It’s been nearly 16 months since the end of the 2022 fiscal year, and the city of Homer has not completed its audit. This is longer than every audit done by the city since 2015.
The city stands out from others on the Kenai Peninsula that have all completed their audit, including Kenai, Soldotna and Seward.
From starting the audit later than expected to new accounting standards, City Manager Rob Dumouchel said that multiple factors are contributing to the long wait for the audit.
At the end of 2020, City council changed the city’s fiscal year to begin in July rather than January. This shortened the 2021 fiscal year to six months and led to that year’s audit taking 15 months to complete, which was longer than the nine to twelve months an audit typically took for the past seven fiscal years.
This meant work on the 2022 audit began roughly three months later than expected. A Governmental Accounting Standards Board standard regarding governmental leases also became effective in June of 2021, requiring the city to provide new financial statements.
On top of that, Dumouchel said the city’s finance department – which has a large workload outside the audit – is understaffed, and recruitment has been a challenge.
Dumouchel (3:56): “You'll see a lot of road maintenance and expansion of utilities, and new sidewalks, and all that stuff requires a lot of administration,” he said, “and also through COVID, we saw upwards of an extra $10 million of funds that we had to administer, and a lot of that went out to the community and small individual grants that were super labor intensive for us.”
In the meantime, his meetings with auditors point to the city being in good financial standing, despite the long wait.
“They're very confident in the numbers and our books and all that stuff. We don't have any discrepancies. There's no major findings that we've had in an audit in years and years. It's just a timing thing,” he said.
In addition to being behind on their audit, the department has not produced regular financial reports for city council members or Mayor Ken Castner.
Castner said that he and the council currently cannot track spending in the budget or in the city’s reserves.
“Every council member should be able to say, ‘here's where we are. This is where we are. I just got a report last week, I can tell you exactly where we are,’” he said, “but we can't, and that's not right.
But, the end to long audits and nonexistent financial reports may be in sight.
Dumouchel said that funding from the current budget is going towards the 2023 fiscal year audit. However, that fiscal year ended nearly four months ago and cannot begin until the 2022 audit is completed.
“In the FY 24-25 budget, I believe we added about 35 to $40,000 per year to professional services to allow us to use more outside resources to supplement the folks that we do have,” he said, “and so my big interest is an acceleration of that audit to do away with that kind of cumulative impact of big changes the city made in the last couple years.”
Council Members Rachel Lord and Shelly Erickson are also working on a resolution, creating a financial plan with the city to improve audits, track spending, and establish policies with the general and enterprise funds. The council will vote on the final version of the resolution this coming Monday.
