HomeMy WebLinkAbout13 COMPREHENSIVE ANNUAL FINANCIAL REPORT~SY }..., AGENDA REPORT S''r1 MEETING DATE: FEBRUARY 4, 2014 TO: JEFFREY C. PARKER, .CITY MANAGER Agenda Item Reviewed: City Manager Finance Director FROM: PAMELA ARENDS -KING, FINANCE DIRECTOR /CITY TREASURER 13 SUBJECT: COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED JUNE 30TH 2013 SUMMARY: The City engages an independent certified public accounting firm to complete an annual audit of the City's financial records. There are a number of reports such as the Comprehensive Annual Financial Report (CAFR), produced as a result of the annual audit and there are actions that are required by the City's governing board (City Council) to meet the requirements of various auditing standards, such as meeting with the auditing firm that conducted the audit to discuss the audit and internal control issues. RECOMMENDATION: 1. Receive and file the CAFR for the year ended June 30, 2013. 2. Discuss the audit and internal controls with the independent certified public accounting firm, White Nelson Diehl Evans LLP, who conducted the audit. FISCAL IMPACT: The independent certified public accounting firm that the City contracted with to complete the annual audit is White Nelson Diehl Evans LLP. Total cost of the annual audit is $42,000. Of this amount, $4,000 was charged to the Successor Agency for the Tustin Community Redevelopment Agency (Successor Agency); $12,600 was charged to the Water Enterprise fund; and $25,400 was charged to the General Fund. BACKGROUND: The reports that are produced for the fiscal year ending June 30, 2013 are the CAFR; the City State Controllers report; and the report of the auditors' consideration of *the City's internal control over financial reporting and on their tests of its compliance with certain provisions of laws, regulations, contracts, grant agreements and other matters. Due to reduced federal funding, a Single Audit was not required for the fiscal year ending June 30, 2013. The CAFR consists of a transmittal letter, independent auditor's report, management's discussion and analysis (MD & A); basic financial statements; notes to the financial statements; supplementary information and a statistical section. The City implemented Governmental Accounting Standards Board's (GASB) Statement No. 63, "Financial COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED JUNE 30, 2013 February 4, 2014 Page 2 of 3 Reporting of Deferred Outflows of Resources, Deferred Inflows of Resources, and Net Position ". The adoption of this standard also provides a new statement of net position format to report all assets, deferred outflows of resources, liabilities, deferred inflows of resources, and net position. The MD & A presents an overview of the basic financial statements and what each section consists of and discusses financial highlights for the year ended June 30, 2013. General Fund financial highlights for the year ended June 30, 2013 are as follows: • The City's General Fund total expenditures were $54.8 million, $2.1 million more than prior year's expenditures. The primary reason for the increase is due to the legal settlement with Key Bank of $2.1 million for the resolution of a $53 million lien on property within the former Marine Corps Air Station referred to as the Tustin Legacy that reverted back to the City when its business relationship with the former master developer, Tustin Legacy Community Partnership, dissolved. • General Fund revenues were $56.6 million, $0.8 million less than prior fiscal year. Taxes increased $4.8 million from prior year primarily due to sales tax revenues of $21.6 million reflecting a $1.7 million increase from prior year due to the increase in automobile sales. Property tax revenue increased $2.6 million from prior fiscal year due primarily due to receiving $1.8 million in property tax residual payments from allocation of former Redevelopment tax increment. The increase in taxes was offset with the decrease in intergovernmental revenues of $4.7 million from prior year due to the decrease in the amount the Successor Agency reimbursed the General Fund for an outstanding obligation for third party costs incurred for the extension of Newport Avenue. Charges for services and other revenue decreased a total of $0.9 million from prior year primarily due to the decrease in workers compensation contributions as the reserves were adequate and due to the decrease in equipment replacement contributions from other funds and. departments as it was determined the reserves for that fund were adequate. • Other Financing Sources (Uses) increased $42.3 million from prior fiscal year primarily due to sale of land held for resale within the Tustin Legacy. Total revenues and transfers in of $99 million exceeded total expenditures of $55 million, by $44 million. Therefore, the General Fund's fund balance of $148.6 million as of June 30, 2012 increased to $192.9 million as of June 30, 2013. Of the $192.9 million, $128.9 million are nonspendable funds primarily due to a total of $128.8 million in land held for resale; $19.6 million are restricted funds and $44.3 million are unassigned and /or spendable funds not contained in other classifications. Other Financial Highlights for the year ended June 30, 2013 are as follows: • The City's assets, which encompass all governmental and business type activities (i.e. General Fund, Special Revenue Funds, Capital Projects Funds and the Water Enterprise Fund) and deferred out flows of resources as of June 30, 2013, exceeded its liabilities by $695 million (net position). Net position consists of $456 COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED JUNE 30, 2013 February 4, 2014 Page 3 of 3 million net investment in capital assets, $54.4 million in restricted net position and $184.6 million in unrestricted net position. • The City's total net position increased by $59.3 million primarily due to the gain on sale of assets of $43.3 million. The assets sold were land held for resale in the Tustin Legacy area and land held for resale along the 55 freeway and Edinger Avenue. • The net increase in the City's total long -term liabilities was $2.6 million. The $2.6 million net increase is primarily due to the $2.0 million liability to fund an annuity the City purchased to fund an early retirement incentive program. A more thorough discussion of the financial activities for the year ended June 30, 2013 is presented in the MD & A. The City did not have any audit findings and there were two material misstatements that staff corrected relating to an adjustment due to the refunding of bonds and an adjustment regarding a receivable from the Successor Agency. Pamela Arends -King Finance Director /City Treasurer Attachment: Comprehensive Annual Financial Report for the year ended June 30, 2013 Management Letter Governmental Auditing Standards Letter Appropriations Limit Worksheet