Sedona receives clean audit – Sedona Red Rock News
City has $29K in assets per resident
The city of Sedona received a clean audit during the March 10 Sedona City Council meeting, at which council heard a presentation about the Annual Comprehensive Financial Report for Fiscal Year 2024–25.
The presentation was delivered by Deputy City Manager Barbara Whitehorn; Jean Marie Dietrich, signing director at Clifton Larson Allen LLP; and Renée Stanley, the city’s accounting manager.
“I look at it as large reserves, annual surpluses, a clean audit, low financial risk, all these things you found in audit,” Councilman Pete Furman said. “It’s amazing fiscal performance that I think reflects the culture of folks that work here in City Hall, stemming from the city manager on down through the Finance Department and going into every department this people take these fiscal performance of our city seriously, and it’s a very it’s a pleasure to sit here on City Council and accept reports like this.”
In performing the audit, Dietrich said her firm conducts a risk-based approach, obtaining management’s financials, details and supporting schedules, then examining and verifying management’s assertions on those schedules and financials before providing an opinion.
“I do not opine on the health of an organization,” she said.
The city’s total net position is $284,167,327, calculated as the difference between everything Sedona owns, such as infrastructure and cash, minus everything it owes such as debt. At the end of Fiscal Year 2025 the city’s total net position increased $18.7 million and in Fiscal Year 2024 it increased $27.3 million according to the audit.
“The assets and deferred outflows of resources of the city exceeded its liabilities and deferred inflows of resources at the close of the fiscal years 2025 and 2024 by $284.2 million and $261.0 million — net position — respectively,” the audit reads. “Of these amounts, $86.5 million and $59.5 million — unrestricted net position — respectively, may be used to meet the government’s ongoing obligations to citizens and creditors.”
The city approved its $103,291,695 budget on June 24, 2025.
“I tried to explore a new math analysis of the ACFR this year, and I stumbled across looking at net position per population, and I see that we have $29,000 in assets per resident,” Furman said. “Which I believe is just an extraordinarily high number for a small city like Sedona, and so everybody in this town should just be absolutely happy and proud of the financial position of our city.”
Additionally, “at the close of fiscal year 2025, unassigned fund balance for the General Fund was $21.8 million, or 68.6% of actual expenditures,” the audit reads. “City policy requires a minimum unassigned balance of 30%.”
In the next three to five years, Dietrich said the city should pay attention to cyber security and grant management as two financial risks.
“The one thing is, with the city of Sedona, [you] are not highly reliant on federal grants,” Dietrich said. “In fact, we’re completing the second single audit that you’ve had. From a financial reporting risk. It’s your controls over your information systems that are at highest risk. And warned that employee turnover in grants management could potentially put the city at risk because newer employees could be less familiar with reporting and documentation requirements.”
Whitehorn said the city has not currently purchased software for grants management but she sees it as a need.
Vice Mayor Brian Fultz asked how artificial intelligence could “be a tool to address some of these risks going forward?”
“AI is assisting with grants management in that it is putting workflows in place that is increasing segregation of duties, AI is assisting with reading and interpreting documents,” Dietrich said. “We always have to read what AI reads, because we trust but verify.”
Furman asked whether the audit identified any financial vulnerability related to the city’s reliance on sales tax revenues. Dietrich said that falls outside the scope of an audit, which focuses on whether financial schedules contain any material misstatements.
“We have to really consider that our revenues that drive most of our collections are sales and bed tax, which can be more volatile in challenging economic times,” Whitehorn said. “Because of that, we maintain policy reserves that are higher than the standard kind of minimum of two months or 16% for the general fund. And our policy is 30% and we are well above that 30%.”
“Overall, sales and bed tax revenues comprise approximately 76% of the more than $51 million in General Fund revenues,” the audit reads.