HomeMy WebLinkAboutD-2 Staff Report Fiscal Year 2015-16 CAFRSCHEDULED ITEM
D-2
TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL
VIA: TROY L. BUTZLAFF, ICMA-CM, CITY MANAGER
FROM: TALIKA M. JOHNSON, DIRECTOR OF FINANCE
DATE: MARCH 6, 2017
SUBJECT: PRESENTATION OF FISCAL YEAR 2015-16 COMPREHENSIVE ANNUAL
FINANCIAL REPORT AND AUDIT LETTERS
SUMMARY:
The City’s auditors, Lance Soll & Lunghard, LLP, Certified Public Accountants (“LSL”), have
completed the City’s Fiscal Year 2015-16 Comprehensive Annual Financial Report (“CAFR”) and
issued various letters in connection to the audit they performed for the City for the fiscal year ending
June 30, 2016. This action will receive and file the Fiscal Year 2015-16 Comprehensive Annual
Financial Report and Audit Letters.
RECOMMENDATION:
Staff recommends that the City Council take the following action:
1) Receive and File the Fiscal Year 2015-16 Comprehensive Annual Financial Report and Audit
Letters.
DISCUSSION:
Each year, the City undergoes an annual financial audit. This audit includes a review of the existing
internal accounting controls with respect to document preparation and processing, separation of critical
functions and duties, management and control of assets, and reliability of the computer systems to
properly record transactions. In addition, major account balances and large dollar activities are reviewed
to validate year-end balances.
From this review, the City’s auditors prepare consolidated financial statements. Major funds are grouped
together, financial activities are summarized, and extensive footnote documentation is prepared. Once
the audit is complete, Staff develops a CAFR. The CAFR is the public document that summarizes
accomplishments, financial results, and statistical data for the fiscal year.
APPROVED
COUNCIL MEETING
3/6/2017
Receive and File FY 2015-16 CAFR
March 6, 2017
Page 2
The layout of the CAFR follows guidelines established by the Government Finance Officers Association
(GFOA). Three major sections are presented:
Introductory Section – This section includes a Letter of Transmittal, which discusses financial
results, economic indicators, and major projects completed during the fiscal year. In addition, the
Introductory Section also includes the City’s Organizational Chart, a listing of the City’s
officials, and other important information.
Financial Section – This section includes the Independent Auditor’s Report, Management’s
Discussion and Analysis, the audited financial statements, footnotes to the financial statements,
and additional required supplementary information.
Statistical Section – This section includes supplemental data not evident in the Financial Section,
such as financial trend information and demographic information.
The CAFR presentation adheres to the guidelines of all Governmental Accounting Standards Board
(“GASB”) Statements in effect at the time of the issuance of the report.
As part of the audit process, LSL is required to issue three (3) letters (collectively referred to as
“Letters”) summarizing the results of the audit and presentation of the financial statements. These
Letters include:
1. Independent Auditor’s Report – This report can be found in the introductory section of the
CAFR. The Auditor’s Report is a written opinion of LSL regarding the City’s financial
statements. The report outlines the responsibilities of the auditor and the management of the
City, provides the scope of the audit, and issues an opinion of the City's financial statements.
2. Audit Communication Letter – This is an AICPA (American Institute of CPAs) required
communication letter for all financial statement audits. The purpose of this letter is to
communicate to those charged with governance, such as the City Council, the scope of audit
procedures performed, significant findings, and other information, such as disagreements with
management, audit adjustments and significant estimates, that aren’t communicated in the
audited financial statements.
3. Internal Control and Compliance Letter – One of the requirements of LSL’s engagement with the
City is to gain an understanding of the City’s internal controls, how they are implemented and
their operating effectiveness. Along with identifying deficiencies in the City’s controls, LSL may
also offer recommendations for ways to improve controls that will help to mitigate risk and
strengthen the City’s accounting processes.
An LSL representative will provide an oral report on the Letters issued for the Fiscal 2015-16 reporting
year. While the Letters identify the need for some improvements in the City’s year-end closing process,
LSL issued an unqualified opinion on the City’s financial statements. This means the financial
information presented in the City’s accounting records and financial statements is accurately presented
and free from material misstatement. In addition, an unqualified opinion indicates that the Finance
Receive and File FY 2015-16 CAFR
March 6, 2017
Page 3
Department is following appropriate accounting practices and regulations in recording day-to-day
financial activities of the City.
Due to the size of the CAFR document, the CAFR and Letters are not attached to this report, but can be
found on the City’s website under the Finance Department section at www.ci.azusa.ca.us/911/CAFR.
Hard copies of the CAFR and Letters will be available at various public counters throughout the City.
FISCAL IMPACT:
There is no fiscal impact associated with the recommended action.
Prepared by: Reviewed and Approved by:
Talika M. Johnson Louie F. Lacasella
Director of Finance Management Analyst
Reviewed and Approved:
Troy L. Butzlaff, ICMA-CM
City Manager