The Audit Committee met to finalize the town's annual comprehensive financial report and voted to recommend that the Town Council adopt the ACFR at its meeting next Wednesday at 7 PM.

The committee approved the draft ACFR, including the management's discussion and analysis, the auditors' report from PKF, and the supplementary information after staff and the auditors described two specific updates since the December 3 draft: removal of a related-party disclosure and the insertion of a subsequent-events note concerning a lessee rent situation. "It is completely immaterial," said Speaker 4 when agreeing the related-party disclosure (about "a little over 100,000" this year) could be removed. On the subsequent-event, Speaker 3 said the lessee had been on rent abatement through September and "there was no default at that point," meaning no default existed as of the fiscal year end (June 30).

Why it matters: the ACFR consolidates the town's audited financial statements and supporting material; committee approval and a council vote complete the formal acceptance process and make the audited statements a public record. Committee members pressed for clarity on materiality assumptions, distribution of the single-audit/internal-controls report, and a technical pension accounting question.

Details of changes and committee discussion
The related-party disclosure that appeared in prior drafts was removed after committee review. Committee members recorded the disclosed amount as "just over 100,000" and described it as immaterial to the financial statements, so the note was not carried forward. When asked what threshold auditors used for materiality, Speaker 4 said the government-wide lower individually significant amount was about $600,000.

The committee also discussed a subsequent-events note related to a lease receivable. According to committee discussion, the lessee had an approved rent abatement through September and was not in default as of the June 30 fiscal year end; the committee therefore treated the matter as a subsequent event to be disclosed in the ACFR.

Single audit and internal-controls report
A committee member asked about the internal-controls report referenced in the auditor's letter. Speaker 4 said that report is included in the single audit package and that copies should be distributed to committee members; staff agreed to ensure it is provided. The report does not require Town Council approval but was made available for committee review.

Technical question on pension assumptions
Speaker 6 raised a question about actuarial practice: in public-sector accounting the discount rate and the assumed investment rate of return for defined-benefit plans often appear the same. Speaker 4 advised that the actuaries should be consulted for a full explanation and suggested raising the question offline.

Vote and next steps
Speaker 1 moved to approve the ACFR and recommend Town Council approval; the motion was seconded and approved by voice vote. The committee recorded the motion as approved and noted that the Town Council will consider the matter at its meeting next Wednesday at 7 PM. Speaker 1 said they would prepare a PowerPoint presentation for the council agenda item and circulate it to committee members for comment.

The meeting was adjourned by unanimous voice vote.