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LL cityt�f <br />Lo�xisville <br />COLORADO • SINCE 1878 <br />FINANCE COMMITTEE <br />COMMUNICATION <br />ITEM #2 <br />SUBJECT: 2022 ANNUAL COMPREHENSIVE FINANCIAL REPORT AND <br />AUDITOR COMMUNICATION TO GOVERNANCE <br />DATE: AUGUST 17, 2023 <br />PRESENTED BY: PAUL KANE, AUDIT PARTNER, EIDE BAILLY, LLP <br />SUMMARY: <br />A digital copy of the City's 2022 Annual Comprehensive Financial Report (ACFR) has <br />been uploaded to the City's Website, linked here. This report was prepared by City staff, <br />audited by Eide Bailly LLP, the City's independent auditor, and contains Eide Bailly's audit <br />report (on page 11). <br />Audit Opinion: Unmodified <br />"In our opinion, the accompanying financial statements referred to above present fairly, <br />in all material respects, the respective financial position of the governmental activities, the <br />business -type activities, each major fund, and the aggregate remaining fund information <br />of the City, as of December 31, 2022, and the respective changes in financial position, <br />and, where applicable, cash flows thereof for the year then ended in accordance with <br />accounting principles generally accepted in the United States of America." <br />Governance Letter Summary: <br />Summary of Significant Risks Identified: <br />Note: These are standard risks identified during Audits. <br />-Management override of controls — Professional standards require auditors to address <br />the possibility of management overriding controls. Accordingly, we identified as a <br />significant risk that management of the City may have the ability to override controls that <br />the City has implemented. Management may override the City's controls to modify the <br />financial records with the intent of manipulating the financial statements to overstate the <br />City's financial performance or with the intent of concealing fraudulent transactions. <br />-Improper revenue recognition — Professional standards require auditors to presume that <br />improper revenue recognition is a fraud risk. Accordingly, we identified this as a fraud risk <br />in which management may use various techniques to overstate revenue or conceal <br />fraudulent recognition of revenue. <br />FINANCE COMMITTEE COMMUNICATION <br />7/57 <br />