[Council Communication]  [Attachments]

Council Communication

Title:	Acceptance of Audit Committee Report dated November 17, 2003 and the June 30, 2003 Comprehensive Annual Financial Report
Dept:	Finance Department
Date:	December 16, 2003
Submitted By:	Lee Tuneberg, Finance Director
Approved By: ...........................	Gino Grimaldi, City Administrator

Synopsis:	The Audit Committee has met with staff and Pauly, Rogers and Company, P.C. to review and accept the annual audit for the fiscal year ended June 30, 2003. The committee's report can be found in the annual financial report on page xv and the auditor opinion on page 1. Copies of those pages and meeting minutes are attached.
Recommendation:	The Audit Committee recommends acceptance of the 2002-2003 Comprehensive Annual Financial Report and staff concurs.
Fiscal Impact:	None from adoption. The annual report is a complex document containing a tremendous amount of information. From an overview perspective, the City remains in a good financial position even though the report presents a decrease in net assets of $5.5 million. Of this amount, $4.5 million is depreciation of general assets (non-enterprise fund assets) that is a new calculation this year as part of Ashland's compliance with Governmental Accounting Standards Board Statement 34 requirements (GASBS 34). Again this year we saw fund balances and cash levels decrease specifically related to capital project completion. This has been presented during the last two years as we have seen the library, fire station, community development/engineering building and AFN infrastructure completed. Internal borrowing for operations as is done for AFN contributes to these reductions.
Background:	The Comprehensive Annual Financial Report is prepared annually as part of the state-required audit by an independent, certified and municipally licensed auditor. In Ashland, the auditor reports to the Audit Committee established by the City. The committee receives the auditor opinion, management letter and annual financial reports prepared by staff. When satisfied with the reports and related information, the committee forwards the report to council with a recommendation to accept. The auditor gave an unqualified opinion again this year but found two reportable conditions that are in the management letter. The reportable conditions relate to accounting controls that may have been compromised where insufficient segregation of duties or acceptable levels of backup exist in the Municipal Court and Computer support area as it relates to the utility billing software. The Finance Department is working hard to address these issues through changes in operation or budget. The City and its component unit, the Parks & Recreation Commission, implemented GASBS 34 this year. The changes required and nuances of the presentations are well explained with the financial reports, specifically in a new section called Management's Discussion & Analysis. Within that section is a more detailed discussion of the agency's financial health including changes operational and general revenues, operating expenses, capital outlay and improvements, debt service and the City's bond rating. The city is responsible for completeness and accuracy of the annual report and this year's document was prepared, cover to cover, by city staff. The necessary auditor reports are included in the document and presented on their letterhead. Pages Information i - ix Transmittal letter from staff xv Report of Audit Committee accepting the audit 1 - 2 Auditor's unqualified opinion 3 - 12 Management's Discussion & Analysis 15 - 25 Basic Financial Statements 19 - 61 Notes to General Purpose Financial Statements 65 - 113 Supplementary reports, schedules and statistical tables 117 - 130 Other required auditor comments and disclosures Key places to look within the document are: Questions on the Comprehensive Annual Financial Report can be directed to the Finance Department
Attachments:	FY 2002-03 Comprehensive Annual Financial Report Audit Committee meeting minutes 11/17/03 Audit Committee meeting minutes 5/27/03 Audit Committee Report Independent Auditors' Report FY 2002-03 Management Report Finance Department Responses to Management Report The above reports are available in PDF format. To view the documents on your computer, please click on the link below. The Adobe reader program will open in a new browser window.  Please use the browser's "Zoom" feature to adjust the size of the text for comfortable reading.

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Annual_Audit_Reports.pdf (352.9KB)

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