Item 4D: Resolution Acknowledging Receipt of CAFR

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The key pages of the CAFR which the council may wish to review are pages 11-12 and pages 155-156, where two of the auditors' reports are found. In the first report, the auditors have issued an unqualified opinion (also known as 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 address the City’s compliance with applicable provisions of Oregon Revised Statutes including, requirements related to debt, deposit of public funds, preparation and adoption of the budget, accounting records and related internal control structure, etc. In addition, the auditors also report if the City had any significant internal control weaknesses. The auditors noted that the City complied with all laws with one exception - the City exceeded its legal budget (page 47) in three funds. ? The Urban Renewal Agency (URA) General Fund exceeded its operating budget by $72,443, or 24%. When PDD staff finalized the FY07 budget in February, 2006 for the Urban Renewal, they budgeted 53% of operating expenses to Downtown district and 47% to the Riverfront district. During FY07, however, expenditures for Downtown activity consumed approximately 75% of the total staff expenditures with the majority of the staff effort focused on the West Broadway project in the latter part of the year. As a result, the URA General Fund exceeded its approved budget. The money to pay for this over-expenditure came from within the URA Debt Service Fund. ? The URA Debt Service Fund, which provides funding to the URA General Fund for administrative expenses, exceeded its transfer authority by $72,425, or 6%. This was a result of the over- expenditure in the URA General Fund, as described above. ? The Professional Services Internal Service Fund (PSF Fund) overspent its transfer authority by $13,947, or 3%. As part of the FY07 budget process, the facilities professional function was moved from the PSF Fund to the Facilities Internal Service Fund (Facilities Fund). Staff under-estimated the transfer of equity from the PSF Fund to the Facilities Fund by this amount. ORS require that all over-expenditures be brought to the attention of the governing body. Because there is no dollar threshold, it is common for local governments to have occasional over-expenditures. As a benchmark for reference, in the past decade with total annual budgets of between $400-500 million, the City has been cited for four other over-expenditures totaling $11,403. This indicates that over- expenditures occur rarely. Two additional reports, beginning on page 159, 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. F:\CMO\2008 Council Agendas\M080114\S0801144D.doc