Assembly to Receive Positive Audit Report

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Category: News

Created on Tuesday, 11 February 2025 14:42

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By SHANNON HAUGLAND
Sentinel Staff Writer
    The City and Borough of Sitka has received a clean audit for the 2023-24 fiscal year, and in the single audit process for the same year showed no significant deficiencies or material weaknesses.
    Those were among conclusions made by the city-contracted auditor BDO, which will be on the Assembly’s agenda at tonight’s regular meeting, 6 p.m. at Centennial Hall.
    The annual audit will include a presentation by BDO CPA Joy Merriner, who will speak via Zoom near the top of the agenda.
    “Their conclusion is everything is clean,” City Finance Director Melissa Haley said today. “The only thing they called out is that some of us have the ability to post our own journal entries.” The journal entries – some 5,500 a year – are accounting details that are entered by one staff member, and reviewed by a second staff member.
    The journal entry procedure was noted by the CPA firm, but isn’t considered significant, and is mainly a product of time constraints and staff working after hours, Haley said.
    BDO also noted a “control deficiency,” in that the finance director has administrative access to the accounting system. This was noted for the past few years by BDO but was not considered “significant” and reflects the lack of an IT staff member dedicated to the ERP (enterprise resource planning).
    For the two minor issues, Haley said, the CPA firm recommends that the city ensure it has “an audit trail,” and has other controls to a ensure secondary reviews, and document any changes to security systems.
    In other business at tonight’s meeting the Assembly will consider an ordinance authorizing the electric department to make an early pay-off of a 2020 U.S. Department of Agriculture, Rural Utility Service loan of $3.1 million. It was not until 2023 that the paperwork was signed, and in the meantime the interest rate rose from less than 2% to 5%, city officials said.
    Besides the extra interest expense, the loan came with significant reporting requirements, and required operational changes in the electric department which the city memo says would be onerous.
    Fortunately, the city received an unrestricted $3 million in federal post-COVID hydroelectric incentive payments that will “help maintain adequate levels of working capital while we are repaying the loan,” finance director Haley said.
    At the last special budget meeting, Haley and city administrator John Leach told the Assembly that paying off the loan early means the working capital would take a hit in the short run, but it’s a good investment in the long run since the city won’t have to pay interest on the loan.
    The ordinance to pay off the loan, plus interest and fees, with $3.3 million from the electric fund, is on the agenda for first reading tonight and for second reading Feb. 25.
Other Business
    In other business at tonight’s meeting the Assembly will consider:
    – first reading of an ordinance covering a number of mid-year supplemental appropriations for unexpected changes in the current budget, including waterline repairs, carpet replacement at city hall, and Kirkman Street utilities.
    – appointing Mariana Robertson to the Local Emergency Planning Committee; and Joshua Badder to the Port and Harbors Commission.
    – reappointing Lauren Howard to the Gary Paxton Industrial Park Board; and JoAnn Huff to the Tree and Landscape Committee.
    – liquor license package store delivery Endorsement applications for Triple C Ventures Inc. dba Watson Point Liquor at 1867 Halibut Point Road and Cascade Convenience Center at 1211 #A Sawmill Creek Road.