For City Council Meeting [September 24, 2019]
TO: Honorable Mayor and City Council
APPROVAL: Rod Foster, City Administrator
FROM: Jessica Brown, Finance Director
Title
Request City Council, Rialto Housing Authority, Rialto Utility Authority and Successor Agency to Accept the Fiscal Year 2017-18 Audit Results and Receive and File the Fiscal Year 2017-18 Comprehensive Annual Financial Report and Related Documents.
(ACTION)
Body
BACKGROUND
In order to meet the guidelines set forth in Statement No. 1 of the Governmental Accounting Standards Board (GASB), following the close of each fiscal year the City’s external auditors conduct an audit of the City’s financial records and assist in the compilation of the Comprehensive Annual Financial Report (CAFR). The audit is conducted in conformity with the Generally Accepted Auditing Standards (GAAS) which require that the independent auditor firm plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement and examines evidence to support the amounts and disclosures in the financial statements. Once complete, an opinion is issued on the fairness of the presentation of the financial position and the results of operations of the financial statements of the City, in conformity with Generally Accepted Accounting Principles (GAAP) as applicable to local governments.
ANALYSIS/DISCUSSION
The annual audit for the fiscal year ended June 30, 2018 has been completed by Teaman, Ramirez & Smith, Inc. The audits for both the City and the former Redevelopment Agency (“Successor Agency”) received a clean opinion and present fairly, in all material respects, the respective financial positions of the City and the Successor Agency. Attached are the following items:
• Comprehensive Annual Financial Report for fiscal year end June 30, 2018
• Single Audit Report on Federal Award Programs (Single Audit Report)
• Appropriations Limit Worksheet with Independent Accountant’s Report on Agreed Upon Procedures Applied to the Appropriations Limit Worksheet
• Communication with those Charged with Governance Letter
Comprehensive Annual Financial Report
This document is a thorough and detailed presentation of the City’s financial state and includes financial statements on the fiscal year’s activities and balances that are audited by the City’s independent auditors. The CAFR is presented in three sections including the introductory, financial, and statistical sections.
Single Audit Report on Federal Award Programs (Single Audit Report)
This document consists of two parts of reporting of internal controls. The first defines the opinions of the auditors regarding internal control over financial reporting. The second is compliance requirements with respect to the City’s federal financial assistance. The City has complied with respect to its major federal programs in all material respects.
Appropriations Limit Worksheet with Independent Accountant’s Report on Agreed Upon Procedures Applied to the Appropriations Limit Worksheet
The auditors have prepared this letter in accordance with standards established by the American Institute of Certified Public Accountants.
Communication with those Charged with Governance Letter
This letter communicates to the City Council any significant audit matters such as qualitative aspects of accounting practices, difficulties encountered in performing the audit, corrected and uncorrected misstatements, disagreements with management, management representations, and any other audit findings if they occurred during the audit process.
The draft Fiscal Year 2017-18 Comprehensive Annual Financial Report and Related Documents was presented to the Audit Subcommittee on September 12, 2019.
Also, on tonight’s consent agenda is the City’s proposed engagement with the City’s auditors for the 2018-19 audit. It is anticipated that the first phase of the 2018-19 audit process will begin the end of September through October with the interim and yearend request lists being issued to the City. The interim audit fieldwork is anticipated to take place the end of October and the yearend audit fieldwork the first two weeks of November, with draft financial statements prepared by mid-December. Once finalized, the 2018-19 comprehensive annual financial report will be presented to Council in January 2020.
ENVIRONMENTAL IMPACT
The action is exempt from California Environmental Quality Act (CEQA) pursuant to Section 15378(b) (5) of the CEQA Guidelines because the preparation of a budget plan is a governmental administrative activity that will not result in direct or indirect physical changes in the environment.
GENERAL PLAN CONSISTENCY
General Plan Guiding Principle 3 - Rialto's Economic Environment Is Healthy and Diverse - specifically, our City government will lead by example, and will operate in an open, transparent, and responsive manner that meets the needs of the citizens and is a good place to do business.
LEGAL REVIEW
The City Attorney has reviewed and supports this staff report.
FINANCIAL IMPACT
Operating Budget Impact
The Fiscal Year 2017-18 Audited Financial Statements are recommended to be received and filed into the City records. There is no direct financial impact related to this action.
Capital Improvement Budget Impact
There is no financial impact to the capital improvement budget as a result of the approval of this item.
RECOMMENDATION
Staff recommends that the City Council, Rialto Housing Authority, Rialto Utility Authority and Successor Agency to Accept the Fiscal Year 2017-18 Audit Results and Receive and File the Fiscal Year 2017-18 Comprehensive Annual Financial Report and Related Documents.