HomeMy WebLinkAbout09252023 City Council LAYDOWN 1 Finance Dept Seward, City of Final Compliance 2022 CITY OF SEWARD, ALASKA
Compliance Reports
Year Ended December 31 , 2022
Altman, Rogers
CERTIFIED
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Co. ACCOUNTANTS
Li
CITY OF SEWARD, ALASKA
Compliance Reports
Year Ended December 31, 2022
City of Seward, Alaska
Table of Contents
Page No.
SINGLE AUDIT:
Independent Auditor's Report on Internal Control Over Financial Reporting
and on Compliance and Other Matters Based on an Audit of Financial
Statements Performed in Accordance with Government Auditing Standards 1-2
Independent Auditor's Report on Compliance For Each Major Federal Program and
Report on Internal Control Over Compliance Required by the Uniform Guidance 3-6
Schedule of Expenditures of Federal Awards 7
Notes to Schedule of Expenditures of Federal Awards 8
Federal Schedule of Findings and Questioned Costs 9-10
Independent Auditor's Report on Compliance For Each Major State Program and
Report on Internal Control over Compliance Required by the State of Alaska
Audit Guide and Compliance Supplement for State Single Audits 11-14
Schedule of State Financial Assistance 15
Notes to Schedule of State Financial Assistance 16
State Schedule of Findings and Questioned Costs 17
Summary of Prior Audit Findings 18
Corrective Action Plan 19-20
Altman, Rogers
CoCERTIFIED
PUBLIC
. ACCOUNTANTS
Report on Internal Control Over Financial Reporting and on Compliance and Other Matters
Based on an Audit of Financial Statements Performed in Accordance with Government
Auditinq Standards
Independent Auditor's Report
Honorable Mayor and City Council
City of Seward, Alaska
We have audited, in accordance with the auditing standards generally accepted in the United
States of America and the standards applicable to financial audits contained in Government
Auditing Standards issued by the Comptroller General of the United States, the financial
statements of the governmental activities, the business-type activities, each major fund, and the
aggregate remaining fund information of the City of Seward, Alaska, (City of Seward) as of and for
the year ended December 31, 2022, and the related notes to the financial statements, which
collectively comprise the City of Seward's basic financial statements and have issued our report
thereon dated August 30, 2023. Our report includes a reference to other auditors who audited the
financial statements of the Providence Seward Medical Care Center, as described in our report of
City of Seward's basic financial statements. This report does not include the results of the
auditors' testing of internal control over financial reporting or compliance and other matters that
are reported on separately by these auditors.
Report on Internal Control over Financial Reporting
In planning and performing our audit of the financial statements, we considered the City of
Seward's internal control over financial reporting (internal control) as a basis for designing audit
procedures that are appropriate in the circumstances for the purpose of expressing our opinions
on the financial statements, but not for the purpose of expressing an opinion on the effectiveness
of the City of Seward's internal control. Accordingly, we do not express an opinion on the
effectiveness of the City of Seward's internal control.
A deficiency in internal control exists when the design or operation of a control does not allow
management or employees, in the normal course of performing their assigned functions, to prevent, or
detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a
combination of deficiencies, in internal control such that there is a reasonable possibility that a
material misstatement of the entity's financial statements will not be prevented, or detected and
corrected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in
internal control that is less severe than a material weakness, yet important enough to merit attention
by those charged with governance.
3000 C Street N. Suite 201 Anchorage,Alaska 99503 Phone 907-274-2992 Fax 907-274-2993
Offices in Juneau and Soldotna A Professional Corporation
Honorable Mayor and City Council
City of Seward, Alaska
Our consideration of internal control was for the limited purpose described in the first paragraph of
this section and was not designed to identify all deficiencies in internal control that might be
material weaknesses or significant deficiencies and therefore, material weaknesses or significant
deficiencies may exist that have not been identified. We did identify a certain deficiency in internal
control, described in the accompanying federal schedule of findings and questioned costs as Finding
2022-001, that we consider to be a material weakness.
Report on Compliance and Other Matters
As part of obtaining reasonable assurance about whether the City of Seward's financial statements
are free from material misstatement, we performed tests of its compliance with certain provisions
of laws, regulations, contracts, and grant agreements, noncompliance with which could have a
direct and material effect on the financial statements. However, providing an opinion on compliance
with those provisions was not an objective of our audit, and accordingly, we do not express such an
opinion. The results of our tests disclosed no instances of noncompliance or other matters that are
required to be reported under Government Auditing Standards.
City of Seward's Response to Finding
Governmental Auditing Standards requires the auditor to perform limited procedures on the City of
Seward's response to the finding identified in our audit is described in the accompanying federal
schedule of findings and questioned costs. City of Seward's response was not subjected to the other
auditing procedures applied in the audit of the financial statements and, accordingly, we express
no opinion on the response.
Purpose of this Report
The purpose of this report is solely to describe the scope of our testing of internal control and
compliance and the results of that testing, and not to provide an opinion on the effectiveness of
the City of Seward's internal control or on compliance. This report is an integral part of an audit
performed in accordance with Government Auditing Standards in considering the entity's internal
control and compliance. Accordingly, this communication is not suitable for any other purpose.
r
Anchorage, Alaska
August 30, 2023
2
Altman, Rogers
CoCERTIFIED
PUBLIC
. ACCOUNTANTS
Report on Compliance For Each Maior Federal Program and Report on Internal Control Over
Compliance Required by the Uniform Guidance
Independent Auditor's Report
Honorable Mayor and City Council
City of Seward, Alaska
Report on Compliance For Each Major Federal Program
Opinion on Each Major Federal Program
We have audited the City of Seward's compliance with the types of compliance requirements
identified as subject to audit in the OMB Compliance Supplement that could have a direct and
material effect on each of the City of Seward's major federal programs for the year ended
December 31, 2022. City of Seward, Alaska's major federal programs are identified in the
summary of auditor's results section of the accompanying federal schedule of findings and
questioned costs.
City of Seward's basic financial statements include the operations of Providence Seward Medical
Center, which expended $277,166 in federal awards which are included in the City of Seward's
schedule of expenditures of federal awards as passed through to Providence Seward Medical
Center for the year ended December 31, 2022. Our audit was limited to the requirements to the
City of Seward as the pass-through entity and did not include the operations of Providence Seward
Medical Center, who engaged other auditors to perform an audit of compliance over the program
received from the City of Seward as a subrecipient.
In our opinion, City of Seward complied, in all material respects, with the types of compliance
requirements referred to above that could have a direct and material effect on each of its major
federal programs for the year ended December 31, 2022.
Basis for Opinion on Each Major Federal Program
We conducted our audit of compliance in accordance with auditing standards generally accepted
in the United States of America (GAAS); the standards applicable to financial audits contained in
Government Auditing Standards, issued by the Comptroller General of the United States
(Government Auditing Standards); and the audit requirements of Title 2 U.S. Code of Federal
Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit
Requirements for Federal Awards (Uniform Guidance). Our responsibilities under those standards
and the Uniform Guidance are further described in the Auditor's Responsibilities for the Audit of
Compliance section of our report.
3
3000 C Street N. Suite 201 Anchorage,Alaska 99503 Phone 907-274-2992 Fax 907-274-2993
Offices in Juneau and Soldotna A Professional Corporation
Honorable Mayor and City Council
City of Seward, Alaska
We are required to be independent of City of Seward and to meet our other ethical responsibilities,
in accordance with relevant ethical requirements relating to our audit. We believe that the audit
evidence we have obtained is sufficient and appropriate to provide a basis for our opinion on
compliance for each major federal program. Our audit does not provide a legal determination of
City of Seward's compliance with the compliance requirements referred to above.
Responsibilities of Management for Compliance
Management is responsible for compliance with the requirements referred to above and for the
design, implementation, and maintenance of effective internal control over compliance with the
requirements of laws, statutes, regulations, rules, and provisions of contracts or grant agreements
applicable to City of Seward's federal programs.
Auditor's Responsibilities for the Audit of Compliance
Our objectives are to obtain reasonable assurance about whether material noncompliance with the
compliance requirements referred to above occurred, whether due to fraud or error, and express
an opinion on City of Seward's compliance based on our audit. Reasonable assurance is a high level
of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted
in accordance with generally accepted auditing standards, Government Auditing Standards, and the
Uniform Guidance will always detect material noncompliance when it exists. The risk of not
detecting material noncompliance resulting from fraud is higher than for that resulting from error,
as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override
of internal control. Noncompliance with the compliance requirements referred to above is
considered material if there is a substantial likelihood that, individually or in the aggregate, it would
influence the judgment made by a reasonable user of the report on compliance about City of
Seward, Alaska's compliance with the requirements of each major federal program as a whole.
In performing an audit in accordance with generally accepted auditing standards, Government
Auditing Standards, and the Uniform Guidance, we:
• Exercise professional judgment and maintain professional skepticism throughout the audit.
• Identify and assess the risks of material noncompliance, whether due to fraud or error, and
design and perform audit procedures responsive to those risks. Such procedures include
examining, on a test basis, evidence regarding City of Seward's compliance with the
compliance requirements referred to above and performing such other procedures as we
considered necessary in the circumstances.
• Obtain an understanding of City of Seward's internal control over compliance relevant to
the audit in order to design audit procedures that are appropriate in the circumstances and
to test and report on internal control over compliance in accordance with the Uniform
Guidance, but not for the purpose of expressing an opinion on the effectiveness of City of
Seward, Alaska's internal control over compliance. Accordingly, no such opinion is
expressed.
4
Honorable Mayor and City Council
City of Seward, Alaska
We are required to communicate with those charged with governance regarding, among other
matters, the planned scope and timing of the audit and any significant deficiencies and material
weaknesses in internal control over compliance that we identified during the audit.
Report on Internal Control over Compliance
A deficiency in internal control over compliance exists when the design or operation of a control
over compliance does not allow management or employees, in the normal course of performing their
assigned functions, to prevent, or detect and correct, noncompliance with a type of compliance
requirement of a federal program on a timely basis. A material weakness in internal control over
compliance is a deficiency, or combination of deficiencies, in internal control over compliance, such
that there is a reasonable possibility that material noncompliance with a type of compliance
requirement of a federal program will not be prevented, or detected and corrected, on a timely
basis. A significant deficiency in internal control over compliance is a deficiency, or a combination
of deficiencies, in internal control over compliance with a type of compliance requirement of a
federal program that is less severe than a material weakness in internal control over compliance,
yet important enough to merit attention by those charged with governance.
Our consideration of internal control over compliance was for the limited purpose described in the
Auditor's Responsibilities for the Audit of Compliance section above and was not designed to identify
all deficiencies in internal control over compliance that might be material weaknesses or significant
deficiencies in internal control over compliance. Given these limitations, during our audit we did
not identify any deficiencies in internal control over compliance that we consider to be material
weaknesses, as defined above. However, material weaknesses or significant deficiencies in internal
control over compliance may exist that were not identified.
Our audit was not designed for the purpose of expressing an opinion on the effectiveness of internal
control over compliance. Accordingly, no such opinion is expressed.
The purpose of this report on internal control over compliance is solely to describe the scope of our
testing of internal control over compliance and the results of that testing based on the requirements
of the Uniform Guidance. Accordingly, this report is not suitable for any other purpose.
5
Honorable Mayor and City Council
City of Seward, Alaska
Report on Schedule of Expenditures of Federal Awards Required by the Uniform Guidance
We have audited the financial statements of the governmental activities, the business-type activities,
each major fund, and the aggregate remaining fund information of City of Seward, Alaska, as of and for
the year ended December 31, 2022, and the related notes to the financial statements, which collectively
comprise City of Seward's basic financial statements. We issued our report thereon dated August 30,
2023, which contained unmodified opinions on those financial statements. Our audit was performed for
the purpose of forming opinions on the financial statements that collectively comprise the basic financial
statements. The accompanying schedule of expenditures of federal awards is presented for purposes of
additional analysis as required by the Uniform Guidance and is not a required part of the basic financial
statements. Such information is the responsibility of management and was derived from and relates
directly to the underlying accounting and other records used to prepare the basic financial statements.
The information has been subjected to the auditing procedures applied in the audit of the financial
statements and certain additional procedures, including comparing and reconciling such information
directly to the underlying accounting and other records used to prepare the basic financial statements or
to the basic financial statements themselves, and other additional procedures in accordance with auditing
standards generally accepted in the United States of America. In our opinion, the schedule of
expenditures of federal awards is fairly stated in all material respects in relation to the basic financial
statements as a whole.
f
Anchorage, Alaska
August 30, 2023
6
City of Seward,Alaska
Schedule of Expenditures of Federal Awards
Year Ended December 31,2022
Grant Number or
Pass Through
Assistance Grantor's Program/ Passed
Listing Award Award Through to Federal
Federal Grantor Number Number Amount Subrecipients Expenditures
U.S.Department of Justice:
Direct:
Bulletproof Vest Partnership 16.607 N/A S 1,689 1,689
National Oceanic and Atmospheric Admininistration(NOAA):
Passed through Pacific States
Marine Fisheries Commission-
Gulf of Alaska Pacific Cod Disaster Funding 11.477 22-178G 43,676 11,60D
U.S.Department of the Interior:
Passed through the State of Alaska,
Department of Fish and Game-
Seward North Harbor Launch Ramp Renovation 15.605 COOP 20-122 2,899,553 2,899,553
U.S.Department of Agriculture:
Passed through the State of Alaska,
Department Natural Resources-
2D22 Assistance to Firefighters Grant 10.664 None 4,766 4,766
National Endowment of the Humanities:
Passed through the State of Alaska,
Department of Education and Early Development:
COVID-19 Easy Grant for Seward Community Library and Museum 45.310 EASY22-014 6,000 6,000
COVID-19 Seward computers,security cameras,and server 45,310 ARPA37 37,777 37,777
Total National Endowment of the Humanities 43,777 43,777
U.S.Department of Homeland Security:
Passed through the State of Alaska,
Department of Military and Veterans Affairs:
Lowell Point Road Debris Removal 97.036 DR4661•PW00001 760,365 760,365
Lowell Point Road Emergency Protective Measures 97.036 DR4661-PW00002 95,178 95,178
Total U.S.Department of Homeland Security 855,543 855,543
U.S.Department of Health and Human Services:
Direct:
Health Center Program Cluster:
Grants for New and Expanded Services
under the Health Center Program 93.527 8 H80CS26600 333,786 43,D99
Grants for New and Expanded Services
under the Health Center Program 93.527 8 H80CS26600 989,633 67,185
Grants for New and Expanded Services
under the Health Center Program 93.527 8 H80CS26600 167,000 17,919
Grants for New and Expanded Services
under the Health Center Program 93.224 9 H80CS26600 1,117,814 1,024,663
Grants for New and Expanded Services
under the Health Center Program 93.224 9 H80CS26600 372,605 341,555
COVID-19-American Rescue Plan Act(ARPA)
Funding for Health Centers 93.224 1 H8FC541405 894,750 422,693
Total Health Center Program Cluster 3,875,588 - 1,917,114
COVID-19-Provider Relief Fund 93.498 None 277,166 277,166 277,166
Total Department of Health and Human Services 4,152,754 277,166 2,194,280
Total Expenditures of Federal Awards $ 8,001,758 277,166 6,011,208
Reconciliation to Intergovernmental Revenues in the Statement of Revenues,Expenditures,and
Changes in Fund Balance:
Total Federal financial assistance per above schedule(SEFA) 6,011,208
Total State financial assistance(SSFA) 1,963,597
State funding not considered financial assistance under 2 AAC 45.010 773,868
Less state cruise ship tax expenditures (439,978)
Intergovernmental contracts not included on the SEFA or SSFA 467,752
Provider Relief Funds reported on the SEFA that are not reported as Intergovernmental
Revenues in the Healthcare Facilities Enterprise Fund (277,166)
State and Federal Funds reported as Capital Contributions in the Enterprise Funds (4,142,591)
Total Intergovernmental Revenues in the Statement of Revenues,Expenditures and Changes in
Fund Balance(Exhibit D-1). $ 4,356,690
See accompanying notes to the Schedule.
7
City of Seward, Alaska
Notes to the Schedule of Expenditures of Federal Awards
Year Ended December 31, 2022
(1) Basis of Presentation
The accompanying Schedule of Expenditures of Federal Awards (the "Schedule") includes the
federal award activity of City of Seward, Alaska, under programs of the federal government
for the year ended December 31, 2022. The information in this Schedule is presented in
accordance with the requirements of Title 2 U.S. Code of Federal Regulations Part 200,
Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal
Awards (Uniform Guidance). Because the Schedule presents only a selected portion of the
operations of City of Seward, it is not intended to and does not present the basic financial
statements of City of Seward.
(2) Summary of Significant Accounting Policies
Expenditures reported on the Schedule are reported on the modified accrual basis of
accounting. Such expenditures are recognized following the cost principles contained in the
Uniform Guidance, wherein certain types of expenditures are not allowable or are limited as
to reimbursement.
(3) Indirect Cost Rate
City of Seward has elected not to use the 10% de minimis indirect cost rate allowed under the
Uniform Guidance.
(4) Provider Relief Funds
The CARES Act authorizes funding to hospitals and other healthcare providers to be distributed
through the Public Health and Social Services Emergency Fund (Provider Relief Fund).
Payments from the Provider Relief Fund are to be used to prevent, prepare for, and respond
to the Coronavirus pandemic, and shall reimburse the recipient for health care related
expenses or lost revenues attributable to the Coronavirus pandemic and are not required to
be repaid, provided the recipients attest to and comply with the terms and conditions of the
funding. For the year ended December 31, 2022, the Healthcare Facilities Enterprise Fund has
reported Provider Relief Fund revenues of $305,000.
(5) Passed Through Awards
The City of Seward passed $277,166 of federal funds through to Providence Seward Medical
Center during the year ended December 31, 2022. These funds were COVID-19 Provider Relief
Funds, ALN 93.498.
8
City of Seward, Alaska
Federal Schedule of Findings and Questioned Costs
Year Ended December 31, 2022
Section I - Summary of Auditor's Results
Financial Statements
Type of Type of report the auditor issued on whether the
financial statements audited were prepared in accordance
with GAAP: Unmodified
Is a going concern emphasis-of-matter paragraph
included in the audit report? Yes X No
Internal control over financial reporting:
Material weakness(es) identified? X Yes No
Significant deficiency(ies) identified? Yes X None reported
Noncompliance material to financial statements noted? Yes X No
Federal Awards
Internal control over major programs (2 CFR 200.516 (a)(1)):
Material weakness(es) identified? Yes X No
Significant deficiency(es) identified? Yes X None reported
Any material noncompliance with the provisions of
laws, regulations, contracts, or grant agreements
related to a major program (2 CFR 200.516 (a)(2))? Yes X No
Type of auditor's report issued on compliance
for major program: Unmodified
Any audit findings disclosed that are required
to be reported in accordance with Uniform
Guidance, (2 CFR 200.516 (a)(3) or (4)? Yes X No
Identification of major programs:
Assistance Listing Number(s) Name of Federal Program or Cluster
15.605 Seward North Harbor Launch Ramp Renovation
97.036 Lowell Point Road
Dollar threshold used to distinguish
between Type A and Type B programs: $ 750,000
Auditee qualified as low-risk auditee? Yes X No
9
City of Seward, Alaska
Federal Schedule of Findings and Questioned Costs, Continued
Section II - Financial Statement Findings
Finding 2022-001 Lack of Internal Controls over Utility Billings
Material Weakness
Criteria: Internal controls should be in place to ensure proper and accurate
financial reporting in accordance with Generally Accepted
Accounting Principles (GAAP).
Condition and Context: During our testing of internal controls over the utility billing system,
we noted 5 instances of charges not being billed to the customer as
a result of net meter readings, and learned that the entire
population of the 30 net meter customers were not being billed at
various times. We noted two instances of charges for lights not
being updated from the previous amount, one instance of an
industrial client being charged incorrectly by ERU's for sewer as
opposed to actual usage as mandated by the tariff, one instance in
which a customer was categorized as the incorrect type of entity,
one instance in which the customer was charged duplicate amounts,
and one instance of a base rate being charged with no additional
charges or usage as required by tariff.
Cause: The City does not have adequate processes and controls in place to
ensure that all utility accounts are billed the correct rate and for
the correct service.
Effect: A significant number of utility customers are being billed
incorrectly. In some instances, customers are being overbilled, in
other instances customers are being under billed. The amounts
noted are immaterial in nature but indicate a lack of internal
controls over utility billings.
Repeat Finding: Repeat of Finding 2021-001.
Recommendation: We recommend the City simplify the utility rate structure and
implement new processes and controls related to individual utility
account balances and charges.
Management's Response: Management agrees with this finding. See Corrective Action Plan.
Section III - Federal Award Findings
The City of Seward did not have any findings that relate to Federal awards.
10
Altman, Rogers
CoCERTIFIED
PUBLIC
. ACCOUNTANTS
Report on Compliance For Each Maior State Program and Report on Internal Control over
Compliance Required by the State of Alaska Audit Guide and Compliance Supplement for
State Single Audits
Independent Auditor's Report
Honorable Mayor and City Council
City of Seward, Alaska
Report on Compliance For Each Major State Program
Opinion on Compliance for Each Major State Program
We have audited City of Seward's compliance with the types of compliance requirements
identified as subject to audit in the State of Alaska Audit Guide and Compliance Supplement for
State Single Audits that could have a direct and material effect on each of City of Seward's major
state programs for the year ended December 31, 2022. City of Seward's major state programs are
identified in the accompanying Schedule of State Financial Assistance.
In our opinion, City of Seward complied, in all material respects, with the types of compliance
requirements referred to above that could have a direct and material effect on each of its major
state programs for the year ended December 31, 2022.
Basis for Opinion on Each Major State Program
We conducted our audit of compliance in accordance with auditing standards generally accepted
in the United States of America (GAAS); the standards applicable to financial audits contained in
Government Auditing Standards issued by the Comptroller General of the United States
(Government Auditing Standards); and the audit requirements in the State of Alaska Audit Guide.
Our responsibilities under those standards and the State of Alaska Audit Guide are further
described in the Auditor's Responsibilities for the Audit of Compliance section of our report.
We are required to be independent of City of Seward and to meet our other ethical
responsibilities, in accordance with relevant ethical requirements relating to our audit. We
believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our opinion on compliance for each major state program. Our audit does not provide a legal
determination of City of Seward's compliance with the compliance requirements referred to
above.
3000 C Street N. Suite 201 Anchorage,Alaska 99503 Phone 907-274-2992 Fax 907-274-2993
Offices in Juneau and Soldotna A Professional Corporation
Honorable Mayor and City Council
City of Seward, Alaska
Responsibilities of Management for Compliance
Management is responsible for compliance with the requirements referred to above and for the
design, implementation, and maintenance of effective internal control over compliance with the
requirements of laws, statutes, regulations, rules, and provisions of contracts or grant agreements
applicable to City of Seward's state programs.
Auditor's Responsibilities for the Audit of Compliance
Our objectives are to obtain reasonable assurance about whether material noncompliance with the
compliance requirements referred to above occurred, whether due to fraud or error, and express
an opinion on City of Seward's compliance based on our audit. Reasonable assurance is a high level
of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted
in accordance with GAAS, Government Auditing Standards, and the State of Alaska Audit Guide
requirements will always detect material noncompliance when it exists. The risk of not detecting
material noncompliance resulting from fraud is higher than for that resulting from error, as fraud
may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal
control. Noncompliance with the compliance requirements referred to above is considered material
if there is a substantial likelihood that, individually or in the aggregate, it would influence the
judgment made by a reasonable user of the report on compliance about City of Seward's compliance
with the requirements of each major state program as a whole.
In performing an audit in accordance with GAAS, Government Auditing Standards, and the State of
Alaska Audit Guide, we:
• Exercise professional judgment and maintain professional skepticism throughout the audit.
• Identify and assess the risks of material noncompliance, whether due to fraud or error, and
design and perform audit procedures responsive to those risks. Such procedures include
examining, on a test basis, evidence regarding City of Seward's compliance with the
compliance requirements referred to above and performing such other procedures as we
considered necessary in the circumstances.
• Obtain an understanding of City of Seward's internal control over compliance relevant to
the audit in order to design audit procedures that are appropriate in the circumstances and
to test and report on internal control over compliance in accordance with the State of Alaska
requirements, but not for the purpose of expressing an opinion on the effectiveness of City
of Seward, Alaska's internal control over compliance. Accordingly, no such opinion is
expressed.
12
Honorable Mayor and City Council
City of Seward, Alaska
We are required to communicate with those charged with governance regarding, among other
matters, the planned scope and timing of the audit and any significant deficiencies and material
weaknesses in internal control over compliance that we identified during the audit.
Report on Internal Control over Compliance
A deficiency in internal control over compliance exists when the design or operation of a control
over compliance does not allow management or employees, in the normal course of performing their
assigned functions, to prevent, or detect and correct, noncompliance with a type of compliance
requirement of a state program on a timely basis. A material weakness in internal control over
compliance is a deficiency, or combination of deficiencies, in internal control over compliance, such
that there is a reasonable possibility that material noncompliance with a type of compliance
requirement of a state program will not be prevented, or detected and corrected, on a timely basis.
A significant deficiency in internal control over compliance is a deficiency, or a combination of
deficiencies, in internal control over compliance with a type of compliance requirement of a state
program that is less severe than a material weakness in internal control over compliance, yet
important enough to merit attention by those charged with governance.
Our consideration of internal control over compliance was for the limited purpose described in the
Auditor's Responsibilities for the Audit of Compliance section above and was not designed to identify
all deficiencies in internal control over compliance that might be material weaknesses or significant
deficiencies in internal control over compliance. Given these limitations, during our audit we did
not identify any deficiencies in internal control over compliance that we consider to be material
weaknesses, as defined above. However, material weaknesses or significant deficiencies in internal
control may exist that have not been identified.
Our audit was not designed for the purpose of expressing an opinion on the effectiveness of internal
control over compliance. Accordingly, no such opinion is expressed.
The purpose of this report on internal control over compliance is solely to describe the scope of our
testing of internal control over compliance and the results of that testing based on the requirements
of the State of Alaska. Accordingly, this report is not suitable for any other purpose.
13
Honorable Mayor and City Council
City of Seward, Alaska
Report on Schedule of State Financial Assistance Required by the State of Alaska Audit Guide
and Compliance Supplement for State Single Audits
We have audited the financial statements of the governmental activities, the business-type
activities, each major fund, and the aggregate remaining fund information of City of Seward, Alaska,
as of and for the year ended December 31, 2022, and the related notes to the financial statements,
which collectively comprise City of Seward's basic financial statements. We issued our report
thereon dated August 30, 2023, which contained unmodified opinions on those financial statements.
Our audit was performed for the purpose of forming opinions on the financial statements that
collectively comprise the basic financial statements. The accompanying schedule of state financial
assistance is presented for purposes of additional analysis as required by the State of Alaska Audit
Guide and Compliance Supplement for State Single Audits and is not a required part of the basic
financial statements. Such information is the responsibility of management and was derived from
and relates directly to the underlying accounting and other records used to prepare the basic
financial statements. The information has been subjected to the auditing procedures applied in the
audit of the financial statements and certain additional procedures, including comparing and
reconciling such information directly to the underlying accounting and other records used to prepare
the basic financial statements or to the basic financial statements themselves, and other additional
procedures in accordance with auditing standards generally accepted in the United States of
America. In our opinion, the schedule of state financial assistance is fairly stated in all material
respects in relation to the basic financial statements as a whole.
J I z � � C1_0
Anchorage, Alaska
August 30, 2023
14
City of Seward,Alaska
Schedule of State Financial Assistance
Year Ended December 31, 2022
Pass Through
Grantor's State
Award Program /Award Share of
Grantor Number Amount Expenditures
Department of Military and Veterans Affairs:
Lowell Point Road Debris Removal DR4661-PW00001 $ 253,455 253,455
Lowell Point Road Emergency Protective Measures DR4661-PW00002 31,726 31,726
Total Department of Military and Veterans Affairs 285,181 285,181
Department of Transportation and Public Facilities
. Seward Harbor G, K, L Dock Replacement 22-HG-002 1,729,988 1,231,438
Department of Revenue:
Commercial Passenger Vessel Tax 2016 None 458,165 111,621
Commercial Passenger Vessel Tax 2017 None 458,750 50,337
Passed through Kenai Peninsula Borough:
Commercial Passenger Vessel Tax 2019 None 577,195 278,020
Total Department of Revenue 1,494,110 439,978
Department of Education and Early Development:
Public Library Assistance PLA23-Sewar 7,000 7,000
Total State Financial Assistance $ 3,516,279 1,963,597
See accompanying notes to the Schedule.
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City of Seward, Alaska
Notes to Schedule of State Financial Assistance
Year Ended December 31, 2022
(1) Basis of Presentation
The accompanying Schedule of State Financial Assistance (the "Schedule") includes the state award
activity of City of Seward, Alaska, under programs of the State of Alaska for the year ended December
31, 2022. The information in this Schedule is presented in accordance with the requirements of the
State of Alaska Audit Guide and Compliance Supplement for State Single Audits. Because the
Schedule presents only a selected portion of the operations of City of Seward, it is not intended to
and does not present the basic financial statements of City of Seward.
(2) Summary of Significant Accounting Policies
Expenditures reported on the Schedule are reported on the modified accrual basis of accounting.
Such expenditures are recognized following the cost principles contained in the State Single
audit, wherein certain types of expenditures are not allowable or are limited as to
reimbursement.
(3) Subrecipients
The City did not pass any state funds through to subrecipients during the year ended December
31, 2022.
(4) Commercial Passenger Vessel Tax- State Assistance
Cash receipts for commercial passenger vessel taxes have been recorded as revenue in the
Harbor Enterprise Fund on an accrual basis. Any unspent portion of these funds, is reported as
restricted net position in the fund financial statements. At December 31, 2022, the cumulative
unspent vessel tax receipts were $2,220,386. Total vessel tax funds expended in 2022 and
reported on the schedule of state financial assistance were $439,978.
(5) Major Programs
denotes a major program for compliance audit purposes.
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City of Seward, Alaska
State Schedule of Findings and Questioned Costs
Year Ended December 31, 2022
Section 1- Summary of Auditor's Results
Financial Statements
Type of auditor's report issued: Unmodified
Internal control over financial reporting:
Material weakness(es) identified? X Yes No
Significant deficiency(ies) identified? Yes X None reported
Noncompliance material to financial statements? Yes X No
State Awards
Internal control over major programs:
Material weakness(es) identified? Yes X No
Significant deficiency(ies) identified? Yes X None reported
Type of auditor's report issued on compliance
for major program: Unmodified
Dollar threshold used to distinguish
between Type A and Type B programs: $ 750,000
Auditee qualified as low-risk auditee? Yes X No
Section II - Financial Statement Findings
See the Federal Schedule of Findings and Questioned Costs for all reported financial statement
findings.
Section III - State Award Findings
The City of Seward did not have any findings that relate to State awards.
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• Main Office(907)224-4050
CITY OF SEWARD • Police(907)224-3338
• Harbor(907)224-3138
P.O.Box 167 . Fire(907)224-3445
410 Adams Street . City Clerk(907)224-4046
Seward,Alaska 99664.0167 0 Community Development(907)2244049
• Utilities (907)224-4050
• Fax(907)224-4038
Summary of Prior Audit Findings
Year Ended December 31, 2022
Financial Statement Findings
Finding 2021-001 Lack of Internal Controls over Utility Billings
Material Weakness
Condition and Context: During our testing of internal controls over the utility billing system,
we noted four instances where customers were classified as the
incorrect account type, three instance where a customer was
charged more than one equivalent residential unit for water and
sewer service without adequate documentation, and two instances
where a customer was not charged for water and sewer service
although they were using those services.
Status: This finding has not been resolved and is repeated as Finding 2022-
001.
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• Main Office(907)224-4050
CITY OF SEWARD 0Police(907)224-3338
P.O.Box 167 Harbor(907)224-3138
• Fire(907)224-3445
410 Adams Street , City Clerk(907)224-4046
Seward,Alaska 99664.0167 • Community Development(907)224-4049
• Utilities (907)224-4050
0 Fax(907)224-4038
a•o
Corrective Action Plan
Year Ended December 31, 2022
Financial Statement Findines
Finding 2022-001 Lack of Internal Controls over Utility Billings
Material Weakness
Name of Contact Person: Sully Jusino, Finance Director
Corrective Action Plan: The City is continuing to address various weaknesses in utility billing
including internal controls.
Based on recommendations from a contracted accounting firm that
completed a workflow review, the following has been completed:
• Upgrade to Utility Billing System
• Creation of step-by-step process manuals
• Overview of utility month end reports by Finance Director
In addition, the Finance Department has reviewed and updated all
processes related to utility account creation, cash collections, meter
reading/estimates, billing, and month-end review.
Finally, to address the staffing shortage and inability to provide
separation of duties in-house, the City has hired an external utility
billing/customer service firm. This firm works extensively with the
software the City is using for utility billing and has experience
working with many other cities throughout the United States.
This firm is learning the City's current workflow processes and making
suggestions for improvement. These improvements are incorporated
into the utility manuals. When implementation is completed, the City
will be responsible for cash collections, meter readings, collection of
applications and other documents from customers, and the printing
and mailing of bills.
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City of Seward, Alaska
Corrective Action Plan, Continued
As the external utility firm will be responsible for almost all data
entry into the utility system. The City will review all journal entries
and month-end reporting before posting or final processing.
Regarding cash collection and processing, the Utility Clerk has
receipts reviewed by the Account Tech III. The Account Tech III will
enter the data into the accounting system and data will have a
secondary review as part of the month-end reconciliations.
Proposed Completion Date: It is expected that the implementation of the external utility firm
will be completed by December 31, 2023.
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