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ITEM 7.3A Adopting Comprehensive Financial Report40 z Otsezo MINNESOTA V I DEPARTMENT INFORMATION Request for City Council Action ORIGINATING DEPARTMENT: REQUESTOR: MEETING DATE: Administration Adam Flaherty, Finance Director June 13, 2016 PRESENTER(s): REVIEWED BY: ITEM #: Adam Flaherty, Finance Director City Administrator Johnson 7.3 (A) AGENDA ITEM DETAILS RECOMMENDATION: It is recommended by staff that the City Council approve a resolution adopting the comprehensive annual financial report for the year ended December 31, 2015. ARE YOU SEEKING APPROVAL OF A CONTRACT? IS A PUBLIC HEARING REQUIRED? No I No BACKGROUNDMUSTIFICATION: The City annually prepares a Comprehensive Annual Financial Report (CAFR). In accordance with Minnesota Statutes, the financial statements within the City's CAFR must be audited on an annual basis. Said audit has been completed by BerganKDV, who was present at the 6pm special meeting on June 13, 2016 to review the results of the audit with the City Council. A short summary on each of the three documents attached (were received by the Council for the 6PM special meeting) is below: CAFR This is a comprehensive document regarding the finances of the City of Otsego, and is prepared by the City. The CAFR includes narrative discussion, financial statements, note disclosures, statistical tables, and much more. Maybe the most important aspect of the CAFR is the Independent Auditor's Report which is issued by BerganKDV. The audit report outlines that the City has received an Unmodified opinion, also known as a clean opinion, and is the best opinion that can be given. Communications Letter This document is prepared by BerganKDV, and is a blend of required communications and summary financial analysis. This was the primary source for the discussion at the 6pm special meeting. Within this document, the auditors have identified one significant deficiency, in relation to the lack of segregation of duties. The City Council should be familiar with this finding as it has been present in past audits as well. The finding is primarily the result of the size of the City finance staff, which hinders the ability to adequately segregate some financial duties. The Finance Director is currently reviewing the assignment of certain finance duties as well as developing compensating controls for when duties cannot be segregated. Reports on Compliance This document contains reporting required by BerganKDV on other aspects of the City's audit. This document contains three separate components: 1) Report on Government Auditing Standards 2) Report on Legal Compliance (MN Statutes) 3) Report on Compliance for Each Major Federal Program (Single Audit) Each of the first two reports are issued each year by the auditors, however the Council may not be familiar with item 3, commonly known as the Single Audit. This report and respective procedures were triggered by the award and expenditure of more than $750,000 of Federal assistance on the 70th Street improvement project. SUPPORTING DOCUMENTS: st ATTACHED NONE 0 Resolution 2016-59 • Comprehensive Annual Financial Report (CAFR) • Communications Letter • Reports on Compliance POSSIBLE MOTION Please word motion as you would like it to appear in the minutes. -Motion to approve Resolution 2016-59 adopting the comprehensive annual financial report for the year ended December 31, 2015. BUDGET INFORMATION FUNDING: BUDGETED: n/a n/a ACTION TAKEN ❑ APPROVED AS REQUESTED ❑ DENIED ❑ TABLED ❑ OTHER (List changes) COMMENTS: CITY OF OTSEGO COUNTY OF WRIGHT STATE OF MINNESOTA RESOLUTION NO: 2016-59 ADOPTING THE COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED DECEMBER 31, 2015 WHEREAS, the City annually prepares a Comprehensive Annual Financial Report (CAFR); and WHEREAS, the CAFR contains the financial statements for the City of Otsego which have been prepared in accordance with accounting principles generally accepted in the United States of America (GAAP), as applied to governmental units by the Governmental Accounting Standards Board (GASB); and WHEREAS, the financial statements have been subjected to a statutorily required audit, which has been conducted by BerganKDV, an independent CPA firm; and WHEREAS, BerganKDV opined that the financial statements present fairly, in all material respects, the respective financial position of the City of Otsego for the year ended December 31, 2015; and WHEREAS, said CAFR and the documents summarizing the audit process have been distributed to and discussed with the City Council on June 13, 2016. NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF OTSEGO, MINNESOTA: That the Comprehensive Annual Financial Report (CAFR) for the City of Otsego for the year ended December 31, 2015, and all supporting documentation, is hereby adopted as the official financial record for said fiscal year. -- ADOPTED by the Otsego City Council this 13th day of June, 2016. ATTEST: CITY OF OTSEGO Jessica Stockamp, Mayor Tami Loff, City Clerk MOTION made by Council Member and SECONDED by Council Member IN FAVOR: OPPOSED: