension to be spread out over five years.
So when the market goes up, there’s a big pickup.
When the market goes down, there’s a big drop.
Jon, what is the planned year end of the pension?
December.
Oh, the same as the financial, so it’s a year per year?
Yeah, but I think they’re reporting- You’re basically saying that there’s a five-year projection on this right here?
No, so they’re not going to have a five-year projection.
You don’t ever see those numbers.
Like I would never see that number as the auditor until probably two months before we do your fieldwork.
The URS issues those statements and sends them to each of the government entities.
So I couldn’t even tell you what’s going to happen in the next year.
If that makes sense, but that’s kind of what I’m trying to say.
To Karen’s point, like these are non-cash issues that you’re seeing trends.
And so my recommendation
is what I tell commissions
and councils is if you’re trying
to do financial planning,
anything related to the URS
or the pension liabilities,
you kind of ignore that
and take that out of the picture
because the only way
that’s ever going to be
a true liability to you
as a county is that the URS
decided that they’re
going to fold up shop
and that pension
has to be fully funded.
They’re going to say, OK, each of the entities, this is your proportionate share that you owe to the fund in order to fully fund this pension.
And that’s why it’s hard to look at the government wide statements is because there’s a lot of non-cash transactions that are happening inside those statements that are not giving you maybe a reality picture of the current operations of what the county is going through.
I know that’s hard to.
Sounds like we’re trying to put you off, but it’s just the difference in the way the financial statements are being reported.
And it gets confusing.
That’s the problem with government financial statements.
So, Jon, does the GASB 68 reporting from the state, does that come out very late in the following year?
Texas, there’s usually a six month lag, and I don’t know how long the lag is in Utah.
It’s typically a year.
OK, so they’ll they’ll issue their they’ll what typically will happen is they’ll issue their audited financial statements for the plan.
Six months after year end.
So if we’re talking about 2023 numbers that went into the 2024, they’re going to have 2023 audited financial statements by June 30th, and then they turn around and do the GASB 68 statements, which allocates all of the pension liabilities, deferred inflows and outflows.
They don’t do those until almost a year later, like to the end of the year.
So then they’re not allocated to all the governments until typically February to March after the year end.
Quite late.
OK, so we’re talking 15 months.
I see that is a delay.
Yeah.
And it’s and it’s been it is frustrating as an auditor.
I mean, these are estimates that get built into the financial statements.
And typically what we’ve seen, like you saw the change last year was almost a million dollars.
There’s years where it will you’ll have a huge net pension liability, which causes a huge expense in your government wide financial statements.
And then the very next year, you have a pension asset, which creates a revenue, which brings your net income way up.
And then the very next year, there’s a liability and your net income goes way back down.
And so it’s hard to really get a true picture in the government wide financial statements of what you’re actually doing inside the government and how healthy you really are.
Thank you so much.
I’m ready to make a motion.
You guys are ready.
You guys are ready.
I move to approve financials with Karen’s recommendations to be looked at by Jon Hatterley, as well as based on the conversation between Karen and Mr. Wojtek over the language on the TRT.
I’ll second.
Motion by Commissioner Martinez, second by Commissioner Hadley to approve.
Hadler.
I’m sorry.
Every time she said and I apologize.
Is there any further discussion?
If not, I’m satisfied.
OK, I guess I’m sorry.
I just want a quick clarification.
Commissioner Martinez, the language you would like me to review with Gabe is the management response to the fund deficit in the debt service or another topic.
I’m sorry, I may have misunderstood going back.
It was the conversation that we were having on the TRT over the 24 and then the subsequent note for 25.
Oh, the subsequent event note.
Yeah, and whether or not.
Yes, whether or not you want to add language regarding response to the state auditors audit and the county’s response to that and subsequent taking care of those findings.
In the note disclosures, which particular note disclosure are you talking about?
Supplementing an existing note disclosure.
I think that’s what you’re you were Commissioner Martinez.
I think that’s what you were asking was to have more clarification on that transfers note.
Maybe an additional wording.
Once again, we’re just trying to tie this up right here so that in 2025, we can just note that it was, you know, that it was addressed and then that we can move forward.
OK, so we’re just focusing on that transfers note.
In relation to the TRT.
OK, thank you.
I’ll look with Gabe at the subsequent event for 2025 transfers.
Yeah, Mr. Hadley had just mentioned that he was uncomfortable making that drafting that language.
And I just recommended that maybe you and Gabe could work on that.
Get that over to Mr. Hadley and hopefully we could have that that language inside of the financials for the commission meeting coming up tomorrow.
OK, super.
Thank you.
Thank you so much.
Let me read this back to you and make sure I got it right.
If that’s OK.
Sure, please.
Motion by Martinez to approve the draft financials to incorporate comments made by Karen Curtin and to include the modified management response surrounding the TRT transfer and subsequent event note regarding transfers for 2025.
That sounds correct.
I captured everything I wanted.
OK, so.
And second by.
Yeah, if if necessary.
Yes.
All right.
We’re good for a call for a vote.
Sure.
All right.
All in favor.
Aye.
All right.
That passes unanimously.
Thank you, Jon.
Thank you, Karen.
I know that was a lot there, but I think it’s been a long time coming to get to where we are here.
And I think that we’re getting to a better place with our financial there.
And thanks also, Julian, for your input on some of that.
Do you mind taking a just a quick recess?
OK, and we’re going to take just a quick couple of minute recess if we could, please.
And then we’ll be right back.
Bill, you want me to stay in the meeting?
Sorry, you were muted.
Sorry.
OK.
I don’t see any reason to, Jon.
Thanks again for helping us through all of that.
Yeah, for sure.
And I’ll go through and I’ll have Steve make all these.
Changes to the spelling and things like that, and we’ll get everything taken care of.
And then Karen, I’ll just reach out, probably email.
See if you’ve had a chance to talk to Gabe.
We’ll try and get a final draft.
By tomorrow’s commission meeting, you’re muted, Karen.
Thank you.
Can you please drop your email in the chat?
Yeah, yeah.
As I will, and Bill, would you like me to participate in the remainder of the meeting?
Yes, please.
If that works with your schedule, I know we’re going longer than normal here.
We’ve got the discussion and approval of the audit charter that Julian has provided us with coming up.
And then just some direction for the internal auditor.
And I think we’re going to postpone the update on the external auditor because we’re extending the period looking for an external auditor there.
OK, I’m sorry.
I have another call that I need to prepare for at once.
So I could probably stay on until 1215 or so.
Sure.
Whatever works for you, Karen.
Thank you.
Thank you.
Did you get that, Karen?
You get that?
Your email?
Yeah.
Yes, I have it.
Thank you.
All right.
Thank you, everybody.
Thank you.
Nice to talk to you.
Bye bye.
All right.
All right.
Thank you.
OK, so we will move on to our discussion and approval of the audit charter.
Julian, if you have anything that you want to discuss, I don’t know if there’s any questions regarding this.
I didn’t have any.
I read through it twice.
I don’t does anybody do either of you guys have anything to add to this?
No, I just want to make a point is the and the rest of the commissioners don’t need.
This is just standard audit committee stuff.
Sure.
Yeah, there is.
OK, we’re just probably are going to get the audit.
And I didn’t call for any questions from them, but I didn’t see anybody really.
No, I totally agree.
Wanting to engage.
So necessary.
We can.
Yeah.
So, yeah, Julian, if you want to.
Add what you want and then we’ll just vote to approve this.
Wonderful, yeah.
So I took the language a lot from a group we’re involved in called the Association of Local Government Auditors.
They are what we call yellow book, mainly mainly mainly a yellow book institution.
Their coalition of nationwide local government auditors.
And.
Really, the only additions I made with some Utah specific things, things that I felt fit the county model.
I worked to make sure the language was flexible because it does not have to be contracted.
You could have staff doing this.
There could be a staff based internal audit function.
I wanted to present you with a document that had life beyond us so that you were building more of an institution that served the county long term.
I do think this is something that eventually could be adopted in a code, but the shortest path is adopting it as a policy, testing it out, making sure it actually works and fits with the county, making changes and maybe years down the road, adopting it in a more formal manner.
But just to get the ball rolling, set standards, set definitions.
This is what we’re putting forward.
I’ll go ahead and make a motion to approve the audit charter as presented.
Motion and a second.
All in favor.
Aye.
That passes.
Julian, thank you.
And I did note in my reading that it looked like it was something that could go on after GPP was, if they were finalized with us.
So I appreciate that.
I think it’ll be good practice for later, you know, for the county to have this document, as you say, later adopted into code.
Excellent.
All right.
Thank you on that one.
Let’s see.
We will move to approve short and long term direction for the internal auditor.
I know that we’ve had a bunch of discussion around this.
I don’t know if you, other commissioners want to weigh in on it.
I know we’ve had some discussion regarding the airport and remind me what’s the other.
We’ve talked about Sand Flats and MOT as well.
Sand Flats, Mott being the Mott Office of Tourism.
And the airport to start with those, Julian, as far as departments.
And then I’ve asked for some update and it was too late for this meeting to get a review of everything that GPP, no, excuse me.
I’m sorry.
EFG.
EFG, what they had done in the past so that as we move through the, I think there’s like 14 departments and a few SSDs that we’re not doing another department subsequent, maybe a year or two later that we try and rotate through the full list of departments that we have.
So we’re not repeating ourselves too close together is I guess what I’m trying to communicate.
And so once we get that all assembled from what EFG did, why then we’ll maybe relay that to you as well.
You can have the information of what they did as well as timeline.
And then just maybe a question or a recommendation.
Should we split it up a little bit rather than just have, you know, like we have an SSD, we have an internal department and then the airport right here.
Should we also have maybe like look at one elected office and then maybe look at, I’d like to see, just make sure that we’re kind of splitting that up a little bit.
So it’s not all, you know, one department or one section of departments here, one section here.
If we have one where we look at one elected office and then we look at, you know, a SSD and then maybe we look at another internal department.
Well, there’s, I mean, there’s so many more departments than there are SSDs, for example.
So we’re going to run through the SSDs much more frequently than departments if we do one, one at one every time.
But maybe I can just throw all of them into a pot and rotate through.
And some are obviously like airport.
There’s so much more pass-through money in the airport that there are other departments we’re going to probably be hitting that a little more frequently or spending more time and energy on it, I would assume than something like.
I do see the value in at least doing one elected office, because what do we have?
Assessor, recorder, treasurer, sheriff.
Yeah, five or six.
So I think it might be, well, you know, make sense to start making sure that we yearly do an elected office so that we don’t end up one year.
We’re doing all four or five of them.
No, that makes sense to you.
And our office can come up with a rotation and give that to you all to see what your thoughts are.
OK, as far as SSDs, where is our internal auditor?
Because they have their own auditors.
How much time and energy are we putting into those SSDs normally?
I mean, have we done that in the past?
I don’t know.
I just, yeah.
I’m not sure either.
And I think does this also overlap a little bit with our discussion on the component units regarding we have discussed paying for their audits or a portion of it.
I’m not sure where that ended up, because we want to set a date that they are final.
And we just had that with Jon.
He gave us some recommendations.
I wrote them down here.
But does that kind of tie into this discussion as well?
Because if we’re moving into doing their audits rather than themselves, I wouldn’t think we would want to duplicate, do we?
No, but we might want to include them.
I do think that we would want to have both an internal and external audit.
You know, if that’s something that we, especially if it’s something we’ve done in the past, I think that they are two different.
I think they’re two different reviews.
Right, so I think that, you know, you’re looking at, you know, maybe bored down in the minutia with these internal audits right here and getting down into the details and making sure that the controls, right, so the external audit happens, they say they recommend these controls.
Who’s actually checking to make sure that those controls have been implemented?
Yeah, I would agree.
And I think mine more relates to actual, you know, the update on the external auditor RFP, you know, my question regarding these deadlines.
That’s probably in our next meeting when we look like how does that work with the, I mean, I just don’t know.
That’s why I’m asking with us, like, say, sending an internal auditor to look at the, say, Andy’s books and his procedures.
Is that, we never have tried that before.
We can’t.
Yeah, I don’t think we haven’t tried it.
And I don’t, I mean, is that over just something we could look into.
For sure.
I think we should look into it before committing to it, because it seems like it could be.
And again, I don’t know.
I’m not making a judgment.
Oh, I think that point is well taken.
We don’t want to upset anyone, right?
I wasn’t sure if it had been done in the past or not.
So I thought in the past, and I’m not saying that there’s a reason we haven’t.
I just, we stuck the internal to county departments is all.
Okay.
I don’t know.
Maybe we should get our county attorney to weigh in as far as what statute is.
We definitely don’t want to overseed our oversight.
Yeah, now I agree.
May I throw in a thought, please?
Sure, please.
So based on the comments from the external auditor, it appears that there’s issues with cutoff with payables being recorded and cutoff by cutoff.
I mean, payables and receivables being recorded in the proper period, which is what to some degree has led to one of the comments.
And also you could argue the budget, the budget comment, also the production of financial statements being done quarterly is important.
So I’m not sure, Julian, how this sort of falls into your risk assessment, but I’d like to put it out there as a thought that evaluating the internal controls around the payables in general may be something that a value to look into.
Yeah, I agree.
That sounds good.
And commissioners, can I complicate things a little bit more?
I submitted on Friday and I apologize it was so late to the agenda, a proposed format of what an audit plan might look like about some of the things I had heard when I had the opportunity to speak with folks and some of the issues, which I would really modify after hearing some of the report from the external auditor today.
But I put it together so that for this discussion, you would have a framework of what an audit could look like about how we tend to do it.
And that’s not saying we can’t change.
We can easily change the format and the structure.
This is how we tend to do audits, performance audits in particular.
I don’t know if you have a printout of it.
I’m happy to put it on screen and just walk through it.
If it helps you frame this.
That was my thinking because I’m not suggesting this has to be the exact format.
I did look through it.
OK.
Oh, big.
And I’ll just share background about where this is coming from, because the intent of this was there are some prior issues with restricted funds I’ve read about, heard about.
And the intention was to say, let’s confirm that those issues have been resolved, the corrective actions have been taken, and that things moving forward.
So doing a pretty recent scope of FY24 and then into the current fiscal year saying, well, what’s been changed?
What’s working?
Are these issues in a position where they will not recur again?
I had selected the three major restricted funding sources, which would be the TRT and TRCC, Class B and C roads coming from the state, and then some of the airport federal grants this came up.
Of course, there’s a single audit about the airport improvement program.
But using these as a basis for looking at countywide controls and reporting and compliance and efforts around restricted funds in general, because there’s a lot of smaller restricted funds, of course, besides this.
And using this as a template to really look at these issues and ensure that they’re in place.
I think there are other risks, and I’m not suggesting these are the key ones, but these are some of the legacy risks that I had heard and observed might benefit from being confirmed that they are wrapped up with a bow, that there’s nothing here and that the county can move on to another issue.
Not to relitigate the old issues, but to say, are the solutions that the county has been working hard to put in place?
Are they fully in place?
Are they working?
Then let’s move forward to the other risks.
And there’s certainly lots of other risks that could be brought forward.
But again, I’m not suggesting you have to use this format, have to do these things.
This was just a template to get the ball rolling, because I know there’s a lot on the table.
And if you read through it, it just talks about our general process.
We tend to do a phase one.
Can you go up just a little bit more?
I’m sorry.
And this is the reason why these would be selected.
So I’ll scroll up a tiny bit more.
Just the dollar amount.
These are larger.
And again, risks can exist in small dollar areas as well.
I’d just like to bring up the, I think, importance right there of the TRT and the TRCCA and the risk right there.
And something you might not be familiar with is we do have a new bill that came out, which is HB 456.
Which is going to be changing how that account is.
Right.
So we’re going to have basically funds that were set in our restricted account that are going to have one set of rules, which is going to have, you know, based off of what is it?
It’s a film rec and convention, basically inside there.
And so those funds are going to have a certain amount.
And then we’re going to have the new restrictions that we put on under HB 456.
And we’re only allowed to have one restricted account for those funds.
So there’s going to be a lot of confusion based right there, especially since we do have quite a bit of funds that are going to be sitting inside there.
And so making sure that those funds are spent properly is going to be a big part of the outdoor grant that is going to be associated with another 0.25. It’s going to be collected by the state.
So making sure that we stay in compliance there, I think should be a top priority when we’re looking at those internal controls.
If that makes any kind of sense to you.
I can go into further detail offline or we can chat right here about it.
Yeah, I think the single fund does make it harder for folks to manage.
And there’s just more internal controls and reporting you need if the money’s commingled in a fund.
It’s easier if you just put them in separate buckets.
You don’t have that option.
So it changes the nature of what needs to happen on the ground.
Yeah, and you know, one of my long terms is I just want to make sure that we are not found to be incompliant and then not eligible for these 0.25% grants right there.
And making sure that that fund balance is correct, you know, so that we’re spending that money based on whether we do a first in, first out, or however we look at managing that fund.
I do think that making sure that we have some controls set up so that we can make wise decisions on it.
And just to continue off that, and with all of these, I’m not suggesting there is a problem.
These are just the larger revenue sources where the most risk is concentrated just on a dollar volume.
Sure, and not just the dollar volume, but I just wanted you to understand the potential of, I think that the risk would be elevated on that right there just because of those grants.
And it’s listed right there and I just wanted to make that extra note.
No, that’s a really good addition and definitely a complication for anyone trying to manage those dollars.
Yeah, it’s a shame it’s combined.
Makes it harder.
If real briefly, I’ll just share our general process as we do a planning and risk assessment phase for engagements where we start with interviews and an entrance conference where we meet with the stakeholders, make sure there’s no questions, look at documents, all kind of normal things you might expect.
We do a risk assessment at the end of this first phase, which is re-evaluating our hypothesis basically and saying, did we learn anything new?
Is there something we should do to our testing plan and modify it?
We share that document with the auditees and say, give us feedback early.
If you think we’re wrong, let’s talk about it now before it’s too late.
We’re not trying to do an I gotcha audit.
That’s the intent of the first phase is to make sure we have all the information we need to then do testing and field work that reflects the reality of how things operate.
With this, we would look at policies and procedures and controls override when we did get into this testing.
The three programs we discussed.
And then if in phase one, we identify some other risks, that we would add that in as a fifth testing area and then reporting.
Our process is to provide the auditee with a draft report before we give it to the audit committee and to the commission.
I think it’s really important for them to have a chance to raise their hands and say, no, we actually have this document.
We didn’t give it to you.
We don’t see eye to eye on this.
Let’s understand we get that right before anything becomes public.
And we have a chance to have that dialogue.
And then we finalize the report.
Then the auditee, in this case, management would have a chance to provide a letter, which we attach to the final report and present that to you with their response.
That’s our general process that we do for these types of audits.
And hour-wise, I just wanted to share, I think this would be a couple hundred hours, 260 hours.
It’s a simple audit in a lot of ways, but there’s a lot of stakeholders in how this process works and in how these different functions interrelate to other county functions.
So I think there’s some added complexity to an otherwise simple process.
But I wanted to ground you in the sense of the scale of what we think it takes to get an audit like this done.
And again, this would relate to other audits to consider in the future.
We want to be extremely careful with county resources.
So trying to be as transparent about what we think it takes to accomplish these audits.
And still 260 hours in a performance audit where we are going into the weeds, I would say that’s a relatively small audit.
But we’ve done some studies of audit shops.
Most audits in this space range between 250 hours to 1500.
And so it’s a huge range in this field.
And we really put this on the lower end and really trying to focus in on the high risk areas and be as conservative as we can with the county’s resources.
Forty-five thousand.
What do we spend the cost on internal audits?
Do you know, Quinn?
What were we looking to spend?
Ten thousand.
So it’s significantly.
And what were we looking to spend to have Squire come in and help us out?
I’m sorry, I don’t understand.
There was discussion earlier about having Squire come in and help us out with our books as well.
Corey’s already in our contract.
Yeah, I understand that.
But we had we had an additional conversation about having Squire come in and help us out.
Was it about a week?
What’s that?
Some 40 hours.
That’s right, I think it was.
Yeah, I was up for it.
I think it was 10 days or something.
Forty hours, yeah.
That we talked about.
Just trying to get the picture of where we’re at.
So do we need them to do something to make sure that we’re budgeted for this above and beyond what we’ve currently got?
Or I guess I’m not real sure.
It’s for next year.
This is for 2026.
Yeah, it was.
We need this.
Right, right.
Yeah, I think we’re going a lot deeper than we have in a long time, Julian.
And I’m not against that.
I’m not opposed to it.
I think that getting this all cleaned up and on an ongoing basis.
Do you see that being a regular year?
Yearly?
Or do you see this, some of this being just a start?
Well, I think this topic in particular is nebulous because it crosses three different areas.
So we’re kind of doing three mini audits at once.
And then we have elected officials who are involved and other stakeholders.
So it’s a little more complicated than say focusing on a single department and a single issue within that department.
Sure.
So I think this one gets more complicated.
I would be really interested in your feedback, though, with this and any future audits about how we focus on the highest priorities so that we maintain the best use of resources.
Because it’s really easy to go very broad.
And there’s, of course, you can find problems.
You can find things in an audit like this on multiple levels.
But what is the highest benefit to the county?
So getting that feedback on a regular basis, I would just say will help us in any future audits as well.
Make sure that we are focused on what your needs are.
Sure, and I could see where, you know, some of these very, very small departments or even our SSD, there wouldn’t be a value in auditing deeply.
Somebody that’s got a budget of 30 or 40 thousand dollars, you know, I’m thinking of Thompson SSD off the top of my head.
But some of these, I don’t think that are near as critical as the others.
So and I guess I’m going to go back to the elected.
I think that we will do some sort of rotation.
And I know Mark was going to give us some feedback on where to start on that based off of the past, possibly.
So that one is still up in the air and we just have the other three currently for you, correct?
I think if we haven’t done those in a long time, it seems like starting with the biggest, you know, obviously, the sheriff’s got by far the largest budget of any of the electeds.
It’s just off the top of my head.
Yeah, I would say wherever the biggest risk is, that’s not where we should start at.
I would assume the biggest budget is probably the biggest risk.
I mean.
Right, if we were to put together the risk assessment today, I think we would have a metric for simply, I would recommend a metric for operating size of the budget.
I’d throw in history with workers’ comp claims, just because there’s some operational things that happen with that.
And that tends to correlate.
Big things have more people with more claims.
Prior litigation, prior audits.
And then any of these items that have been noted by the external auditor would add to it for some functional areas, not necessarily individual departments.
And then anything that management and the various management throughout the county would raise their hands and say this is a risk too.
In my opinion, that is noteworthy for a risk assessment for you having some kind of quantitative way of ranking what the highest risk is.
Sure.
I mean, I think it’s pretty obvious who’s going to be elected.
Yeah, I know the Sheriff’s is the biggest.
I would bet that there’s plenty of people in the public that would pick other departments because of their tax increases.
I’m sure that there’s…
Like Julian was saying, with personnel and past claims and whatnot, it’ll hurt.
Right.
Then also some value, I would say at some point that we’re going to have to get into the treasurer and the clerk auditor’s office.
So they’re all going to have to be looked at eventually.
So then Julian, I did just send you…
So one of the questions that I had earlier was a breakdown of our restricted funds and their fund balances that they have.
And I just included you, and I also gave it to the audit committee here, the response that I got back from Gabe.
I think that we are going to have to go through once again and look at the makeup of what’s sitting inside those fund balances right there.
So whether it’s the fund 47 and is it option B that’s sitting inside there?
Are they grants?
Are they TRT?
And then once you go into the TRT right there, we’re going to need to know is it rec film convention?
Is it promotion?
Or is it new restrictions under HB 456?
And that’s one of my concerns that I’d like to make sure that we’re getting down to the bottom of, just so we know what those balances are right there and what needs to be spent, what can be spent before we go into our budgeting season.
Right.
I would hope that this audit could touch on that.
The intention wasn’t to cover every restricted fund, but certainly break down these.
One of the outcomes I imagined would be what’s in the fund balance today would be reported back, not just the functional background of it.
But I think we would look at that and be able to say the allocation and how things are designated within a fund is appropriate or not.
And in doing so, we would confirm the fund balances.
Yeah.
And just what that process is for these single funded, these single funds, right?
I think that we just need to make sure that there is a process to know what the balance, if it’s a single fund, what the makeup is inside that.
I think that I’m good with where we are.
If there’s anything else that you want to add in, Julian, or any of your team, I think we’re to a point where we can move forward here.
Wait, so can I just, I want to make sure we have clarity.
Are we talking about a focus for this year versus the larger expenditure of the $45,000 would be for a 26, right?
It’d be 26, right?
It’d be 26.
Is that, am I correct?
Yeah, you are.
And I was just catching everybody up here with what I had been doing.
So what are we asking the focus to be now for the remainder of 2025?
Are we seeking guidance on the remainder of 2025?
And if so, what is it?
I think that’s a good question because I was under the impression that we were ready to start moving forward.
And I think you’re right, but I think if it’s going to cost us that much, we need to budget it for next year.
I don’t think we have that much budget for this year.
Yeah, absolutely.
That’s well, but we can do it.
We can have a budget discussion.
This meeting here, because I think there was some other stuff related to that.
But I do think we need to clarify what we want to start on this year.
And maybe that’s after we’ve had a budget discussion here too, Liam.
No, I completely understand.
And this is something we could work on next year just as easily as this year.
If with budget in mind, especially since a smaller number, I believe it was budgeted for the current year, we could focus this fall on putting together the risk assessment and giving a proposed plan that you could adopt for next year, which would include something like this restricted funds audit or something broader as well.
Okay.
Okay, and then, so I know that we’re also waiting on some information regarding elected.
So I would say that a follow-up email from the administrator and possibly including all the audit committee here to you, I think that would be the way I would see this moving forward too, Liam.
Understood, that sounds great.
And with that, I hate to bring up too much housekeeping, but one thing that would be important to us before we began a proper engagement is also making sure that we have a contract in place with the county.
So something signed, it’s one of those areas where I see risk potentially county-wide because if we’re a vendor operating in a potential gray area or other vendors operating without a formal contract signed, what does that mean for insurance requirements?
So this is good practice.
If we just have a contract in place, we would do that.
I think that’s pretty standard here.
I don’t know of anything that’s operating without one.
I’m not saying that something doesn’t exist.
But we do have a fairly standard contract on a lot of different things.
We see a lot of contacts out there.
So I’ll make sure that that happens also.
Okay, fantastic.
Do you have something that you want us to review as far as a contract or would you prefer we put it together on our end?
To be completely honest, I am used to jurisdictions telling us what the rules are and what they’re telling us the contract terms.
I could easily put something together, but it’s usually the tables are turned where we’re committing to a jurisdiction’s requirements and their legal counsel’s concerns about risk related to vendors.
So not to pass the buck, but it’s probably healthy for the county to do it, yeah.
I agree with exactly what you’re saying, but sometimes people have something that they at least want some of their verbiage in.
So yeah, I would jump in.
Julie, this is Quinlan.
You can’t see me.
I’m off camera.
We have a standard independent contractor form.
And so what I’d like to do is get that to you and just have you fill out this work as you see it and then get it back to us.
And we can collaborate back and forth on that.
Okay, that’s great.
Just to have something formalized and move forward.
I think that the passage of the audit charter as far as verbiage, as long as we have that in place, that puts all of my concerns to rest.
And we’re happy to comply with all the insurance and indemnification.
Yeah, we’re quite used to that.
Okay, all right.
I don’t believe any of this requires a vote unless you feel differently.
All right, well, Julian, again, thanks.
And thanks for your team sitting through all of that.
That was a lot.
And we look forward to getting started on some things.
Thank you for your time, commissioners.
Yeah, thank you.
And so with that, I will adjourn this meeting.
All right, all right, meeting adjourned.
Thank you, folks.

See the full agenda

2024 Grand County Audit Presentation and Approval

The audit committee received and approved Grand County’s 2024 financial audit, presented by Jon Haderlie from Larson accounting firm. Two compliance findings were identified.

First, multiple funds and departments exceeded their budget, including the Health Care Sales Tax Fund, Canyonlands Airport, Debt Service Building Authority, and several departments (Public Safety, Public Works, Community and Intergovernmental).

Second, the Debt Service Building Authority Fund showed a $14,000 deficit, requiring corrective action under state law to reduce the deficit by 5% of fund revenue annually.

Late financial statements from component units—Grand County’s special service districts—continue to delay the county’s audit completion. Special service districts are responsible for their own audits, but must provide info to the county. Haderlie stated all component unit audits must be received by the end of May to meet deadlines.

Audit Charter Approved

The committee unanimously approved a new audit charter establishing standards and procedures for internal audit functions, designed to extend beyond the current GPP Analytics contract. They also discussed guidance for internal auditors and looking for an external auditor.

Discussion centered on prioritizing internal audit focus areas, with airport operations, Sand Flats Recreation Area, the Moab Office of Tourism and TRT (Transient Room Tax) and restricted fund compliance being identified as top priorities.

Commissioners also considered a comprehensive restricted funds audit proposed by GPP Analytics, which would cost approximately $45,000 (260 hours of work), requiring budget consideration for fiscal year 2026.

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