Title
Staff Report for the Resolution Approving the Comprehensive Annual Finance Report (CAFR) for the Year Ending June 30, 2012
Staffreport
SUMMARY AND RECOMMENDATIONS
Staff recommends that the City Council accept the CAFR for fiscal year ended June 30, 2012.
BACKGROUND
The City's independent auditor, Maze & Associates, has completed the audit of the City's financial statements and provided their auditor's reports for the year ended June 30, 2012. The Finance Department prepared the City's financial statements as part of its CAFR for the year ended June 30, 2012. The Government Accounting Standards Board (GASB) recommends the elements for the CAFR format. The CAFR and the related financial statements fully disclose the financial condition of the City, Successor Agency to the Redevelopment Agency, and other reporting units of the City.
Other financial statements for the year ended June 30, 2012 are reviewed and prepared by the City's external auditor:
1. Alameda County Transportation Authority- Measure B Funds
2. Redevelopment Agency of San Leandro (Component Unit Report)
3. Transportation Development Act Article III Fund
4. Appropriations Limit Schedule and Independent Accountant's Report
5. Single Audit of Federal Grant Expenditures in accordance with U.S. Office of Management and Budget Circular A-133
The primary report, the CAFR, contains three sections. The first is the introductory section, which provides general information on the City's structure, personnel, economic condition, and finances. The financial section includes the independent auditor's report, the general-purpose financial statements and related notes, and supplementary information. Finally, the statistical section includes pertinent financial and non-financial demographic data.
The format of the CAFR is designed to serve the needs of three primary users. CAFR information serves the City Council and other governmental oversight bodies, the public, and agencies assessing the City's creditworthiness.
DISCUSSION
The City's independent auditor completed audits of the City's financial statements and the other reports stated earlier. The audits found no exception to conformance with generally accepted accounting standards, the Government Auditing Standards issued by the Comptroller of the United States, or the U.S. Office of Management and Budget Circular A-133 for state and local governments.
Maze found the general-purpose financial statements present fairly, in all material ways, the City's financial position as of June 30, 2012. The audited financial statements include the statement of net assets, statements of activities and changes in net assets, balance sheets, statements of revenues, expenditures, and, changes in fund balances, and statements of cash flows.
The CAFR has been prepared in accordance with generally accepted accounting principles (GAAP). The GASB established this framework for the financial reports of state and local governments. Important financial statement changes highlighted in the CAFR Management Discussion and Analysis include:
· The net assets of the City exceeded its liabilities at fiscal year ending June 30, 2012 by $355.6 million. Of this amount, $282 million was invested in capital assets, net of related debt. The balance was restricted for capital projects totaling $8.7 million, $9.2 million is restricted for debt service and other projects, and $55.7 million is unrestricted.
· The City's total net assets increased by $23.4 million; representing a $21.5 million increase in Governmental and a $1.9 million increase in Business type activities. The net assets increase was largely due to the transfer of the Redevelopment Agency negative net assets to a fiduciary fund in the amount of $22.9 million (indebtedness exceeds assets).
· The City's Governmental activities revenues increased by $20.8 million mainly due to a $21.1 million extraordinary accounting gain due to the transfer of redevelopment assets to the Successor Agency to the Redevelopment Agency. Sales tax which increased by $2.3 million. However, charges for services decreased by $4.8 million. The decrease in charges for services is primarily due to the one-time increase in permits and fees for the construction of the Kaiser Hospital in 2010-11.
The City's business-type activities include the Water Pollution Control Plant, Shoreline, Storm Water Utility and Environmental Services. The net assets increased by $1.9 million from prior fiscal year due to the increase in capital assets mainly due to new machinery and equipment for the expansion of the Water Pollution Control Plant.
The City has once again received an unqualified opinion (one that is without any reservations or qualifications on the opinion) which is the highest level of assurance that can be rendered by the auditors. This opinion assures that the City's financial statements are in conformity with accounting principles generally accepted in the United States and has been rendered on all of the City's funds, including the Successor Agency to the Redevelopment Agency of the City of San Leandro.
The City Council should note that the City was awarded the Certificate of Achievement for Excellence in Financial Reporting for the fiscal year ended June 30, 2011 by the Government Finance Officers Association of the United States and Canada (GFOA). Staff has submitted this year's CAFR for the award and believes that the 2011-12 CAFR continues to meet the stringent standards of the GFOA Awards program.
Staff recommends that the City Council accept the Comprehensive Annual Financial Report (CAFR) for fiscal year ended June 30, 2012.
PREPARED BY: David Baum, Finance Director, Finance