4G, Motion to Accept 2008 Financial Reoprts as presented

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~ ~HILLS MEMORANDUM DATE: July 8,2009 TO: Honorable Mayor and City Council Ronald Moorse, City Administrator FROM: Sue Iverson, Finance Director SUBJECT: 2008 City Financial Statements Background/Discussion: The City's 2008 Financial Statements have been completed and submitted to both the State Auditor and the GFOA. The City's auditor will be present at the July 13, 2009 City Council meeting to give an overview and answer questions. The auditors have issued an unqualified ("clean") opinion on our financial statements for the year ended December 31,2008. The total general fund balance at December 31,2008 was $1,850,765 or 58% of total general fund expenditures for 2008. The general fund balance decreased by $320,166 as a $500,000 transfer was made from the General Fund to the Equipment Building and Replacement Fund. The City's total net assets increased by $617,977 and the combined ending fund balances for governmental funds were $11,228,367, and combined ending working capital balance for enterprise funds were $1,977,168. We have completed the report in the form prescribed by the Government Finance Officers Association of United States and Canada (GFOA) for their Certificate of Achievement for Excellence in Financial Reporting. In order to qualify for this, the report has to be published in an easily readable and efficiently organized Comprehensive Annual Financial Report (CAFR) that satisfies both accounting principles generally accepted in the United States of America and applicable legal requirements As a note of information, the changes to Auditing Standards are increasing and changing. With these changes, you will see increased findings. This does not mean that the City has done anything wrong compared to previous years, only that the reporting requirements have become much stricter. Many cities are experiencing these findings, and the findings are expected to increase for all cities as these standards become stricter. We continue to have findings related to "Segregation of Duties" and "Timely General Ledger Reconciliations". The "Segregation of Duties" finding is common to organizations of our size. Staff continues to review and make improvements to its internal control structure on an ongoing basis and attempts to maximize the segregation of duties in all areas within the limits of the staff available. The "Timely General Ledger Reconciliations" relates to monthly and year-end reconciliations which are delayed due to workloads and vacancies. As of June 2009, we have all reconciliations completed, as previous vacancies are now filled and a finance intern has been added. (Due to the vacancy created by the Assistant City Administrator position, finance staff essentially took on these duties.) Staff is responding to these findings, but in light of the circumstances is pleased with the outcome of the audit.