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HomeMy WebLinkAbout2000-01-11 - AGENDA REPORTS - ANNUAL FINANCIAL REPORT 1999 (2)AGENDA REPORT City Manager Approval: Item to be presented by: CONSENT CALENDAR DATE: January 11, 2000 SUBJECT: 6/30/99 COMPREHENSIVE ANNUAL FINANCIAL REPORT AND MANAGEMENT LETTER DEPARTMENT: Administrative Services RECOMMENDED ACTION Receive Comprehensive Annual Financial Report and Management Letter for fiscal year ended June 30, 1999. BACKGROUND The City's independent audit firm, Moreland & Associates, has completed the City's annual audit for fiscal year ending June 30, 1999. The auditors conducted the audit in accordance with generally accepted auditing standards, whereby an audit plan was prepared and followed to obtain reasonable assurance that the City's financial statements were free from material misstatements. The audit included an examination, on a test basis, of evidence supporting the amounts and disclosures in the financial statements. The audit also included assessing the accounting principles used and significant estimates made by management as well as evaluating the overall general purpose financial statement presentation. Based on the audit performed, Moreland & Associates issued an unqualified audit opinion letter which reflects the best level of opinion an organization can receive on its financial statements. This letter is identified as the "Independent Auditors' Report" in the City's Comprehensive Annual Financial Report (CAFR) for fiscal year ended June 30, 1999. An excerpt of this letter is shown as Attachment 1. As part of the audit engagement, Moreland & Associates also prepared a Management Letter (Attachment 2) to comment on the City's internal control structure and its operations. The purpose of this letter is to make recommendations for management to implement procedures to improve systems in place or note weaknesses in internal controls. For fiscal year ended June 30, 1999, there were no weakness comments by the auditors. The CAFR has been submitted to the Government Finance Officers Association for the Certificate of Achievement for Excellence in Financial Reporting Award and California Society of Municipal Finance Officers for the Outstanding Financial Reporting Award. Both of these awards has been received by the City for the past ten years. ALTERNATIVE ACTION None. FISCAL IMPACT None. /:M�7LN�1TL�1[ 1) Audited Opinion Letter dated September 11, 1999 2) Management Letter for FYE June 30, 1999 Comprehensive Annual Financial Report for Year Ended June 30, 1999 is available in the City Clerk's reading file. BB:bb s:\fin\aua toss\aseoaa.dw Morelandao�at�, CERTIFIED PUBLIC ACCOUNTANTS September 11, 1999 The Honorable City Council of the City of Santa Clarita, California 1201 DOVE STREET, SUITE 660 NEWPORT BEACH, CALIFORNIA 92660 (949) 221-0025 570 RANCHEROS DRIVE, SUITE 260 SAN MARCOS, CA 92069 (760) 752-3390 Report on Compliance and on Internal Control Over Financial Reporting Based on an Audit of General Purpose Financial Statements Performed in Accordance With Government Auditing Standards We have audited the general purpose financial statements of the City of Santa Clarita, California as of and for the year ended June 30, 1999, and have issued our report thereon dated September 11, 1999. We conducted our audit in accordance with generally accepted auditing standards and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Com lip ance As part of obtaining reasonable assurance about whether the City of Santa Clarita's general purpose financial statements are free of material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts and grants, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit and, accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance that are required to be reported under Government Auditing Standards. Internal Control Over Financial Reporting In planning and performing our audit, we considered the City of Santa Clarita's internal control over financial reporting in order to determine our auditing procedures for the purpose of expressing our opinion on the financial statements and not to provide assurance on the internal control over financial reporting. Our consideration of the internal control over financial reporting would not necessarily disclose all matters in the internal control over financial reporting that might be material weaknesses. A material weakness is a condition in which the design or operation of one or more of the internal control components does not reduce to a relatively low level the risk that misstatements in amounts that would be material in relation to the general purpose financial statements being audited may occur and not be detected within a timely period by employees in the normal course of performing their assigned functions. We noted no matters involving the internal control over financial reporting and its operation that we consider to be material weaknesses. This report is intended solely for the information and use of the City Council and management of the City of Santa Clarita and is not intended to be and should not be used by anyone other than these specified parties. Moreland & tea&j. Jim CERTIFIED PUBLIC ACCOUNTANTS September 17, 1999 The Honorable City Council of the City of Santa Clarita, California 1201 DOVE STREET, SUITE 680 NEWPORT BEACH, CALIFORNIA 92660 (949) 221-0025 570 RANCHEROS DRIVE, SUITE 260 SAN MARCOS, CA 92069 (760) 752-3390 We have audited the general purpose financial statements of the City of Santa Clarita, California for the year ended June 30, 1999, and have issued our report thereon dated September 17, 1999. Under generally accepted auditing standards, we are providing you the attached information related to our audit. Our responsibility under generally accepted auditing standards is to plan and perform our audit to obtain reasonable, but not absolute, assurance that the financial statements are free of material misstatement and are fairly presented in accordance with generally accepted accounting principles. Because of the concept of reasonable assurance and because we did not perform a detailed examination of all transactions, there is a risk that material errors, irregularities, or illegal acts, including fraud and defalcations, may exist and not be detected by us- In addition, we considered the internal control over financial reporting of the City of Santa Clarity Such considerations were solely for the purpose of determining our audit procedures and not to provide any assurance concerning such internal control over financial reporting. Significant Accounting Policies The significant accounting policies of the City are described in Note 1 to the general purpose financial statements. No new accounting policies were adopted and the application of existing policies was not changed during the year. We noted no significant, unusual transactions during the year, or transactions for which there is a lack of authoritative guidance or consensus. Management Judgments and Accounting Estimates Accounting estimates are an integral part of the financial statements prepared by management and are based upon management's current judgments. Those judgments are normally based on knowledge and experience based on past and current events and assumptions about future events. The judgments and estimates which may significantly affect the City's general purpose financial statements include establishing appropriate liabilities associated with general liability claims. The Honorable City Council of the City of Santa Clarita, California September 17, 1999 Page 2 During our audit of the general purpose financial statements, we performed procedures to determine the reasonableness of the estimates used by management. These procedures included, but were not limited to, reviewing reports prepared by a third party administrator summarizing the estimated liability for general liability claims against the City and inquiries of the City Attorney. Based on these and other procedures performed, we were able to conclude that the liability associated with general liability claims recorded by management was reasonable. Significant Audit Adiuslments As a result of our audit related testwork, we proposed no corrections of the financial statements that, in our judgment, either individually or in the aggregate, had a significant effect on the Citys financial reporting process. For purposes of this letter, professional standards define a significant audit adjustment as a proposed correction of the general purpose financial statements that, in our judgment, may not have been detected except through our auditing procedures. Other Information in Documents Containing Audited Financial Statements Our responsibility for other information in documents containing the City's general purpose financial statements and our report thereon does not extend beyond financial information identified in our report, and we have no obligation to perform any procedures to corroborate other information contained in these documents. We have, however, read the other information included in the City's comprehensive annual financial report; and no matters came to our attention that cause us to believe that such information, or its manner of presentation, is materially inconsistent with the information, or its manner of presentation, appearing in the financial statements. Disagreements With Management There were no disagreements with management on financial accounting and reporting matters that, if not satisfactorily resolved, would have caused a modification to our report on the City's 1999 financial statements. Consultation With Other Accountants In some cases, management may decide to consult with other accountants about auditing and accounting matters, similar to obtaining a "second opinion" on certain situations. If a consultation involves application of an accounting principle to the governmental unit's general purpose financial statements or a determination of the type of auditor's opinion that may be expressed on those statements, our professional standards require the consulting accountant to check with us to determine that the consultant has all the relevant facts. To our knowledge, there were no such consultations with other accountants. The Honorable City Council of the City of Santa Clarita, California September 17, 1999 Page 3 Major Issues Discussed With Management Prior to Retention We generally discuss a variety of matters, including the application of accounting principles and auditing standards, with management each year prior to retention as the City's auditors. These discussions occurred in the normal course of our professional relationship, and our responses were not a condition to our retention. This information is intended solely for the information and use of the City Council of the City of Santa Clarita and others within the organization and is not intended to be and should not be used by anyone other than these specified parties. AA AA Vk4 tl'v 4txt