Item 2E - Res.Receipt of CAFR - Laserfiche WebLink

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expertise being developed on specific financial and service issues that can then be used to assist departments and other pertinent parties. The key pages of the CAFR which the council may wish to review are pages 9-10 and pages 147-148, where two of the auditors' reports are found. In the first report, the auditors have issued a "clean opinion" on the City's basic financial statements, indicating that the City has prepared these statements in conformity with generally accepted accounting principles (GAAP). GAAP for state and local governments is promulgated by the Governmental Accounting Standards Board (GASB) to ensure consistency in accounting and comparability in financial reporting among state and local governments. A clean opinion is a fundamental financial goal for every government, as it represents the highest level of opinion a government can receive from its independent auditors. A clean opinion is an important indicator of sound financial management and creditworthiness to the citizens, other governmental jurisdictions (state and federal), credit rating agencies, investment bankers, bond holders, and other private sector entities. In the second report, the auditors state that nothing came to their attention that caused them to believe that the City was not in compliance with appropriate state and federal regulations with two exceptions where the City exceeded its legal budget (page 45). The General Fund over- expended the appropriated amount for intergovernmental expenditures by $90,701. This expenditure is for State assessment fees collected by the City Municipal Court and then passed on to the State. A change in the ORS in FY99 requires that any money received on behalf of another government agency should be appropriated in the City's budget. These fees are difficult to estimate because they are based on the number of cases filed. The City also had an over- expenditure of $29,908 in the Public Safety Answering Point Fund's operating budget. The over-expenditure stemmed from a pass-through as well. In this case, the State remits the City's share of 9-1-1 telephone excise tax directly to LCOG on a quarterly basis. However, the City is still required to report the tax as a revenue and expenditure. In FY04, the City underestimated the budgeted amount it would receive from the State and when the transaction was recorded at year end, the City had an over-expenditure. To remedy this situation in the future, City staff will budget a larger 'cushion' to allow for fluctuations and closely monitor expected expenditures to appropriation amounts particularly toward the end of the fiscal year to prevent this from occurring again. As a benchmark for reference, in the past decade with total annual budgets of between $400-500 million, the City has been cited for three other over-expenditures totaling $2,401. This indicates that over-expenditures occur rarely. Two additional reports, beginning on page 151, specifically address compliance with Federal laws, regulations, contracts and grants and indicate that the auditors found no material instances of the City's noncompliance with these requirements, nor were there any findings or questioned costs noted in relation to Federal awards made to the City. RELATED POLICY ISSUES Policy B. 1 of the City's Financial Management Goals and Policies states that "The City will maintain an accounting and financial reporting system that allows reporting in conformance with Generally Accepted Accounting Principles and Oregon Local Budget Law and will issue a Comprehensive Annual Financial Report each fiscal year." This action signifies formal L:\CMO\2005 Council Agendas\M050124\S0501242E.doc