Condition: During audit fieldwork, testing resulted in a restatement of fund balance related to the implementation of a new capital asset policy, implementation of GASB Statement No. 87, and the write-off of forgivable loan balances. Plan: The City and its Finance Department will continue implementi...
Condition: During audit fieldwork, testing resulted in a restatement of fund balance related to the implementation of a new capital asset policy, implementation of GASB Statement No. 87, and the write-off of forgivable loan balances. Plan: The City and its Finance Department will continue implementing revised policies and new accounting standards, some of which may require retroactive restatements. The City will also continue to evaluate the appropriateness of receivable balances, including forgivable loans, prior to audit fieldwork. Anticipated Date of Completion: Fiscal Year 2024 Name of Contact Person: Eric Dubrowski, Finance Director Management Response: As part of its internal review of capital assets, the City implemented a revised capital asset policy. This policy significantly reduced the number of assets required to be tracked while retaining the vast majority of assets on the City’s books, resulting in improved compliance and increased administrative efficiency. The City reviews the implementation of new GASB pronouncements with its auditors in advance of each applicable reporting period. Forgivable loan balances previously corresponded to liens placed on properties and notes issued to borrowers. Upon reevaluation of the criteria required for forgiveness, the City concluded that these loans were highly likely to be forgiven. In the limited circumstance where forgiveness would not occur, such as a borrower ceasing operations, collection of the loan would also be unlikely. As a result, the City determined that these balances should be removed retroactively from the balance sheet, resulting in a restatement of fund balance.