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HomeMy WebLinkAboutItem 2E - Res.Receipt of CAFREUGENE CITY COUNCIL AGENDA ITEM SUMMARY Action: Resolution 4823 Acknowledging Receipt of the City of Eugene, Oregon Comprehensive Annual Financial Report for the Fiscal Year Ended June 30, 2004 Meeting Date: January 24, 2005 Agenda Item Number: 2E Department: Central Services Staff Contact: Fionan Cronin www. cl. eugene, or. us Contact Telephone Number: 682-5394 ISSUE STATEMENT This is a resolution acknowledging receipt of the Comprehensive Annual Financial Report (CAFR) for the City of Eugene for the fiscal year ended June 30, 2004. This resolution demonstrates compliance with ORS 297.465(2), which requires that a copy of the City's CAFR containing a signed expression of opinion, be furnished to each member of the governing body. BACKGROUND Under Oregon Municipal Audit Law, the City is required each fiscal year to contract with an authorized accounting firm for the audit of its accounts and fiscal affairs (ORS 297.425). The regional firm of Grove, Mueller & Swank, P.C. (auditors) has completed the audit of the City of Eugene's financial statements for the fiscal year ended June 30, 2004, and issued an unqualified opinion on the basic financial statements. The auditors conduct the audit of the City's basic financial statements in accordance with generally accepted auditing standards and the Minimum Standards for Audit 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 Office of Management and Budget (OMB) Circular A-133, Audits of States, Local Governments and Non-Profit Organizations. These standards and OMB Circular A-133 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 about whether the City complied with the laws and regulations pertaining to federally-funded programs. In addition to state and federal requirements, the City has bond covenants in connection with certain debt issuances which require that the City issue annual audited financial statements. 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 L:\CMO\2005 Council Agendas\M050124\S0501242E.doc 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 completion of this process for the fiscal year ended June 30, 2004, and demonstrates the council's compliance with the policy. COUNCIL OPTIONS Not applicable. CITY MANAGER'S RECOMMENDATION The City Manager recommends adoption of the proposed resolution. SUGGESTED MOTION Move to approve Resolution 4823 acknowledging receipt of the Comprehensive Annual Financial Report (CAFR) for the City of Eugene for the fiscal year ended June 30, 2004. ATTACHMENTS A. Resolution B. Copy of the 2004 CAFR FOR MORE INFORMATION Staff Contact: Fionan Cronin Telephone: 682-5394 Staff E-Mail: finn.j, cronin~ci, eugene, or.us L:\CMO\2005 Council Agendas\M050124\S0501242E.doc ATTACHMENT A RESOLUTION NO. A RESOLUTION ACKNOWLEDGING THE RECEIPT OF THE COMPREHENSIVE ANNUAL FINANCIAL REPORT OF THE CITY OF EUGENE FOR THE FISCAL YEAR ENDED JUNE 30, 2004 The City Council of the City of Eugene finds that: The firm of Grove, Mueller & Swank, P.C. has completed the audit of the financial statements of the City of Eugene for the fiscal year ended June 30, 2004, as required by ORS 297.425 and, pursuant to ORS 297.465, reported to the Mayor and City Council on its findings. NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Eugene, a Municipal Corporation of the State of Oregon, as follows: Section 1. That the Council hereby acknowledges that it has received the Comprehensive Annual Financial Report for the year ended June 30, 2004. The foregoing resolution adopted the 24th day of January, 2005. City Recorder