Perfect score: Auditing firm declares CAWCD financial statements “clean”

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A foundational aspect of the operations behind the Central Arizona Project (CAP), out of sight from the massive pumping plants and 336-mile canal and essential roles played by many of the nearly 500 employees, is the granular-yet-grand world of financial statements.

And CAP’s latest financial statements, the pages upon pages of densely packed data, have been given an outstanding review.

At the April 18 Finance, Audit and Power meeting, CliftonLarsonAllen (CLA), the independent auditing firm hired by CAP to audit its Annual Comprehensive Financial Report and the financial statements of CAWCD Insurance Company for the fiscal year ending Dec. 31, 2023, declared an unmodified “clean” opinion of the statements.

This is the highest level of assurance a CPA (Certified Public Accountant) firm can provide.

The auditors are not just looking at financial statements, but also the processes that impact the numbers.  In other words, from the procurement of an asset to the final audit, there were no material findings. This is a testament to the long-term financial strength and integrity of Central Arizona Water Conservation District (CAWCD), which operates, maintains, and manages CAP, despite uncertainties that include drought and economic unpredictability.

Procurement-to-audit: the asset acquirement process

As a public entity, CAP does not make a profit and has a responsibility to provide a reliable water supply at a reasonable price.  It’s important to CAP that the asset-acquirement process is accurate, honest and efficient.

For the audit of the 2023 Annual Comprehensive Financial Report (ACFR), one of the selections that CLA chose to perform a deeper dive on was the power operations process.

An example of the cycle of a single power purchase would be:

  • CAP’s Water Operations staff determines how much water is being delivered and to what turnout (which is affected by the above, unpredictable factors such as drought).
  • CAP’s Power Program staff takes the schedule from water operations to determine power needs. They then purchase power using reliable, cost-effective strategies such as a diversified power portfolio to afford stakeholders reliable and stable rates.
  • CAP’s Finance staff gathers this “buy and sale” information, then compares transactions and activity to supporting documentation, a process known as reconciliation.
  • CAP’s Accounting Operations staff records the transactions for the purchases and sales to the ledger for CAP’s financial reporting.
  • At different stages along the process the work is reviewed and approved.
  • An independent auditor (CLA) conducts an audit of such entries at the end of a fiscal year. This can include pulling and reviewing invoices and even interviewing CAP staff.

To achieve a clean audit, all of the documents reviewed cannot have any material findings or comments.

The importance of a clean audit is critical to a successful CAP mission of managing and delivering Colorado River water to 6 million people living in central and southern Arizona. It positively influences aspects such as the stability of our bond rating, overall operational integrity, and efficacy of CAP’s water rates setting process.

CAP Senior Accountant Tanya M. Luther, CPA, is proud of the overall outcome of a “clean” audit.  She feels the quality of the product is a representation of the teamwork, experience and knowledge at CAP. “The ACFR supports the financial integrity of the company,” Luther said of the audited financial statements. “They let water users know they can be confident in the water rates that we’re setting.”

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KRA: Finance

Maintaining long-term financial strength to achieve CAP’s goals and being prepared to address opportunities or challenges

Learn more about CAP’s eight Key Result Areas (KRAs)