HomeMy WebLinkAboutMemo - Mail Packet - 06/04/2024 - Memorandum from Randy Bailey re: Plante & Moran LLC FY23 AuditAccounting Department
215 N Mason St
PO Box 580, Fort Collins, CO 80522
970-416-4354
rbailey@fcgov.com
CC: Trevor Nash, Controller
MEMORANDUM
Date: 5/22/2024
To: Mayor and City Councilmembers
Through: Kelly DiMartino, City Manager
Travis Storin, Chief Financial Officer
From: Randy Bailey, Accounting Director
Subject: Plante & Moran LLC FY23 Audit
The City’s municipal audit for fiscal year 2023 is underway. Our audit firm, Plante & Moran LLC
is providing an overview of the audit process and direct contact information should you have
additional inquiry. The accounting staff is also available on request to provide additional follow-
up as requested, and appropriate.
DocuSign Envelope ID: 7F9D91BA-8635-4F83-8369-250ABDBFFAF5
May 21, 2024
To the Honorable Mayor and
Members of City Council
City of Fort Collins
300 LaPorte Ave.
Fort Collins, CO 80524
Dear Mayor and Council Members:
We are in the process of planning for and completing the audit of the financial statements of the City of Fort
Collins (the “City”) for the year ended December 31, 2023. An important aspect of planning for the audit is
communication with those who have responsibility for overseeing the strategic direction of the City and
obligations related to the accountability of the City. At the City, these responsibilities and obligations are
held by the Mayor and Council Members, collectively and individually; therefore, it is important for us to
communicate with each of you in your role as a member of the City Council.
As part of this communication process, we have spoken at length with Randy Bailey, Director of Accounting,
regarding our responsibilities under generally accepted auditing standards and the planned scope and
timing of our audit. The purpose of this letter is to provide each of you with a summary of those discussions
and to provide you with the opportunity to communicate with us on matters that may impact our audit.
Our Responsibility Under Generally Accepted Auditing Standards and Generally Accepted
Government Auditing Standards
As stated in our engagement letter addressed to Mayor Jeni Arndt and dated March 22, 2024, our
responsibility, as described by professional standards, is to express an opinion about whether the financial
statements prepared by management with your oversight are fairly presented, in all material respects, in
conformity with U.S. generally accepted accounting principles. Our audit of the financial statements does
not relieve you or management of your responsibilities.
In accordance with Generally Accepted Government Auditing Standards (GAO Standards), we are required
to communicate all noncompliance with provisions of laws, regulations, contracts, or grants that have a
material effect on the financial statements that comes to our attention. GAO Standards also require that we
report any instances of abuse identified during that audit that could be quantitatively or qualitatively material
to the financial statements.
We expect to include an emphasis-of-matter paragraph in accordance with section 706, Emphasis-of-
Matter Paragraphs and Other-Matter Paragraphs in the Independent Auditor’s Report. The proposed
wording of the emphasis-of-matter paragraph follows:
As described in Note X to the financial statements, during the year ended December 31, 2023, the
City adopted new accounting guidance of Governmental Accounting Standards Board Statement
No. 96, Subscription-Based Information Technology Arrangements (SBITAs), which establishes
criteria for accounting for such agreements. Our opinion is not modified with respect to this matter.
Overview of the Planned Scope and Timing of the Audit
Timothy St. Andrew is the engagement partner responsible for supervising our services performed as part
of this engagement.
DocuSign Envelope ID: 7F9D91BA-8635-4F83-8369-250ABDBFFAF5
To the Honorable Mayor and
Members of City Council May 21, 2024
Our audit fieldwork will include three phases. The planning and preliminary information-gathering phase
occurred during February and March the risk assessment phase in March and April; and the rest of our
audit procedures will be performed during April, May, and June.
To plan an effective audit, we must identify significant risks of misstatement in the financial statements,
including those related to changes in the financial reporting framework or changes in the entity’s
environment, financial condition, or activities, and design procedures to address those risks.
Because management is in a unique position to perpetrate fraud due to its ability to manipulate accounting
records and prepare fraudulent financial statements by overriding controls that otherwise appear to be
operating effectively, generally accepted auditing standards require that we always consider this to be a
significant risk. In addition, we identified the following significant risks of misstatement:
• Proper valuation and recognition of the net pension liability
• Proper valuation of infrastructure under the modified approach
• Recognition of revenue associated with federal awards
In response to these identified significant risks, we will perform the following:
• Testing of journal entries recorded in the general ledger and other adjustments made in the
preparation of the financial statements.
• Review of pension actuarial valuation including assumptions and methodology and ensuring the
liability recorded is consistent with the valuations.
• Review of the City’s assessment of infrastructure assets for appropriate conclusions and
disclosures.
• Compare federal expenditures from grant funds to SEFA and perform a reconciliation between
federal grant revenues and federal expenditures on the SEFA.
We will gain an understanding of accounting processes and key internal controls through a review of the
accounting procedures questionnaires and control procedures questionnaires prepared by management.
We will confirm through observation and inspection procedures that accounting procedures and controls
included in the questionnaires have been implemented. We will not express an opinion on the effectiveness
of internal control over financial reporting; however, we will communicate to you significant deficiencies and
material weaknesses identified in connection with our audit.
The concept of materiality is inherent in our work. We place greater emphasis on those items that have, on
a relative basis, more importance to the financial statements and greater possibilities of material error than
with those items of lesser importance or those in which the possibility of material error is remote.
Information from You Relevant to Our Audit
An important aspect of this communication process is the opportunity for us to obtain from you information
that is relevant to our audit. Your views about any of the following are relevant to our audit:
• The City’s objectives and strategies and the related business risks that may result in material
misstatements
• Matters that you consider warrant particular attention during the audit and any areas where you
want to request additional procedures be undertaken
DocuSign Envelope ID: 7F9D91BA-8635-4F83-8369-250ABDBFFAF5
To the Honorable Mayor and
Members of City Council May 21, 2024
• Significant communications between the City and regulators
• Understanding of the City’s relationships and transactions with related parties that are significant
to the City and any concerns regarding those relationships or transactions
• The attitudes, awareness, and actions concerning:
o The City’s internal control and its importance to the City, including how the Mayor and
Council Members oversees the effectiveness of internal control and the detection or
possibility of fraud
o The detection or possibility of fraud, including whether Mayor and Council Members has
knowledge of any actual, suspected, or alleged fraud affecting the City
o Any significant unusual transactions the City has entered into
• The actions of the Mayor and Council Members in response to developments in accounting
standards, regulations, laws, previous communications from us, and other related matters and the
effect of such developments on, for example, the overall presentation, structure, and content of the
financial statements, including the following:
o The relevance, reliability, comparability, and understandability of the information presented
in the financial statements
o Whether all required information has been included in the financial statements and whether
such information has been appropriately classified, aggregated or disaggregated, and
presented
• Other information included in the Annual Comprehensive Financial Report comprises combining
and individal fund statements and schedules, Local Highway Finance Report, and introductory and
statistical sections.. In connection with our audit of the basic financial statements, our responsibility
is to read the other information and consider whether a material inconsistency exists between the
other information and the basic financial statements or the other information otherwise appears to
be misstated. If, based on the work performed, we conclude that an uncorrected material
misstatement of the other information exists, we are required to describe it in our report.
Management expects that final versions of other information will be provided to us prior to the date
of the auditor’s report.
Management expects that final versions of other information in the Popular Annual Financial Report
will be provided to us before finalizing. We will request management provide a written
representation that the final version of the documents will be provided to us when available, and
prior to issuance by the City of Fort Collins, in order for us to complete necessary procedures.
If you have any information to communicate to us regarding the above or any other matters you believe are
relevant to the audit, or if you would like to discuss the audit in more detail, please call Tim at 313-496-8542
or Josh at 734-330-9535 as soon as possible.
DocuSign Envelope ID: 7F9D91BA-8635-4F83-8369-250ABDBFFAF5
To the Honorable Mayor and
Members of City Council May 21, 2024
Thank you for your time and consideration in this important aspect of the audit process. You can expect to
hear from us again after the completion of our audit when we will report to you the significant findings from
the audit.
Very truly yours,
Plante & Moran, PLLC
Timothy St. Andrew, CPA
Partner
Joshua Yde, CPA
Principal
DocuSign Envelope ID: 7F9D91BA-8635-4F83-8369-250ABDBFFAF5