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<br /> December 9, 2019, Meeting – Item 2C <br /> <br />The auditors noted that the City complied with all laws with one exception—the City exceeded its legal budget (page 47) in two funds. <br /> The Construction and Rental Housing Fund overspent its fire and emergency medical services departmental appropriation by $18,133, or 5.3 percent. The over-expenditure was caused by a one-time Public Employees Retirement System correction for an employee who should have been moved from general service PERS to police and fire PERS. <br /> The Parking Services Fund overspent its planning and development departmental appropriation by $35,495, or 0.6 percent. This was due to some additional spending in FY19 on the security camera project for the parking garages. 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. The auditors conduct the audit of the City's basic financial statements in accordance with generally accepted auditing standards and the Minimum Standards for Audits of Oregon Municipal Corporations. In addition, as a recipient of federal grants, the City is subject to the Federal Single Audit Act of 1984, which requires that the audit be conducted in accordance with Government Auditing Standards, issued by the Comptroller General of the United States and the audit requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). These standards and the Uniform Guidance require that the auditors plan and perform the audit to obtain reasonable assurance about whether the basic financial statements are free of material misstatement and whether the City complied with the laws and regulations pertaining to federally-funded programs. In addition to state and federal requirements, the City has a contractual obligation in connection with its debt issuances, which requires that the City issue annual audited financial statements. Two additional reports, beginning on page 161, 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. Management is responsible for the information contained in, and the preparation of, the City's financial statements. To effectively fulfill this responsibility and to contain the cost of auditor services, City staff devotes significant effort to the closing of accounting records, the preparation of schedules and audit workpapers, and the production of the CAFR. This also results in staff expertise being developed on specific financial and service issues that can then be used to assist departments and other pertinent parties. Professional requirements mandate auditors provide a report to the governing body that addresses any concerns or findings they encountered in such audit-related issues as significant audit findings, accounting estimates and disagreements with management. Isler CPA’s memo addressing these issues for fiscal year 2019 is included as Attachment C and it states that there were no concerns that required communication to City Council. <br />CC Agenda - Page 32