HomeMy WebLinkAbout07.04 Comprehensive Financial Audit Report FY18AGENDA ITEM
January 8, 2019
TO: Honorable Mayor and Members of the City Council
THRU: Rick Otto, City Manager
FROM: Will Kolbow, Administrative Services Director
REVIEW: City Manager� FinancejAy
1. SUBJECT
Audited Financial Statements and Related Financial Reports for the fiscal year ended
June 30, 2018.
2. SUMMARY
Presentation of Financial Reports and Statements provided by independent auditors as
a result of the annual financial audit for the fiscal year ended June 30, 2018.
3. RECOMMENDED ACTION
Receive and file the following documents for the fiscal year ended June 30, 2018:
• Comprehensive Annual Financial Report
• Audit Communication Letter
• Independent Accountants' Report on Agreed -Upon Procedures Applied to the
Appropriations Limit Worksheets
• Independent Accountants' Report on Agreed -Upon Procedures Applied to the
Investment Portfolio
• Air Pollution Reduction Fund Financial Statements and Independent Auditors'
Report
• Independent Auditors' Report on Internal Control Over Financial Reporting
• Housing Successor Fund Financial Statements
• Single Audit of Federally Assisted Grant Programs
4. FISCAL IMPACT
None.
5. STRATEGIC PLAN GOALS
Goal 2: Be a fiscally healthy community
ITEM 1 01/08/2019
6. DISCUSSION AND BACKGROUND
White Nelson Diehl Evans, LLP again provided audit services to the city, for the fiscal
year ended June 30, 2018. As an integral part of their audit, the firm considers the city's
internal controls over our financial reporting and, while they did riot express an opinion,
their conclusion was they did not identify any deficiencies in internal control considered
to be material weaknesses.
The city finance staff includes three former auditors. Throughout the year; the Finance
Department performs various internal audits'to provide assurance both financial, and
operational, controls and efficiencies are in place and are being followed. While the City
of Orange Audit Committee continues to have vacancies, staff believes oversight of our
financial position and reporting requirements is being properly maintained.
The independent auditor's testing resulted in a. "clean" audit opinion. This provides
assurance the city's financial transactions are accurately recorded and can be relied upon
not only for proper reporting of past financial results in the city's FY 2017 CAFR, but also
on a go -forward basis as we craft the FY 2019 Budget. This is of utmost importance given
the results reflected in the CAFR include fixed assets and restricted fund balances that
are not readily available to staff for appropriation as budgeted expenditures for operating
costs or Capital Improvement Projects.
The following Reports, Letter and Statements for that fiscal year end are presented:
1. Comprehensive Annual Financial Report (CAFR) — This report is divided into
three major sections: the Introductory Section, the Financial Section and the
Statistical Section. The Introductory Section includes a Letter of Transmittal. The
Financial Section comprises the'Audit Opinion, Management's Discussion and
Analysis, and the Basic Financial Statements. The Statistical Section provides
important historical and trend information about the city. The Audit opinion is an
"unqualified opinion", which states that, in the auditor's opinion, the basic
financial statements of the city are presented fairly in all material respects and
are in conformity with generally accepted accounting principles.
2. Audit Communication Letter — a report of recommendations made to
management by the auditors to improve internal controls and/or operating
efficiencies within the city.
3. Independent Accountants' Report on Agreed -Upon Procedures Applied to the
Appropriations Limit Worksheets— procedures performed solely to assist the city
in meeting the requirements of Section 1.5 of the Article XI1113 of the California
Constitution.
4. Independent Accountants' Report on Agreed -Upon Procedures Applied to the
Investment Portfolio — independent review of investment operations and
compliance with the city's investment policy.
5. Air Pollution Reduction Fund Financial Statements and Independent Auditors'
Report - audited financial statements in accordance with Generally Accepted
Auditing Standards and the standards applicable to the financial audits contained
in Government Auditing Standards.
6. Independent Auditors' Report on Internal Control Over Financial Reporting — a
report to describe the scope of testing of the city's internal control over financial
reporting and the results of that testing.
ITEM 2 01/08/2019
7. Housing Successor Fund Financial Statements— audited financial statements in
accordance with Generally Accepted Auditing Standards and the standards
applicable to the financial audits contained in Government Auditing Standards.
8. Single Audit of Federally Assisted Grant Programs — audit of compliance
requirements as described in the U.S. Office of Management and Budget (OMB)
2 CFR part 200, Uniform Grant Guidance.
7. ATTACHMENTS
Aattachments are available for review in the office of the City of Orange City Clerk:
1. City of Orange Comprehensive Annual Financial Report and Summary of Audit
Results
2. Audit Communication Letter
3. Independent Accountants' Report on Agreed -Upon Procedures Applied to the
Appropriations Limit Worksheets
4. Independent Accountants' Report on Agreed -Upon Procedures Applied to
Investment Portfolio
5. Air Pollution Reduction Fund Financial Statements and Independent Auditors'
Report
6. Independent Auditors' Report on Internal Control Over Financial Reporting
7. Housing Successor Fund Financial Statements
8. Single audit of Federally Assisted Grant Programs
ITEM 3 01/08/2019