# Budget, Finance & Economic Development (BFED) Committee - January 21, 2025 > Auto-transcribed civic record · Committee · January 21, 2025 - **Permalink**: https://meetings.lexingtonky.news/meeting/6317 - **Source video**: https://lfucg.granicus.com/player/clip/6317?view_id=14&redirect=true - **Date**: 2025-01-21 - **Body**: Committee - **Last revised**: March 28, 2026 - **Length**: 6,697 words - **Speakers**: Chair > ⚠️ **Auto-generated content.** Audio from the official Granicus video was auto-transcribed by OpenAI Whisper-1, with speaker labels folded in from Granicus closed-captioning. Structured facts were extracted with GPT-4o; the narrative summary was written by Anthropic Claude Sonnet. Speaker labels and verbatim wording may contain errors. See [methodology](https://meetings.lexingtonky.news/about/methodology) or [report a correction](mailto:editor@lexingtonky.news). --- ## Meeting Overview The Budget, Finance, and Economic Development Committee met on November 19, 2024, with the Vice Mayor presiding. The meeting covered two agenda items, both informational in nature: a Quarter 2 FY 2025 Financial Update and an Annual Comprehensive Financial Review. Across the course of the meeting, three motions and votes were taken. No public comments were heard during the session. ## Attendance The following members were present at the January 21, 2025 Committee meeting: - Councilmember Brown - Councilmember Ellinger - Council Member Savigny No members were absent or late. ## Votes and Decisions The committee took three votes during the January 21, 2025 meeting, all of which passed by voice vote. No roll call votes were recorded, and no individual vote counts were available for any of the motions. - **Election of Chair** [timestamp: 0:02]: The committee voted to elect Councilmember Brown as chair of the Budget, Finance, and Economic Development (BFED) Committee. The motion passed by voice vote. - **Approval of November 19, 2024 Committee Summary** [timestamp: 0:03]: The committee voted to approve the summary from its previous meeting held on November 19, 2024. The motion passed by voice vote. - **Removal of Items 21 and 22 from the Committee Referral List** [timestamp: 0:44]: The committee voted to remove items 21 and 22 from the committee referral list. The motion passed by voice vote. ## Appointments The committee took action on two appointments during the January 21, 2025 meeting. - **Councilmember Brown** was appointed to the **Budget, Finance, and Economic Development Committee**. - **Councilmember Ellinger** was appointed as **Vice Chair of the Budget, Finance, and Economic Development Committee**. ## Quarter 2 FY 2025 Financial Update [timestamp: 03:20] Commissioner Hensley and Director Holbrook presented the financial update for the second quarter of Fiscal Year 2025, covering revenues, expenses, and overall budget performance. The presentation was informational in nature. No additional details regarding specific revenue figures, expense line items, budget variances, or concerns raised during the discussion are available in the provided materials. ## Annual Comprehensive Financial Review [timestamp: 23:17] Representatives from Crossland presented the Annual Comprehensive Financial Report (ACFR) to the Committee at the January 21, 2025 meeting. The presentation was delivered by **John Crossland** and **Jacob Smith**, who walked the Committee through the audit process and its results. The presenters confirmed that the audit resulted in an **unmodified opinion**, which is the highest level of assurance an auditor can issue, indicating that the financial statements were found to be free of material misstatement and presented fairly in accordance with applicable accounting standards. The item was informational in nature, and no vote or formal action was taken as a result of the presentation. --- ## Decisions - **Motion** — passed (0-0): Election of Councilmember Brown as chair of BFED - **Motion** — passed (0-0): Approval of the November 19, 2024 Committee Summary - **Motion** — passed (0-0): Removal of items 21 and 22 from the committee referral list --- ## Full transcript You can watch other videos here. Like and subscribe if you found this helpful! This video tutorial shows how to install and configure the Xfce Desktop Environment on VMware Workstation. Visit XfceStore and download the Xfce Desktop Environment ISO file. www.xfcestore.com Xfce Desktop Environment installation is complete. Press Enter to Continue. Xfce Desktop Environment installation is complete. Press Enter to Continue. Xfce Desktop Environment installation is complete. Press Enter to Continue. Motion and a second. Councilmember Brown, are you willing to serve as committee chair if elected? Yes. Thank you. Councilmember Brown, are there any other nominations? All right. Is there any discussion on this motion, this nomination? All right. Hearing none, I'll declare nominations closed and call for a voice vote. All those in favor of Councilmember Brown being chair of BFED, please say aye. Aye. Any opposed? All right. That motion passes. Congratulations, Councilmember Brown. Your first responsibility as chair is to appoint a vice chair. Thank you, Vice Mayor, and thank you, colleagues, for your continued support and confidence in me to serve as your chair of the Budget, Finance, and Economic Development Committee and appoint Councilmember Ellinger as my vice chair. Thank you. All right. Thank you, Councilmember Brown. I now turn the meeting over to you to conduct the remaining business. Okay. Thank you, Vice Mayor. And we'll go straight to our agenda. And the first item on the agenda is the approval of the November 19, 2024 Committee Summary. Our motion has been made and seconded to approve the meeting summary. Are there any corrections or questions? Hearing and seeing none, all those in favor, please say aye. Aye. Are there any that oppose? Hearing none, that motion passes. Next is the Quarter 2 FY 2025 Financial Update. Commissioner Hensley, could you please provide us with the financial update? Good afternoon, and welcome to our new Councilmembers, and welcome back, everyone else. We are starting today with the second quarter financial update, which is representative of our financials through the end of December of 2024. Just as a reminder, we adopt our budget, both revenues and expenses for the full year, but as opposed to some budgets, our revenues, both our revenues and our expenses are represented with a bit of seasonality so that you'll see if you look across the year, we have months where our expenses are expected to exceed our revenues and months where our revenues are expected to exceed our expenses, and so we just kind of take that into account as we go through the year, noting that, you know, some months we expect to have one or the other show more prominently. So at the end of our second quarter, we're proceeding as we had planned. We do have a bit of a deficit, again, that is as planned. We have some months that are coming ahead of us that will show a greater revenue when we get into the spring. We have our net profits collections, which are a good portion of our revenue collections, but we are running ahead. The Director of Revenue, Director Holbrook, is going to talk about our revenues. They are running well to budget, and our expenses, as they have been running for the year, are proceeding as snug. That has been our word for the year. We are continuing on that path. That tells us that we've done a good job as far as budgeting, and we're going to talk about some of those. Our personnel is one that we have really focused on this year. We're continuing on the path that we had noted. We're within 1% of budget, and that's really a lot closer than we've seen over the last couple of years. We're also going to talk a little bit more. Director Luker from Budgeting is going to talk a bit about some of the other categories of our expenditures as we move through. And then at the end of your packet, this is our quarterly, so it does have a little bit more detail as far as charts and graphs for you. And then at the end of the packet, you will note that there are the ARPA reports for your information that are provided, but we're also available to answer any questions. We don't typically go over those in this format, but if there's any questions that you may have, we're either happy to answer them here or answer them as you have questions if you want to send us an email or text after the meeting today. So without further ado, Director Holbrook is going to talk about some of our revenues. Good afternoon, council members. One of the first things we normally look at at our quarterly financials is how our payroll withholding, which is our largest revenue source, breaks down. And we look at this on a quarterly basis. And so you can see the quarterly activity that we budget for and how that's reflected in our actuals. So the line shows what our anticipated budget is for each month. The gray is the actuals for FY24, and then the orange is the actuals for what we've seen in FY25. And like Commissioner Hensley talked about, with most months of this fiscal year, we've seen our revenues in payroll and several other categories be very close to budget. You can see as we've gotten into the end of this quarter that they've started to come around or above the budget, maybe a little better than most of our other months. And so that could be an indicator that as we get ready to move into quarter three, which is typically our largest collection quarter, that we're going to maybe see a little bit stronger growth. But as of right now, we're anticipating it would be pretty close to what we budgeted for this year. Looking at net profits, one of the things that we typically look for is just like state and federal taxes, we have an April 15th tax collection deadline for our business returns. So most of the activity throughout the year is a lot lower until those returns come in in March, April, and May. We typically collect around 50% of our revenue for net profits in that time period. And up until that point, we're collecting extended returns or people that may have a different tax year. And you can see the big jump in April of every year, where we're going to collect around $30 million of a $60 or $70 million budget. So right now, this is trending very close. It's trending ahead of prior year. It's trending ahead of budget. But one of the things that we really don't know is what this will perform as whenever until we get to the April 15th filing deadline. So looking at our other revenue sources, one of our top performers that we've seen typically both in actuals and budget has been our insurance collections. Insurance premiums is our third largest revenue source. And that's insurance premium tax on health insurance, fire, auto, things of that nature. And you can see that on the insurance bills. That's grown about 6% over budget. That's pretty strong growth. We typically do anticipate that growing a decent amount in each year. And that's exceeded what our expectations have been. So that sets us up well to end the year with a positive variance in that category. Franchise fees is a payment that we receive based on utility billing with Kentucky American, Columbia Gas, and Kentucky American Water. And leading up until the end of the calendar year, we've had a pretty mild year relative to what we budgeted. That probably won't be the case once we start to get some January collections, as we've had some colder months. But we do see this underperforming budget slightly. When we see actuals, we'll see it's actually a little bit closer. Other licenses and permits is performing well to budget. That's several different categories. The largest one is bank franchise fees, which is an annual assessment on deposits. Property tax accounts has gotten pretty close to budget. That's typically what you see in that category, just slightly above budget. Services, the deficit there is as a result of excess fees and collections being budgeted in the first half of the year that weren't received. We do see several other categories where we're exceeding budget in that line. And the rest of the lines are a little bit smaller, which results in some very large percentage variances, even though the dollar amounts are a little low. One thing I do want to point out is on other income, we do have some strong collections there. And one of the reasons that that is occurring is we've put in some processing improvements in revenue that allows us to get everything into our system and process more quickly. So we're able to go and review delinquent accounts a little bit more quickly than we might have before. And we've seen the benefit of that in our collections with our penalties and interest. Looking year over year, you can see we have much stronger growth year over year than you can see in the budget. And a lot of that is by design. We're trying to capture more of that anticipated actuals as we go into the budget. So that way we can make sure it's allocated properly. We have about 5.7% growth across the board. You can see one line to point out there, franchise fees is very close to prior year. We've had some pretty mild collections in franchise fees in FY 24. So we should see that start to pick up as we've had this cold month and as we get into the spring. Other than that, everything is really just an echo of what you see on the budgeted sheet. And so I'm happy to take any questions that the council members may have or pass it over to Director Luker for the expenses. Thank you, Director, for the presentation. Committee members, are there any questions? First, we have Council Member Savigny. Thank you, new chair, for that. Thanks for the presentation. Just a quick one, a couple slides back, that, one more, yeah. Like September and December seemed to be an anomaly. And it doesn't look like you were even thinking of that. And I'm just curious if something particular happened in those months. And this, because this is payroll withholding, which you would think is somewhat constant. Right. We do have some entities that will start to make some of their true up payments before they get to the reconciliation. And we did have some larger true up payments within those entities during those months. Thank you, that's all I have. Thank you, Chair. Thank you, Council Member. And welcome to the committee. All right, Council Member, committee members, are there any additional questions for Director Holbrook? Wes, it looks like you're good. Thank you. So next we have Director Luker. Welcome. Good afternoon. So this chart follows the same formatting that the revenue charts did. So orange is FY25 actuals, gray is FY24, and the blue line is our 25 budget. On this chart, you'll see some spikes. You'll see a massive spike in January, which is the month that we're currently in. You'll notice that January's budget is about twice the budget that we have every other month of the fiscal year. So this is why we say we need to get through January to see where we are with our personnel, because January is such a large month. Not only do we have our sick checks in January this year, we have payouts, and we have three payrolls hitting in January. So payroll is very busy this month, so please try not to bother them. But once we get through this month, we will have a better idea just with how we're doing with our personnel, we're still doing very well with our personnel. You can see we're at budget each month. We're spending more than we did prior year each month, except for August and September. We had three payrolls in August this year. Last year, those three payrolls were in September. So you can see our personnel is ticking up, and we're closer to budget, and you'll see that in a couple of slides. On the operating side, while we're spending more than we were prior year, we're still not quite at budget. We've only went or over budget twice this fiscal year in the months. You'll see November was big last fiscal year. December was low last fiscal year. You'll see kind of November, December a little bit more even for FY25 here on this chart. So this is showing we're spending more, but we're just still not spending to budget on our operating. So on the personnel variance, for the council members that were here in November, I stood up here and said, we're within 0.7% of our personnel budget, this may be the only time I get to say that. Next month I may just want to gloss over it. Well, I'm back, and we're 0.7% within our personnel budget again, which is really great. We have really tightened up the budget for this fiscal year. And we are seeing savings currently through December, let me preface that, because it's through December, with some of our full-time salaries and with our overtime. Now we know the events that are happening, weather events this January are going to affect that overtime a little bit. So we'll watch that and we'll see once we get the January close. We are very happy with where we are with our personnel budget. I'm glad I got to come back again and say we're less than 1% because personnel is our largest category. So getting that within 1% is very close. On our operating, we've got several areas with our savings. We have savings in professional services, repairs and maintenance, operating supplies, equipment, utilities. We also had savings in salt through December, which we no longer have. And you all may recall we walked on a budget amendment last week to take $500,000 in utility savings to purchase additional salt for the city. So some of that variance that you see there is already gone, because it's either been spent or we've moved it and it's getting spent to purchase more salt. So we're working on that. We have a large amount of encumbrances on, so purchase orders that people have put on, where they've made a commitment to pay for something and they've not yet received the item, or it's a service that is throughout the year. And so we'll see that get spent down and get a little bit closer there to our operating. Our insurance, debt service partner agencies, capital. So those were right there at budget insurance. A lot of times it's just the timing of when the payments are going out. Debt service, we know what we owe on our bond payments. Sometimes the date of the payment and the close of the month. So we're not worried about those two overages, it's $46,000 between the two. So not anything to concern ourselves with. Partner agencies, we continue to make those payments based on the agreements. Sometimes those agreements don't always line up to where it was anticipated in the budget to be spread. So we'll get that out the door. And then our capital, we're just spending a little sooner than what was anticipated, which is a good thing. We've encouraged people to spend their money, to spend their budgets and get their projects done. So we're happy with that. So let's look at how we were compared to last year. So you can see in every category except for the capital and the transfers, we are spending more than we did the prior fiscal year. So you can see our personnel is about 7% more than it was last fiscal year. Operating is 26% more than it was last fiscal year. So we're seeing the increased expenses that we're experiencing, just not always to budget with our operating. You'll notice that transfers, that $31 million is a big difference. And so let me explain that one. So that is last in FY 24, the fund balance discussion, which was the FY 23 fund balance. We had a large amount of transfer over to our capital fund for capital projects and capital reserve. So we transferred a large amount of money in FY 24 out to our capital fund from our general fund. So that's why you see such a big difference between FY 25 and 24 here. The amount that was transferred in FY 25 for the FY 24 fund balance was significantly less than it was the prior fiscal year. So that explains that $31 million variance that you see on your screen there. So I'll be happy to take any questions. Thank you, Director, for the presentation. Committee members, are there any questions? First, we got Council Member Ellinger. Actually, not questions for them, it's just for you, Chair, just to clarify. We used to have this done every budget meeting we'd go through, and then we went quarterly. And I think you've asked us to go back to doing this each time we do it, which I think is a good thing. So in all of our meetings, you'll be given these presentations, so we'll have a better feel. Is that my understanding? Yeah, Council Member, yeah, I think you're correct. We did go to a quarterly basis, which for some of us that have been here for a while, that's beneficial. For the newer folks, it's getting caught up on this on a quarterly basis can be challenging. So we're going to ask the finance team to give us this update on a regular basis. So I think that should be beneficial. Thank you, Council Member. Next, we have Council Member Savigny. Thank you, Chair, and thanks for the presentation. We just did the debt service, so we just did the new bond issue. Will there be payments this year that it will affect, or will that we'll just see in the future years? And I think you said it was a favorable bond issue, so could you tell us what that means to us? I'm going to let the commissioner answer that one. Thank you. Yes, actually, we had a really good sale. We had 12 bidders, which is extraordinary for us. We usually see somewhere in the range of 8, 9, 10, so 12 is exceptional. We closed, we were hoping to be around 4%. We were just over 3.75%, so that's awesome. That means we're going to pay a little bit less than we thought, but we will go ahead. We did schedule to have a payment in this year, and we will go ahead with that payment in the latter half of this fiscal year. So we will go ahead and utilize the remainder of the debt service as scheduled. Thank you. And then, my second question was, I thought last year we had talked about including the other funds in part of this presentation, at least that they would be included. Not necessarily that they had to be talked about, but I thought we had said that. You're right. We did talk about that, and it completely fell off my radar, and I apologize. I will make sure I don't miss that again. Thank you, I appreciate it. That's it, Chair. Thank you. Thank you, Council Member. I have a quick question, and it's in regards to the operating variance. So what is creating that variance? Is it timing, or is it we're seeing contracts for services come in less than what we budgeted? So some of it is timing. Whenever we're putting the budget together, we ask divisions to spread their budget across the 12 months, how they think they're going to spend it. We all know what we think we're going to do in February, March, April. Doesn't mean we're going to do that in the next February, March, April. So sometimes the budget spread gets off. Sometimes we place orders for things, and we know we're going to place the order in July, but we don't know that it's going to take three months to get the product. And so sometimes we're waiting on items to be received, and then sometimes it's just people may have asked for more budget than they needed. And so it's kind of a combination of timing, spread, waiting on supplies, and also getting an accurate budget. All right, thank you. I appreciate that answer. All right, committee members, are there any other questions? I'm not seeing any, so I think we're good. All right, so we'll go back to our agenda in the next item. Well, the ARPA information is in your packet for information only. In the next, we have the Annual Comprehensive Financial Review. Representatives from our new auditing firm, Crossland, are here to present the Annual Comprehensive Financial Report. First, I would like to thank our Director of Accounting, Phyllis Cooper, and her team for all their hard work on a successful audit process. Now, I would like to welcome and thank John Crossland and Jacob Smith for joining us today. And Commissioner, you want to give an introduction? He stole a little bit of my thunder. I wanted to make sure that before we started this, I sent a special thank you to Director Cooper and her whole team, because this is a huge undertaking. As you all are aware, our financial statements are the responsibility of management, which means that our financial team at the city puts together, prepares, and is responsible for every number that goes in our audit, and that is no small task. That takes us several months, a lot of hard work from a lot of different people, including the Division of Accounting, including finance team, including grants, including people at the division level, and all of our budget partners, and all across government. So a special thank you to all of them. We are really excited to have some new partners in Crossland. I have John Crossland and Jacob Smith with us today. This is our first year with them, and sometimes first year audits can be a little rough. But we made it through it and have come out on the other side. I think we're both very pleased with the process, and we're looking forward to working with them in the coming years. And so I'm looking forward to hearing their presentation just as much as you all are, and to working with them in the future. So thank you and thank them for being with us, and looking forward to it. Thank you, Commissioner. Sorry for stealing your thunder, but I think we can tell her thank you twice. Welcome. Again, I'm John Crossland. This is Jacob Smith. I served as the engagement partner on the audit this year. Jacob was a manager. I want to thank you, too. I want to thank all the management. From our perspective, it went very smooth, the audit did. It went very well. I'm going to go through this audit results on the financial statements. You've seen current numbers. So that's why we generally don't focus on the June 30 numbers, and we're here to report on how the actual audit process went. And there are some required communications that we'll eventually get to. So here's kind of our agenda, and we'll move through this quickly. But of course, you're more than welcome to ask any questions. We'll go through our responsibility, independence, talk about fraud a bit, what our deliverables were, kind of what our audit approach was, any recent pronouncements that you may be interested in, and then conclude with our audit differences and upcoming accounting developments. Just to introduce some of our engagement team members, Bruce Shepard is outside of our firm, but we do call him with any kind of technical questions. He's had a lifetime of experience. John was our overall principal in charge and our concurring reviewer, which is also at the principal level, was Curtis Payne. The overall senior manager on the job was Hunter Ponds. Through that, we have split out some teams over the act for John, Curtis, and Hunter were the in-charges there. We were central government. It was a team effort of all of us, including Garrett Wooten, who was serving as the senior on this role. For uniform guidance, John is serving as the principal. Curtis is serving as the second reviewer, and I am serving as the supervisor manager role. So the uniform guidance is the compliance auditing over the major programs, federal grants. And we'll get to a slide in a minute, which of the major programs we'll be auditing. But that comes after we issue the act for then we'll, in the next couple months, we'll finish up the single audit and then issue that in a separate report. Our responsibility, this is the auditor's responsibilities compared to management's responsibilities. Our responsibility is to express an opinion, as Aaron said, on management's financial statements. And that it's fairly presented in all material respects in conformance with GAAP. That also includes with the single audit and the act for his governmental auditing standards. And then uniform guidance is what the single audit falls under. We are required to maintain independence. That's in fact an appearance and an attitude of professional skepticism. Furthermore, our job is if we find any material weaknesses or significant deficiencies, which we did not have, our responsibilities to report to this committee what those were. Also to talk to management about what those were. Same goes with fraud, if there was any material fraud that was discovered during our audit. We're not only required to talk to management about that, but also this committee, but we did not find any. On the management side, their responsibility is to fairly present the financial statements in accordance with GAAP. And adopt the proper accounting policies. And establish internal controls over financial reporting and over compliance of federal programs. They're responsible for preventing and detecting risk. And disclosing to the commission and to us what any deficiencies they may find. Independence, we are required to be independent under the AICPA's Code of Professional Conduct Rule 101. Furthermore, under government auditing standards, it's actually more stringent independence rules. In chapter three, provides additional guidance that we're supposed to follow as independent. And we are independent in both manners. Additionally, statement on auditing standards number 99, we have to address the material, the risk of material misstatement over your financial statements that could be caused by fraud. We use a four-pronged approach, and I won't read all of these, but we do gather information. We test for any kind of management override, where management could override the entire control system if they so choose. We respond to any identified risks that we have pointed out during our planning portion of the audit. And then we do evaluate the audit evidence for any kind of red flags that we see. Additionally, just to give you a status update, we are issuing an unmodified opinion on your annual, your ACFR. The single audit and related reports, this is uniform guidance. This is the second part that we'll deliver another opinion on at a later date. So under other deliverables, we talk about the required communication, which is the purpose of this. And the data collection form is essentially the results of your uniform guidance that we have to submit to the federal government. The next couple slides are concerning our audit methodology and approach. There's four main areas, audit planning and risk assessment. Obviously, our auditing procedures is going to be focused on wherever the risk of the city and county take us to. So every audit's different. This audit will be very different next year. It depends on where we decide the risk is. We also evaluate your controls and we determine where we can test controls or where we need to, the third bullet point is where we need to do substantive testing. And then finally, it's the completion and the reporting stage of the audit, which we're in now. This is a little bit more detail on where some of the items, I won't go through all the bullet points, where control testing we thought was appropriate during this audit. So we're going to audit from a statistical sample and get comfortable that the processes and the controls in place are strong and indicate that there are no material misstatements. On the other side is substantive testing. Here's where you see normally like you're testing, you're sending confirmations for investments, or you're vouching invoices for new capital asset purchases, or you're confirming debt, or you're doing some of the substantive testing. And there's some of the areas where we thought it was more appropriate to substantively test. Single audit is a term that's also interchangeable with uniform guidance. We're required to assess for any kind of major programs that we're going to determine to test up to 20% of your federal expenditures during the year, which totaled a little over 56 million. We identified the SAFER grant and the coronavirus state and local fiscal recovery funds to audit, and those are ongoing. So a little more background. If you were high risk auditee, we would be required to cover 40% of your federal expenditures. Testing 40%, but since you are low risk, we have a minimum of 20%. Happy to announce no significant new GASB announcements this year. These are some of the required communications that auditors have to, either in writing or verbally, communicate to the serving audit committee. We do audit your accounting estimates. There are estimates, really, in every set of financial statements. And we audit those estimates, like lives of fixed assets, or valuation of investments, which change every day. And so we look at those estimates and make sure they're appropriately disclosed, and that they're in compliance with GAAP, and we believe they were. Unaudited information, like your MDNA, like your roster of commissioners. There are some unaudited schedules, and we look at that information and make sure it's consistent with the rest of the ACFR. Other items, no transactions for which there's a lack of authoritative guidance, so if there was none for the government. All significant transactions have been recognized in the proper period. No alternative accounting policies or practices related to material items. Everything was as planned. We did not encounter any difficulties in dealing with management during the audit. It went very well, very smooth. You should feel comfortable that the finance office is very knowledgeable about reporting and accounting. No disagreements with management either. Management provided appropriate representation at the conclusion of our audit, and we're not aware of any communications with other independent accounting firms. Obviously, you're welcome to do that if you're trying to get a second opinion on a technical matter. We just want to be involved in the conversation. Unrecorded audit differences. These are results of small immaterial differences that did not warrant an adjustment to the overall financial statements. These had to deal with balances and receivables and inventories where the schedules did not match our accounting records. And they were, as I said, immaterial. These are some of the upcoming GASBs. If you want to peruse those on your own, Tom, each of them will be very lengthy. But 101, and we're going to stay abreast of these, and we're going to be talking to Phyllis and the finance office to make sure that if there's anything we can do to help to Adopt these new accounting standards, we'll be happy to help. And Jacob went through our staff, but just want to remind you guys that you're always welcome to contact us any time during the year. Not just once a year in this meeting, we're available at any time. Any questions? Thank you both for the work you have done with our finance team and for the presentation. And with that, committee members, do you have any questions about the audit presentation? Well, while council members are thinking of questions, I just have a couple. So you mentioned that we qualified as low risk. What's the threshold for high risk and low risk? So generally how that's concluded is if you've had a finding in any of the previous two years on a federal grant, then those would become high risk major programs and we would have to audit those again. And that would make your entire uniform guidance or single audit high risk, which would bump you up to 40%. So what this is suggesting is that you have not had any findings, material weaknesses, or significant deficiencies in each of the last two years. Okay. And then, can you explain to me the difference between a unmodified opinion and a modified opinion? Is a- Sure, sure. Unqualified- Can I ask a question first? I'm sorry. So I'm thinking a modified opinion is after you have found something and brought it to our attention and we went in and addressed it. Is that, would that be it? Yes, an unmodified is the best opinion. That's what she wants. That's us saying that we are giving an opinion over your entire ACFR with no modifications. We think the entire ACFR is free of any material misstatement. Sometimes you can modify it, you can carve out a section saying, we're giving an opinion on the entire ACFR except for capital assets. We did not audit those, or we could not get to the point where we feel like they're materially accurate. And we didn't have any sections like that. Okay, thank you. Council Member Savigny. Thank you, Chair. And thanks for the audit. I'm just curious, is the actual audit available to the public somewhere online? And to us, basically. Yes, sir. So you received a hard copy in your mailbox. But usually after today's presentation, we post it to the accounting web page. And so now, once we've approved the audit, the numbers basically are final for through June 30th, 2024, correct? Yes, once it's accepted. Right, accepted. And in our process, do we ever actually approve the pre-audit, June 30th, 2024 numbers, or is that just considered a management thing? Yeah, I think there's just the acceptance of the audit after it's presented to you. All the real approval is- From the auditors. Yeah. Okay, thank you. Thank you, Chair. Thank you, Council Member. And then, just one other question, and Commissioner, this may be more for you. I know there may be some questions about an internal audit that we have internally. Tell me how, or can you explain the difference between this audit, since this audit just come out clean with an unmodified opinion, how can it be that we may have to address issues on an internal audit, but it not be recognized here? Sure, there's a huge difference between an external audit and internal audit. Internal audit is specifically designed to be an ongoing review of the internal workings of an organization or the government. It's designed not just financial, which an external audit is largely financial, but it's also designed to be programmatic in nature and to look at all of our overarching documents to make sure that it is doing, as in our case, doing as you all have intended it, either in resolution or ordinance, that the program is working how it was intended. An external audit is meant to look at the overall financial health of the entire government. And so, when we present financial statements, we present how every single fund of the government is doing, and how they have done for the course of the year, and when we close the books at the end, it's a snapshot, a point in time, of how we have completed the year for every single fund. And they come in and they look at all of those financials to make sure that we have accurately represented the financial health of the government as a whole. There's not a capacity for an external audit firm to dive into any one program, the way an internal audit function is designed to do. That's why we have those two pieces. They're kind of a counterbalance to each other. And they do complement each other. One of the things that we will do from here is take recommendations that our external auditors, Crossland was able to give us some ideas of a couple of things that we might go back to internal audit and sit down with them and talk about. So they mentioned to you that they had some adjustments or some past adjustments on inventory. That's something that we've also struggled with and something that internal audit has looked at several times. So we're going to now go and sit down with internal audit and talk about how we might be able to do that differently. There are rules and parameters that GASB requires, and financially we have to uphold. But there's also ways to work within the confines of government, being able to uphold all those rules. And be able to do things differently that also work for the government. So they really work hand in hand, but they're not meant to be the same. Okay. I know that was a long-winded answer, but I'm hoping it kind of gives you the juxtaposition of the two. No, it does, and it sounds like in some instances, this overarching audit can help us better direct internal audits and vice versa, so to speak. Yeah, I think it's kind of the thousand foot view versus the kind of down in the weeds more view of the day-to-day operations of government. All right, thank you, Commissioner. Yes, sir. It doesn't look like there's any other questions from committee members, so thank you both for the presentation and your work, and we look forward to working with you in the future. Thank you. Very much, appreciate it. All right, committee members, we're going to our next agenda item, and it's the review of the council referrals. Kelly has went through the process of updating my list. Are there any items that can be removed or clarified on our committee referral list? So, I'll start off as chair and ask to remove item 21 and 22 as the division and program review subcommittee. I think it's been inactive for a while, and then also the LFUCG property assessment subcommittee, which I think concluded their work, and if that's something that we want to revisit later that we can add back into committee. So with that, I'll make a motion to remove those two. Second. Well, maybe I can't make the motion, or shouldn't make the motion. So, all right. So a motion was made and seconded to remove those two items. Are there any questions or comments about those? Hearing none, all those in favor, please say aye. Aye. Are there any that oppose? Hearing none, that motion passes. Are there any other items on the list that referral, the person that referred it would like to remove? I'm not seeing any, so with that, that brings us to the end of our agenda. I'd just like to compliment our finance team for all their hard work in working with our new auditor and everybody in that team. Thank you for your service to the government. And without any objection, I'll adjourn this meeting. Thank you. We put it all behind, before we wind up getting hurt. No heart feelings, darling, no regrets, no tears and no worries.