HomeMy WebLinkAbout05-21-2013 b2 cafr single audit 2011-12councrL
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Item Number
B2
FROM:
Prepared By:
CITY OF SAN LUIS OBISPO
Wayne Padilla, Interim Director of Finance & Information Technology
Mette Richardson, Finance Operations Manager
SUBJECT:COMPREHENSTVE ANNUAL FINANCIAL REPORT, SINGLE AUDIT REPORT
AND MANAGEMENT RECOMMENDATIONS LETTER FOR 2011-12
RECOMMENDATION
Receive and file the Comprehensive Annual Financial Report, Single Audit Report and Management
Recommendations Letter for 20I I -12.
DISCUSSION
The accompanying Comprehensive Annual Financial Report (CAFR) has been prepared as required by
the City's Charter and applicable State laws requiring financial reporting. The CAFR provides a final
and audited representation of the City's financial condition across all funds and audited results of
operations for the fiscal year that ended June 30, 2012. The CAFR was also published on the City's
website on December 31, 2012, as required by City Charter, and hard copies were provided to the City
Council in January 2013.
The accompanying Single Audit Report, which is prepared by the City's independent certified public
accountants, provides information about the City's expenditures of federal awards for the period ended
June 30, 2012. Also included in the Single Audit Report is the Auditor's report on intemal controls
and compliance as well as any findings relating to the financial statements and Federal award
programs.
The accompanying Management Recommendations Letter, which is also prepared by the City's
independent certified public accountants, provides comments and recommendations which are intended
to improve internal control or result in other operating efficiencies.
A representative from Glenn, Burdette, Phillips and Bryson, the City's independent certified public
accountants, will attend the May 2I,2013 Council meeting to present the results of the audits and to
respond to any questions the Council may have relating to such audits.
Financial Results Highlighted in the CAFR
IVithin the CAFR, fhe Transmittal Memorandum and Management's Discussion and Analyszs provide
a comprehensive analysis of the City's financial position as of June 30,2012, as well as summaries of
significant City fiscal policies, practices and financial results. Key variances from projected ending
balances for 20ll-12 are also highlighted in the Transmittal Memorandum.
Financial results for the year compare favorably with budget estimates in virrually all areas of the
City's operations. For the General Fund, financial results for the year \¡/ere better than final
estimates for revenues by $211,400, or .3o/o. Expenditures \Mere $2.5 million, or 5o/o, below final
estimates.
B.2-1
Comprehensive Annual Financial Report for 2011-12 Page 2
This results in an ending General Fund unassigned fund balance of $13.7 million, which is $2.7
million better than projected when last forecast in early June 2012 at the preparation of the 20I2-I3
Supplement and Approved Budget.
(1,395,872) i
(883,400):
Unrestricted Fund Balance, end of year
While revenues from the General Fund's top ten sources, which account for 90o/o of total revenues,
were on targeL with projections as a whole, there were variances within the individual sources as
shown below.
Top Ten Revenues
2011-12
Budget
2011-12
Actual Variance
Sales Tax
General
Measure Y
Property Tax
Transient Occupancy Tax
Utility Users Tax
Property tax in lieu of VLF
Franchise Fees
Business Tax
Development Review Fees
Recreation Fees
$ 12,945,500
6,009,400
8,370,200
5,1 34,800
4,898,900
3,551,000
2,503,400
1,849,800
2,244,400
1,511,800
$ 13,290,000
6,237,500
8,367,000
5,222,000
4,584,100
3,492,400
2,462,300
1,837,500
2,453,800
1,741,700
$ 344,500
228,100
(3,200)
87,200
(314,800)
(58,600)
(41 ,1 00)
(12,300)
209,400
229.900
3%
4%
o%
2%
-6%
-2%
-1To
9%
15%
Total $ 49,019,200 49,688,300 $ 669,100
As highlighted in Management's Discussion and Analyszs, the City's assets across all funds exceed its
liabilities by $327.9 million, which was an increase in total net assets of $9.2 million from the prior
year. This increase is primarily attributable to a decrease in noncurrent liabilities due to the paying
down of debt.
Independent Audit
As required by the City Charter, the financial statements have been audited by independent certified
public accountants (Glenn, Burdette, Phillips and Bryson). The objective of a fnancial audit is to
provide users of the financial reports with reasonable assurance from an independent source that the
reports are reliable.
ln addition, the Federal Single Audit Act requires agencies expending $500,000 or more of Federal
assistance funding to undergo organizalion-wide audits of their internal controls. Accordingly, the
Less:
Encunbrances
Carryover/unused Appropriations
Debt Service Reserve
VarianceChanges in
General Fund Balance
2011-12
Estimated
2011-'t2
Actual Amount
(1.950,400)
12,907,900
$ 53,475,400
49,727,200
(5,6e8,600)
776,500
12,907,900
$ 53,686,800
47,212,100
(5,6e8,200)
Fund balance, beginning of year
Revenues
Expenditures
Other sources (uses)
&cess of revenues and sources
over (under) expenditures & uses
o%
5%
0%
Fund balance. end of vear $ 10,957,500 $ 13,684,400 $ 2,726,900
82-2
Comprehensive Annual Financial Report lor 2011-'12 Page 3
accompanying Single Audit Report provides a Report on Internal Control Over Financial Reporting
and on Compliance and Other Matters.
The auditor issued the financial statements with an unqualified opinion which means that they are
presented fairly and in conformity with generally accepted accounting principles (see pages 15-16 of
the CAFR). However, the auditors did identify two conditions which they felt represented material
weaknesses related to the timing and accuracy of year-end closing entries and supporting
documentation provided by the Finance Department. A material weakness is a deficiency 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. The City has begun
taking the necessary steps to ensure that the issues identified as material weaknesses are resolved and
thus that a material misstatement does not occur in the future. The identified findings are shown in the
Schedule of Audit Findings and Questioned Costs on page 9 of the Single Audit Report. The City's
responses to such findings have been incorporated into pages I0-I2 of the Report.
ln the accompanying Management Recommendations Letter, the auditors also provided specific
recommendations relating to the City's internal controls over fixed assets and long term debt. In
response to these recommendations, the City is revising its schedules used for tracking and accounting
for long term debt and related issuance costs and discounts. Additionally, the City is preparing timelier
fixed asset reconciliations and is assigning dedicated staff to the fixed asset and long term debt tracking
and reconciliation process. The City's responses to the recommendations have been incorporated into
the Letter.
CAFR Organization
ln accordance with generally accepted accounting principles for state and local govemments, the City's
CAFR is organized into three major sections: lntroduction, Financial Reports and Statistical Tables.
The following is a brief summary of the contents of each of these sections.
Introduction. The Transmittal Memorandum and other information of general interest are presented in
this section, including: directory of officials, advisory bodies, and organization chart.
Financial Reports. This section includes the City's primary financial statements in five major parts
1. Auditors' opinion regarding the financial statements
2. Management's discussion and analysis providing ananative overview of City-wide finances
3. The basic financial statements presenting the government-wide results combining the activities of
the major funds (General, Capital Outlay and all Enterprise Funds) into governmental and
business-type categories; the fund financial statements; and the notes to the financial statements.
4. Required supplementary information presenting the General Fund actual results with both the
original and final adjusted budgets.
5. Other supplemental schedules and financial statements providing financial information for each of
the City's non-major governmental and agency funds. This includes a financial schedule
presenting Measure Y revenues and uses in20ll-I2.
82-3
Comprehensive Annual Financial Report for 2011-12 Page 4
Støtistícal Tables. This section provides demographic and financial tables showing current and
historical trend information for the City and is organizedinto six major parts:
1. Statistical overview. General information about the San Luis Obispo community.
2. General financial trends. Ten-year summary information on net assets, governmental revenues
and expenditures and fund balances.
3. Revenue capacity. Ten-year sunmary information on property and sales tax trends.
4. Debt capacity. Ten-year sunìmary information on debt service requirements.
5. Economic and demographic trends. Ten-year summaries of taxable sales, building permits and
valuations, housing, population and other demographic trends.
6. Operating information. Ten-year trend information on operating indicators by function.
Recognition for Excellence in Financial Reporting
Beginning in fiscal year 1983-84, all of the City's CAFRs have been awarded the certificate of
achievement for excellence in financial reporting from the Government Finance Officers Association
of the United States andCanada (GFOA). This is a prestigious national award recognizing the City's
use of the highest standards in preparing our annual financial report. The City received the award for
its 2010-2011 CAFR and has submitted the award application for the 20ll-2012 CAFR.
F'ISCAL IMPACT
There is no fiscal impact associated with review of the financial results for the fiscal year
AVAILABLE FOR REVIE\ü IN THE COUNCIL OFFICE
Comprehensive Annual Financial Report for 2011-12
Single Audit Report for 20II-12
Management Recommendations Letter for 20I I -I2
Tl0ouncil Agenda Reports\20 13\2013-05-21\Comprehensive Annual F¡nancial Reporlfor 2O'11-12 (Padilla-Richard$n}CAFR-Single audit 201'l-12.docx
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