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HomeMy WebLinkAboutFin Financial Reports FY2011-12carr oFr�:%'V � (. Agenda Item No: 5.a Meeting Date: December 17, 2012 SAN RAFAEL CITY COUNCIL AGENDA REPORT Department: FINANCE Prepared by: Mark Moses City Manager Approval Interim Finance Director SUBJECT: FY 2011-2012 ANNUAL FINANCIAL AUDIT REPORT; THE GANN APPROPRIATION LIMIT REPORT, AND THE MEMORANDUM ON INTERNAL CONTROL RECOMMENDATION: ACCEPT THE FY 2011-2012 ANNUAL FINANCIAL AUDIT REPORT; ACCEPT THE GANN APPROPRIATION LIMIT REPORT; AND ACCEPT THE MEMORANDUM ON INTERNAL CONTROL ►_ ' 1 i As is required by local code, State law, bond covenants, and best practices, the City of San Rafael completes an annual audit of its financial activities. The auditing firm of Maze and Associates, Accountancy Corporation conducted the audit for fiscal year 2011-2012. Their work was completed in accordance with generally accepted auditing standards; Government Auditing Standards, issued by the Comptroller General of the United States; and the provisions of Office of Management and Budget Circular A-133, Audits of State and Local Government and Non - Profit Organizations. The Federal Government requires that any local agency expending $500,000 or more in combined federal grant funds, either directly or indirectly in a fiscal year, is subject to a separate audit on those programs and a separate Single Audit Report is issued. This threshold amount did occur in fiscal year 2011-2012; therefore, this separate audit report is required. This report will be presented at a later date. The requirements of Section 1.5 of Article XII1B of the California Constitution are met with an agreed upon procedure report applied to the Gann Appropriation Limit calculated for the year ending June 30, 2013. A Memorandum on Internal Control is also prepared by the auditors to help identify areas that could help improve the City's organization and controls over its financial activities. These reports are also attached to this staff report. FOR CITY CLERK ONLY Fite No.: - - 3 - d Council Meeting: Disposition: SAN RAFAEL CITY COUNCIL AGENDA REPORT / Page: 2 ANALYSIS: The actual results of the City's financial activities are presented in the Comprehensive Annual Financial Report. The report includes Government -wide financial statements with governmental activities and business -type activities presented separately. Net assets are often a good indicator , of the City's financial position. At the end of the fiscal year, net assets of the City were $240.9 million, an increase of $32.3 million from the prior year. Of this increase, $31.0 million is attributable to the transfer of Redevelopment Agency debt to the Successor Agency, following its termination on January 31, 2012. The final Redevelopment Agency financial statements are included with this report as supplementary information. A financial summary of revenues and expenditures is shown in the Statement of Activities and Changes in Net Assets. Total governmental revenues of $87.2 million exceeded the $84.3 million in expenditures by $3.1 million. Strong sales tax performance, coupled with development -related fees and cost containment initiatives, contributed to this result. Total revenues from business activities (Parking Fund) of $3.9 million exceeded expenditures of $3.5 million by $0.4 million. The final results for the General Fund were close to the projections made at the time the budget was adopted for fiscal year 2012-2013. Actual revenues at $54.9 million exceeded the final budget by $0.2 million, while actual expenditures were $0.1 million under budget at $54.3 million. Net transfers out of $0.7 million exceeded the budgeted amount by $0.4 million, due to a required transfer to the Gas Tax fund related to activity that occurred in a prior year. As a result, there was a net decrease to the fund balance of $43.9 thousand. Supplementary explanatory information is provided in the Management's Discussion and Analysis (MD&A) section beginning on page 3. The MD&A provides key highlights and a summary view of performance of financial activities for the year. The Agreed -Upon Procedures report for the Gann Appropriations Limit required three steps to be performed including testing the accuracy of the calculations and comparison of information presented. No exceptions were noted in the three steps for the fiscal year 2012-2013 calculation. Our auditors are required to communicate to the City Council matters that come to their attention relating to the audit in a report entitled Memorandum on Internal Control. Section one of this report, entitled Schedule of Other Matters, addresses items that are considered by the auditors to be worthy of note to the Council. Three recommendations were outlined in this section. The first recommendation is regarding controls over cash receipts and billing; the second pertains to more timely attention to outdated signature cards; and the third recommends an annual physical inventory of capital assets. The first two items have been substantially corrected, while the third recommendation will be implemented later this fiscal year. Finally, one prior year recommendation, highlighting the City's information system security issues was included to provide staff the opportunity to comment on the current year status. The two remaining items from this recommendation will be implemented over the next two months. SAN RAFAEL CITY COUNLIL AGENDA REPORT / Page: 3 The second section of this report, entitled Required Communications, addresses several areas relating to accounting practices and internal controls. No areas were identified as having deficiencies that the auditors considered to be material weaknesses for fiscal year 2011-2012. FISCAL IMPACT: No fiscal impact occurs by the City Council's acceptance of these reports. The fiscal year 2011- 2012 011-2012 Annual Financial Audit Report and related reports are presented as the actual results of the City and Agency financial activities for the year. RECOMMENDATION: Staff recommends that City Council accept the reports as presented. Attachments: Comprehensive Annual Financial Report — Fiscal Year Ending June 30, 2012 San Rafael Redevelopment Agency Financial Report through January 31, 2012 Memorandum on Internal Control Prop 111 (GANN) 2012-2013 Appropriations Limit WANIanagement Services- WorkFil&Tinance- WorkFile\Council Material'\Staff Reports2012CityAudit report fy2011-12.doc