Consideration of Audited Financial Reports: Year ending June 30, 2012.

1. The City is required by City Charter (Article VI, Section 5) to have an annual audit performed for each fiscal year.
2. The City is also required to complete the Single Audit Report as the City receives more than $300,000 in federal financial assistance.

 

There is no financial impact to approving the City's Fiscal Year 2012 Comprehensive Annual Financial Report (CAFR) or the Single Audit.

Effective governance

No

• Approve the City's Fiscal Year 2012 CAFR and Single Audit Report.
• Do not approve the City's Fiscal Year 2012 CAFR and Single Audit report with direction to the Audit Committee or independent auditor of Council's questions/issues.

 

The Audit Committee is represented by:

• Celia Barotz, Council Member
• David Cosper, CPA
• Sharman Cawood, CPA
• Christopher Lambert, CPA
• Kevin Burke, City Manager
• Barbara Goodrich, Management Services Director

The CAFR was reviewed by the Audit Committee through a presentation by the audit firm Eide Bailly, LLC, the firm that performed the annual City audit.  The presentation of the financial reports to the Audit Committee occurred on January 27, 2013 and was facilitated by Lealan Miller, Partner with Eide Bailly, Pam Eggert, Auditor with Eide Bailly, and Sarah Jones, Auditor with Eide Bailly. 

The City presents its’ financial statements in accordance with all standards as defined by the Government Accounting Standards Board (GASB).The City is required by City Charter to have an audit performed for each fiscal year.  The City is also required to complete the Single Audit Report as the City receives more than $300,000 in federal financial assistance.

The City has received an unqualified opinion from the audit firm, meaning they believe the financial statements are fairly presented in accordance with generally accepted accounting principles.  In the Communication to Council, the audit firm states: there were no difficulties encountered in performing the audit and; there were no disagreements with management. 
 
There were three items identified as corrected misstatements.  The first was related to how a transaction was posted for the change in estimate related to the updated landfill closure and post closure cost calculation. The City initially posted the transaction as a prior period adjustment when it should have been posted as an offset to current expenditures.  The second was related to capitalization of donated land in error as the item was recorded in a previous year and was removed.  The third was related to an error in posting Solid Waste revenues which was a result of a system integration error.  The correct amounts were billing to customer, however the revenues were posting to a payable account.  We are in the process of correcting the integration.  There were two items identified as uncorrected misstatements.  Due to the amount of the transactions, staff held off making adjustments and will research the issues this year.  As noted in the letter to Council these items are considered immaterial and do not affect the financial statements as a whole.

There was one finding noted as a significant deficiency and reported in our Single Audit.  The City did not have adequate processes in place for recognizing donated property for such reasons as right-of-way, easements, open space or other purposes.  Staff is developing procedures to address this concern and will implement this fiscal year. 
 
The Audit Committee unanimously approved the acceptance of the CAFR and Single Audit.

An annual audit is statutorily required by ARS 9-481.  In addition, should the City not perform an annual audit of it financial statements and complete a Single Audit, the City could lose valuable grant funding.  The amount of reimbursements of Federal Award reported for in Fiscal Year 2012 was $14.8 million.  State and local grant funding was $1.3 million in Fiscal Year 2012.

Independent review of the City’s financial statements elevates the level of confidence that the City is reporting fairly, accurately, and within prescribed guidelines.

Involve:  The community is directly involved through the participation on the Audit Committee. 

Inform:  Any community member may review the most recent CAFR and Single Audit Report.  A copy of the current and historical copies CAFR and Single Audit and SEFA is available in the following locations:

• On the City web site, www.flagstaff.az.gov under the Finance and Budget section (http://www.flagstaff.az.gov/index.aspx?nid=164)
• At the Flagstaff Public Library, 300 W Aspen Ave, Flagstaff, Arizona
• At the East Flagstaff Community Library, 3000 N 4^th Street, Suite 5, Flagstaff, Arizona
• Contact the Finance Director at (928) 213-2215

Due to file size of these document, one copy of the CAFR and Single Audit is available in the Council office.

03/05/2013 - EAB - Council approved the June 30, 2012, Comprehensive Annual Financial Report and the Single Audit Report as recommended by the City of Flagstaff Audit Committee.