MEETING DATE:
JANUARY 23, 2024
SUBJECT:
Title
FISCAL YEAR 2022-23 ANNUAL COMPREHENSIVE FINANCIAL REPORT (ACFR)
Body
Recommendation
Recommendation
NOTE AND FILE the City’s Annual Comprehensive Financial Report (ACFR) for the fiscal year ended June 30, 2023 along with the independent auditors’ letter to the City Council regarding audit results.
Body
Board or Commission Action
Not applicable
Relevant Council Strategic Theme
Good Governance
Relevant Department Goal
Maintain Fiscal Health of the City
Executive Summary
At the end of each fiscal year, financial statements are prepared by the City and audited by independent auditors who are contracted through a competitive procurement process.
The Annual Comprehensive Financial Report (ACFR) communicates the City’s financial condition and activity in a transparent and organized manner for the fiscal year ended June 30, 2023. Overall, the City’s operations continue to show signs of stability, a result of prudent and sound management practices and efforts of the City of San Marcos.
The City received the independent auditor’s unmodified (clean) opinion on the ACFR for the fiscal year ended June 30, 2023. The unmodified (clean) opinion communicates to users that the financial statements are fairly presented and that the information used in the report is reliable. The City’s independent audit firm has also issued a letter to the City Council communicating audit findings and other matters, as required by the Auditing Standards Board of the American Institute of Certified Public Accountants (AICPA).
Discussion
At the end of each fiscal year, financial statements are prepared by the City and audited by independent auditors who are contracted through a competitive procurement process. The City’s independent audit firm for the ACFR was Rogers, Anderson, Malody & Scott, LLP.
The ACFR is used to communicate the City’s financial condition and activity in a transparent and organized manner. In addition, the ACFR presents historical and comparative information that can be useful to City staff, elected officials, and external users, such as debt rating agencies, businesses, other public agencies and the City’s residents. The most recent ACFR (see Attachment 1) is also available on the City’s website.
The General Fund for ACFR reporting purposes is comprised of the City’s general operating fund and the City’s Infrastructure, Facility, and Vehicle and Equipment Replacement and Rehabilitation Funds. The Fiscal Year 2022-23 General Fund ended with a $119.7 million fund balance. Of this amount, $12.6 million was assigned to the City’s infrastructure, facility, and vehicle and equipment replacements and rehabilitations and $28.4 million was unassigned or available for operational spending at the City’s discretion. During the year, unassigned and one-time revenues were appropriately accounted for per the City Council’s Fiscal Management Policy and reserves remained in accordance with the City’s Council’s General Fund Reserve Policy.
At the end of the fiscal year, the City is able to report positive balances for the government as a whole, as well as for its separate governmental and business-type activities. The same situation held true for the prior fiscal year. The City’s total net position increased $36.5 million from the prior fiscal year mainly attributable to regular current year operating activities along with an increase in Operating grants and contributions and capital grants and contributions.
Audit industry standards, established by the AICPA, require auditors to provide an opinion on specific areas of the City’s financial statements based on observations, inquiries, testing of transactions and analysis. An unmodified (clean) opinion communicates to users that the financial statements are fairly presented and that the information used in the report is reliable. The City received an unmodified (clean) opinion on the ACFR for the fiscal year ended June 30, 2023.
The Auditing Standards Board of the AICPA requires the independent auditors to communicate significant audit findings to those charged with governance. As a result, the City’s independent audit firm has also issued a letter to the City Council dated January 9, 2024 to comply with these requirements (see Attachment 2).
Environmental Review
Not Applicable
Fiscal Impact
Attachment(s)
Attachment 1: Annual Comprehensive Financial Report for Fiscal Year Ended June 30, 2023
Attachment 2: Letter to the City Council on Summary of Audit Results
Prepared/Submitted by: Jeffrey Jorgenson, Senior Accountant
Reviewed by: Donna Apar, Finance Director
Approved by: Michelle Bender, City Manager