Item 3C: Resolution on FY11 CAFR

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The key pages of the CAFR to review are pages 11-12 and pages 151-152, 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. For policy makers, a clean opinion means that the information in the CAFR is accurate and reliable. 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 48) in two funds:  The Special Assessment Management Special Revenue Fund overspent its departmental appropriation by $57,528, or 3.0%. This occurred due to increased street subsidies for qualifying property owners for the Crest drive assessment as a result of allowing additional opportunities for property owners to qualify and changes in the criteria to allow more properties to receive subsidies.  The Parking Services Enterprise Fund overspent its Planning and Development departmental appropriation by $116,152, or 3.6%. A portion of the overexpenditure was due to adding more neighborhood parking mitigation changes in the neighborhoods impacted by the new University of Oregon arena. The remainder was due to unanticipated garage security costs due to a delay in the implementation of a new downtown police patrol unit.  The Parking Services Enterprise Fund also exceeded its Public Works appropriations by $9,637, or 13%, because of higher than anticipated costs to make parking district changes for free downtown parking and changes for the new parking near Mac Court and the UO Arena district. 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 particular over-expenditures for fiscal year 2011 were unique circumstances that are not likely to be repeated. Two additional reports, beginning on page 155, 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. 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 S:\CMO\2012 Council Agendas\M120109\S1201093C.doc