CITY COUNCIL STAFF REPORT
Meeting: June 6, 2023
Subject
Responses to Annual Comprehensive Financial Report (ACFR) and related supplemental reports.
Recommended Action
Responses to Annual Comprehensive Financial Report (ACFR) and related supplemental reports.
Background
Staff’s responses to May 16th, 2023, Written Communications and Comments and Questions received from councilmember are shown in italics.
Written Communications
Question 1: “Why do the Expenses for “Law Enforcement” in the ACFR for 2021 and 2022 not match the Proposed Budget Attachment J-Law Enforcement (5-17-2023) expenditures for the same years?” (Page 28 of ACFR vs. Page 8 of the Proposed Budget) (Councilmembers Wei and Chao) Staff Response: The ACFR is a complex document that reports on the City’s annual results, which are presented using two different statements, Government-Wide and Fund Financial Statements. The Government-Wide Statements (pages 24-26) are reported using the full accrual basis of accounting, factoring for capital assets, long-term liabilities, and consolidating Internal Revenue Funds and Fiduciary Funds, among others. The Fund Financial Statements (pages 27-38) are separated into three fund types, Governmental, Propriety, and Fiduciary, where both full accrual and modified accrual basis of accounting are used. The purpose of the two financial statements are different and must be considered when reviewing the ACFR.
The Law Enforcement program results in the budget to actual comparisons (pages 32-34) are consistent with the amounts reported in the FY 2023-24 Proposed Budget.
Oral Communications
Comment/Concern 1: A resident expressed concerns with the third identified IT control deficiency, the creation of a financial systems profile without authorizing supporting documentation or the source of its creation.
Staff Response 1: Managements response to this finding can be found on page 1 of the ACFR’s Management Letter.
Comment/Concern 2: A resident expressed concerns with the mention of stores that closed years ago but continue to be revenue drivers.
Staff Response 2: The ACFR is a look-back document focusing on a specific fiscal year. The actual report is completed and published anywhere from 6 to 9 months after fiscal end close. In addition, although stores may close, their reporting to the City may continue for up to six months to collect taxes due to sales tax revenue being reported in arrears.
Comment/Concern 3: A resident expressed concerns about the Council’s appointment of the Treasurer.
Staff Response 3: Per (CMC 2.48.020(A)(3).), The Director of Administrative Services also shall be appointed Treasurer and also shall act as ex officio Assessor and shall assess and collect all City taxes save and except for those collected by State and County officers for the City.
Comment/Concern 4: A resident expressed concerns about the existence of the Marina Projects on page vi of the ACFR’s Transmittal Letter.
Staff Response 4: The ACFR is a look-back document focusing on a specific fiscal year. The actual report is completed and published anywhere from 6 to 9 months after fiscal end close. This ACFR is looking at the financials for the City from July 1, 2021-June 30, 2022. The Marina project changes occurred in December 2022.