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Current Council Agenda and Past Meeting Information

 

CITY COUNCIL AGENDA ITEM NO. 16



Meeting Date: January 9, 2007

Subject/Title: Receive the Independent Auditors Report and Comprehensive Annual Financial Report for Fiscal Year 2005/2006.

Prepared by: Kerry Breen, Business Services Manager

Submitted by: Pamela Ehler, Director of Finance and Information Systems



RECOMMENDATION
Receive the Independent Auditors Report and Comprehensive Annual Financial Report for Fiscal Year 2005/2006.

PREVIOUS ACTION
The audit firm of Vavrinek, Trine, Day & Co., LLP has completed its review and examination of the City’s financial transactions and statements for the year ended June 30, 2006. The audit was conducted in accordance with generally accepted auditing standards. It is the opinion of the auditors that the financial statements fairly represent the financial position of the City as of June 30, 2006, and that the statements were prepared in conformity with generally accepted accounting principles. The Finance Department was responsible for the coordination the audit process, the completion of year-end closing, and the preparation of the Comprehensive Annual Financial Report (CAFR).

BACKGROUND
Each fiscal year, the City and the Redevelopment Agency are required to have an independent audit of their financial statements. The Finance Department incorporates the City’s financial statements into a CAFR, the purpose of which is to provide citizens, grantor agencies, and other interested parties with reliable financial information about the City. In each of the previous five years, the City has received both the Certificate of Achievement for Excellence in Financial Reporting from the Government Finance Officers Association (GFOA), as well as the Certificate of Award for Outstanding Financial Reporting from the California Society of Municipal Finance Officers (CSMFO). The GFOA award is a prestigious national award recognizing the use of high standards in preparing state and local government financial reports. The CSMFO award is a statewide program for recognition of excellence in financial reporting.

We believe our current report continues to meet the program requirements and we are submitting it to both organizations to determine its eligibility for another award. Participation in these programs has a number of benefits. An award-winning CAFR shows a dedication to fiscal responsibility and outstanding financial management and reporting. Producing a CAFR provides confirmation that the City operates at the highest level of financial reporting standards, which can improve the City’s future Bond ratings with the debt investment community. This document is a reflection on the entire staff as it was created and published in-house as opposed to having our auditors prepare it.





The CAFR has three main components: the introductory section, the financial section, and the statistical section. The introductory section includes the Letter of Transmittal, which provides a comprehensive analysis of the City’s financial position as of June 30, 2006, as well as a summary of significant fiscal policies and practices. Other information of general interest is in this section, including a directory of Officials and Directors, a City-Wide organizational chart, City Maps, and previous awards received for excellence in financial reporting.

The Financial Section includes the primary financial statements of the City and is organized into the following parts:

• Auditor’s opinion regarding the financial statements;
• Management’s Discussion and Analysis providing a narrative overview of the government-wide financial activities;
• Basic financial statements presenting the government-wide statements which combine the activities of the major funds into governmental and business-type categories and the fund financial statements;
• Notes to the Financial Statements which is an addendum to the financials; and
• Required Supplementary Information presenting the Major Funds actual results with both the original and final adjusted budgets.

The Statistical Section provides showing current and historical trend information for the City in the following areas:

• Financial Trends
• Revenue Capacity
• Debt Capacity
• Demographic and Economic Information
• Operating Information

Complete financial information as of June 30, 2006 is contained in the CAFR. Key information is summarized below.

• The City’s General Fund Balance is $22,514,337, which represents an increase of $3,013,774 for the fiscal year. The increase is largely attributable to personnel savings resulting from having budgeted positions remain unfilled during the year.

• Net assets for the City’s governmental activities are $430,286,245, which represents an increase of $126,110,526 during the fiscal year. Almost half of this increase was due to the reclassification of Parks and Recreation from a business type to a governmental type. The remainder of the increase was largely due to the completion of projects, the acquisition of assets, and the funding of Capital Improvement Financing Program 2005-1.




• Net assets for the City’s business type activities are $150,470,263, which represents a decrease of $36,249,302 for the fiscal year. As noted above, the reclassification of Parks and Recreation was the cause of the decrease and had the reclassification not happened, it is estimated that net assets would have increased by approximately $20 million. Development Impact fees and the construction and acceptance of infrastructure were the primary reasons for this increase excluding the Parks reclassification.

In additional to performing the audit and offering an opinion on the City and Redevelopment Agency’s financial statements, the independent auditors will note certain matters involving internal control and other operational concerns. This year’s review of the City and Redevelopment financial components did not produce any material weaknesses that management should consider at this time.

FISCAL IMPACT
There is no fiscal impact associated with Council’s action.


 

City Administration
City of Brentwood City Council
150 City Park Way
Brentwood, CA 94513
(925) 516-5440
Fax (925) 516-5441
E-mail allcouncil@brentwoodca.gov