What is an audit – and why should you care?

 

Although budgets and finances aren’t always the most exciting topic to write about, they are among the most important responsibilities we have in City Hall. During the City Council’s Nov. 25 meeting, our independent auditor presented the current audit to the council and commended the City in the manner in which we administer the City’s financial management system.

 

An external audit, which is required by state law, is a process where the City prepares a set of financial records and statements and provides them to an impartial and highly skilled auditor for examination and evaluation. The auditor performs a series of tests, analysis and reconciliations to determine whether the City is following pertinent laws, rules and accounting standards in its handling and reporting of financial transactions. The auditor then issues an opinion on whether the financial statements present fairly the financial condition of the City for the period reviewed (or the previous fiscal year).

 

The benefit of an audit is that it provides assurance that management has presented a “true and fair” view of the City’s financial performance and position. An audit underpins the trust and obligation of stewardship between those who manage a City (the City Council in our case) and those who have a need for a “true and fair” view, the stakeholders (such as our citizens and bondholders).

 

The procedures performed by the auditor are intended to ensure that the City’s financial statements are free from errors that would materially distort the financial condition of the City. The annual audit is a key element of the Council’s oversight of City finances.

 

The City has received an “unqualified opinion” for its FY2013 financial statements. This means that the statements are a reasonably fair and accurate representation of the City’s financial position, as determined by an independent, qualified outsider. This is the standard the City shoots for every year.

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