A small audience gathers to attend the Aug. 25 meeting of the Gunnison City Council. (Photo by John Waters)
Posted
Friday,August 28, 20268:38 am
The Gunnison City Council heard a report on the results of its clean 2025 audit at its Aug. 25 meeting.
City Finance Director Ben Cowan introduced the audit, which Avon, Colorado-based McMahan and Associates performed.
“I’m pleased to relay to you that we received yet another clean audit for 2025 on our financial statements,” said Cowan. He added that these financial statements had been relayed to the state auditor’s office and other users of the city’s financial statements, such as creditors.
He said the audits produced two recommendations for minor procedural changes in portions of city operations, which Cowan said city management agreed with.
Cowan then introduced Paul Backes, a managing member of McMahan and Associates, who would present on the audit process and its findings.
Backes said that presenting Gunnison’s audit would be significantly easier than some audits he had presented recently due to the city’s “quality financial reporting.”
Backes then reviewed the auditing process, which he said starts with planning for the audit by investigating recent city decisions, who is responsible for internal controls over various city funds, and what transactions occurred in these funds.
After planning is complete, Backes said the auditor verifies the numbers by comparing balance sheets for each city fund with the city’s various bank accounts to ensure the results match and that the funds in the bank are invested appropriately. He said the auditor follows a similar process for money owed to the city and payments the city is making, as well as for reviewing the handling of finances related to capital assets.
He said that the auditor also examines the city’s payroll to ensure pay is handled appropriately, in addition to a variety of other reviews to ensure city finances comply with state laws.
Backes said that the audit process involved 411 work papers, either provided to the auditor by the city finance team or by an outside entity.
“So, it’s not a small process, and we express a clean opinion, which is what you guys have, or an unmodified opinion, we don’t say that lightly,” he said. “There’s been a lot of work that’s gone in behind it.”
He said that Gunnison has “really prudent, reasonable management of your funds. You don’t have either really large balances that you’re not putting dollars to work for your constituents, but you’re also not so low that, if there’s a downturn or something like that, you’re gonna have to have kind of crisis management.”
Backes said that the length of the audit report, at 82 pages, was partly driven by the wide range of audiences beyond the city council that the report must serve, including state agencies, creditors, and potential state or federal grant providers.
He said that the city finance team was effective in providing timely and accurate information to the auditors.
Backes said the auditors had two recommendations for the city, both of which he described as a “vanilla FYI” instead of a more serious material weakness or reportable condition.
He explained that, at the Gunnison Senior Center, there is a weakness where a user could potentially pay for a meal, and the funds would be “pocketed.” However, Backes said that he did believe this was a high risk and that he did have recommendations on how to reduce that risk.
The audit report notes a lack of reconciliation between the meal counts at the center and the amount of money deposited in the bank from meal payments, as well as a lack of tracking of which meal payments were discounted or waived, creating a potential vulnerability.
The report recommends that the city establish a system to reconcile meal counts with payments as well as a documentation and approval process for waivers of meal fees.
Backes also said that the auditors found an issue with how items in the water and sewer department’s inventory stockpile were valued, which they were able to explain to staff and adjust to the proper valuation.
The audit report indicates that the city had been adjusting the value of items in inventory to their present market value when calculating the stockpile’s value, when the standard practice is to value items at the lower of their historical cost or current market value.
Backes said that next year would involve significant changes to governmental accounting standards which the city should be aware of and which the auditing firm could assist them in adapting to.
Mayor Pro Tem Marisela Ballesteros congratulated staff on their 12thconsecutive clean audit.
Mayor Diego Plata said that he would second Ballesteros’ comments. “Since long before I’ve been here, it seems like this is a breeze in some ways for Paul and he seems to enjoy it a lot,” he said. “I think it speaks to the level of professionalism that you and your team carry out and really creates what I believe to be a trustworthy financial component of the city when it comes to the public understanding for transparency reasons. It’s all there and it’s all been audited and it all looks good. So, I really appreciate everything you do and your team.”
Councilor Loren Ahonen asked Cowan whether his understanding that procedural changes were already underway to address the financial issue with the senior meals was correct.
Cowan explained that the program provides some free meals through an income-verified scholarship program run by the Gunnison County Department of Human Services. He said that the intersection of challenges in reconciling counts between organizations and staffing changes at the senior center had slowed implementation of a solution to this issue, although one was now in place.”
He said that cash is always difficult to track and that the center lacks the inventory controls some restaurants have, but he felt staff had found a solution that satisfied city finance and the auditors.
The council closed the discussion by unanimously voting to accept the city’s audited financial statements for 2025.
