DATE:
December 13, 2022
CATEGORY:
Consent
DEPT.:
Finance and Administrative Services
TITLE: Accept and File Fiscal Year 2021-22
Annual Comprehensive Financial Report
and Related Auditor Reports
RECOMMENDATION
Accept and file the following reports pertaining to Fiscal Year 2021-2022: (1) City of Mountain View’s Annual Comprehensive Financial Report with Independent Auditor ’s Report (Attachment 2 to the Council report ); (2) Article XIII -B Appropriations Limit Agreed-Upon Procedures Report (Attachment 3 to the Council report ); and (3) Report to the City Council — Required Communications (Attachment 4 to the Council report).
BACKGROUND
Section 1106 of the City Charter and Council Policy B -6 require an independent certified public accountant, also called an independent auditor, to audit the City’s financial records at least on an annual basis. Macias Gini & O’Connell, LLP (MGO) , serves as the City’s independent auditor.
On November 30, 2022, Benjamin Lau of MGO presented the results of MGO’s annual audit of the City’s financial records, along with their observations, conclusions , and findings, to the Council Finance Committee (CFC). A copy of the CFC staff report is included as Attachment 5.
The presentation included an explanation of the various components of the Annual Comprehensive Financial Report (A CFR), highlight s from the Independent Auditor’s Report, Management’s Discussion and Analysis, Notes to the Financial Statements, and other information that is required by auditing standards to be communicated to the City ’s governing body . (The ACFR is included in this report as Attachment 2.) It was noted that the auditor’s opinion was of the highest level possible and that there were no conflicts or other negative findings from this year’s audit. The C FC discussed the audit results, which included various questions on the financial statement revenues and expenditures. The CFC then recommended the City Council accept and file the ACFR, as presented, at its December 13, 2022 meeting.
Copies of these documents are available for public review at the City’s Library and Finance and Administrative Services Department lobby on the second floor of City Hall. They are also available on the Council Agenda page of the City’s website at:
mountainview.gov/council/agendas/current_council_agendas.asp.
Accept and File Fiscal Year 2021-22 Annual Comprehensive Financial Report and Related Auditor Reports
December 13, 2022
ANALYSIS
The City compiles a n Annual Comprehensive Financial Report which is utilized by various organizations, including the State and national credit rating agencies, that monitor and rate the City’s credit and its bond issues. Action taken tonight will formally accept and file the ACFR and related auditor reports in order to comply with grant and other statutory requirements as well as for the benefit of investors and the public in general.
A detailed analysis of the General Operating Fund (GOF) audited results compared to the Budget is included as Attachment 1 . F or Fiscal Year 2021-22, the City had a year-end GOF balance of $17.6 million. This was $5.6 million higher than the $ 12.0 million Estimated Operating Balance that was projected in June 202 2, and $15.6 million more than the Adjusted Budget , which includes Council-approved adjustments made subsequent to the Adopted Budget. Most of the positive variance came from increases in the City’s major revenue streams as the economic recovery from the COVID-19 pandemic continued to surpass expectations. For example, property tax revenue came in $3.7 million higher due to higher assessed value for property and higher property tax in lieu of Vehicle License Fees (VLF). Sales tax revenue w as $4.9 million above budget, primarily due to strength in new automobile sales, fuel/service stations, and quicker - than-expected rebound from restaurants. In addition, operating expenditures were significantly less than estimated, contributing to the higher final operating balance.
This analysis also shows the GOF balance allocat ions as adopted by Council in the Fiscal Year 2021-22 Adopted Budget. In recent years, t he allocations were used to fund City needs, including limited-period expenditures, infrastructure needs, the Compensated Absences Reserve, long-term liabilities, and the General Fund Reserve.
Report on Compliance with Article XIII-B—Appropriations Limit
Article XIII -B of the State Constitution, also known as the Gann Limit, established an annual appropriations limit for governmental entities and specified certain indicators to be used in calculation of the annual appropriations limit increase. The appropriations limit calculation f or Fiscal Year 2021-22 is $ 315,571,679. The appropriations subject to the limitation total is $103,224,135; accordingly, the City is significantly under the Constitutional limit on appropriations funded from taxes and, therefore, in compliance with the Gann Limit. (The Gann Limit report is included as Attachment 3.)
Report to the City Council—Required Communications
As part of the City’s annual financial audit, MGO reviews and comments on the City’s internal controls over financial reporting for the purpose of the audit of the financial statements. No Accept and File Fiscal Year 2021-22 Annual Comprehensive Financial Report and Related Auditor Reports
December 13, 2022
material weaknesses in the City’s internal controls were noted by MGO. In addition, the report provides assistance to City staff for improving its records and operatio ns and may communicate other advisory information, such as future accounting and reporting requirements, which could have an effect on the City’s financial reporting. The last part of this report is the required communications from MGO. The purpose of this report is to provide timely observations arising from the audit that are relevant to Council’s responsibility of oversight. It was also noted there were no disagreements with management nor audit adjustments proposed by MGO that would have a significan t effect on the financial statements. (The Required Communications Report is included as Attachment 4.)
FISCAL IMPACT
Accepting the ACFR and related reports from the independent auditor does not have a fiscal impact to the City.
ALTERNATIVES
1. Do not accept the ACFR and auditor’s reports.
2. Provide other direction.
Accept and File Fiscal Year 2021-22 Annual Comprehensive Financial Report and Related Auditor Reports
December 13, 2022
PUBLIC NOTICING—Agenda posting.
Prepared by:
Grace Zheng
Assistant Finance and Administrative
Services Director
Approved by:
Jesse Takahashi
Finance and Administrative
Services Director
Audrey Seymour Ramberg
Assistant City Manager/
Chief Operating Officer
GZ/4/CAM
541-12-13-22CR
202390
Attachments: 1. Analysis of Fiscal Year 2021-22 Audited Financial Results for the General Operating Fund
2. Annual Comprehensive Financial Report and Independent Auditor’s Reports
3. Article XIII-B Appropriations Limit
4. Report to the City Council—Required Communications
5. Council Finance Committee Staff Report Dated November 30, 2022