Item 5: URA - Resolution Acknowledging Receipt of FY07 Financial Report

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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 credit-worthiness 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 Agency’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 Agency had any significant internal control weaknesses. The auditors noted that the Agency complied with all laws with one exception - the Agency exceeded its legal budget (page 25) in two funds. ? The Agency’s General Fund exceeded its operating budget by $72,443, or 24%. When PDD staff finalized the FY07 budget in February, 2006 for Urban Renewal, they budgeted 53% of operating expenses to the 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 Agency’s General Fund exceeded its approved budget. The money to pay for this over-expenditure came from within the Agency’s Debt Service Fund. ? The Agency’s Debt Service Fund, which provides funding to the Agency’s General Fund for administrative expenses, exceeded its transfer authority by $72,425, or 6%. This was a result of the over-expenditure in the Agency’s General Fund, as described above. 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 the Agency has had no over-expenditures. 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 completion of this process for the fiscal year ended June 30, 2007, and demonstrates the Agency’s compliance with the Policy. OPTIONS None. 2 F:\CMO\2008 Council Agendas\M080114\S0801145.doc