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III.2. Presentation from the Auditors; HarkessCITY OF HOPKINS MEMORANDUM Date: June 20, 2017 To: Mayor & City Council From: Christine Harkess, Finance Director Subject: 2016 Comprehensive Annual Financial Report (CAFR) Our auditors, Dennis Hoogeveen, Principal and John Lorenzini, Manager of the audit firm CliftonLarsonAllen, LLC will be in attendance to present the 2016 Comprehensive Annual Financial Report (CAFR) and the results of their audit. Attached is their presentation. The audit due to its size is being provided under separate cover and can be accessed on the City website on the following page: http://www.hopkinsmn.com/departments/finance/index.php . A copy is also available to the public in the City Hall lobby. Supporting Information  Power Point Presentation FINANCE DEPARTMENT 6/15/2017 1 WEALTH ADVISORY | OUTSOURCING | AUDIT, TAX, AND CONSULTING Investment advisory services are offered through CliftonLarsonAllen Wealth Advisors, LLC, an SEC-registered investment advisor. | ©2016 CliftonLarsonAllen LLP City of Hopkins Audit Results and Communications Dennis Hoogeveen, Principal John Lorenzini, Manager ©2016 CliftonLarsonAllen LLPAudit Results 2 6/15/2017 2©2016 CliftonLarsonAllen LLPWEALTH ADVISORY  |  OUTSOURCING |  AUDIT, TAX, AND CONSULTING Audit Results •The City has an unmodified (clean) opinion for the  December 31, 2016 financial statement audit. • Financial Statement Findings –No material weaknesses –One significant deficiency •Three Minnesota Legal Compliance Findings 3 ©2016 CliftonLarsonAllen LLPWEALTH ADVISORY  |  OUTSOURCING |  AUDIT, TAX, AND CONSULTING Audit Results •Report on Minnesota Legal Compliance (Minnesota  Legal Compliance Audit Guide for Cities promulgated  by the State Auditor). •Three findings noted: – Missing verifications as required by “Responsible  Contractor” criteria, per Minnesota Statute §16C.285,  subdivision 3 – Missing subcontractor clause (Minnesota Statute §471.425,  subdivision 4a –HRA Check declaration (Minnesota Statute §471.38, and  §471.391)4 6/15/2017 3©2016 CliftonLarsonAllen LLPRequired Communications Highlights 5 ©2016 CliftonLarsonAllen LLPWEALTH ADVISORY  |  OUTSOURCING |  AUDIT, TAX, AND CONSULTING Required Communications •No new accounting policies • Accounting Estimates •Two uncorrected misstatements (not considered  material to the financial statements) – $25k watershed project reimbursement – $31k December Pavilion revenue •No difficulties or disagreements with management 6 6/15/2017 4©2016 CliftonLarsonAllen LLPFinancial Results 7 ©2016 CliftonLarsonAllen LLPWEALTH ADVISORY  |  OUTSOURCING |  AUDIT, TAX, AND CONSULTING Financial Results • Governmental Funds fund balances totaled $23.3 million, a  decrease of $3.6 million from 2015 – Primarily due to refunding of 2007 bonds at beginning of year. • Unassigned fund balance of the General Fund totaled $5.4  million or 44% of expenditures. • General Fund Revenues were $433,833 or 3.7% higher than  budget • General Fund Expenditures were $450,039 or 3.8% higher than  budget 8 6/15/2017 5©2016 CliftonLarsonAllen LLPWEALTH ADVISORY  |  OUTSOURCING |  AUDIT, TAX, AND CONSULTING City PresentationFinancial Results –GF Revenues by Source 67%67%59%65%68%65% 8%7%8% 6%5% 6% 4%2%3% 3%2% 3% 11%8% 18%15%11% 12% 5%4% 4%4% 4% 4% 5%12% 8%7% 10% 10%  $‐  $5,000,000  $10,000,000  $15,000,000  $20,000,000  $25,000,000 2011 2012 2013 2014 2015 2016 Taxes Special Assessments Licenses and Permits Intergovernmental Charges for Services Other Revenues ©2016 CliftonLarsonAllen LLPWEALTH ADVISORY  |  OUTSOURCING |  AUDIT, TAX, AND CONSULTING City PresentationFinancial Results –GF Expenditures by Type 15%16%16%16%18%18% 56%57%55%54%54% 53% 2% 1%2%2%2% 1%22%20%21%22%21% 22% 0%1%1%1%1% 1% 5%5%5%5%5% 5%  $‐  $1,000,000  $2,000,000  $3,000,000  $4,000,000  $5,000,000  $6,000,000  $7,000,000  $8,000,000  $9,000,000  $10,000,000  $11,000,000  $12,000,000  $13,000,000 2011 2012 2013 2014 2015 2016 General government Public safety Health and welfare Highways and streets Urban redevelopment and housing Culture and recreation 6/15/2017 6©2016 CliftonLarsonAllen LLPWEALTH ADVISORY  |  OUTSOURCING |  AUDIT, TAX, AND CONSULTINGStatement of Net AssetsFinancial Results (in thousands)2016 2015 Assets Cash and investments 28,928$       30,222$       Taxes and special assessments receivable 3,193            3,880           Other receivables 1,068            2,170           Other assets 1,613            2,001           Capital assets (net of depreciation) 89,027          79,847         Deferred outflows 11,842          1,779           Total Assets 135,671$     119,899$    Liabilities Accounts payable 3,360$          2,372$         Accrued compensation 214                159               Other liabilities 715                648               Long term liabilities 73,068          53,303         Deferred inflows 1,982            926               Total Liabilities 79,339$       57,408$       Total Net Position 56,332$       62,491$      ©2016 CliftonLarsonAllen LLPWEALTH ADVISORY  |  OUTSOURCING |  AUDIT, TAX, AND CONSULTINGStatement of ActivitiesFinancial Results Governmental Fund Types, (in thousands)2016 2015 Revenues Property taxes and assessments 14,954$     13,960$   Charges for service 1,492         1,367       Operating grants & contributions 4,088         4,970       Capital grants & contributions 1,109         501           Grants & contributions not restricted 21               21             Other revenues 186             306           Total Revenues 21,850$     21,125$   Expenditures General  government 10,341$     6,657$     Public safety 8,562         6,666       Health & welfare 185             185           Highways & streets 5,169         4,542       Urban redevelopment & housing 1,399         1,249       Culture & recreation 2,231         2,069       Interest on long‐term debt 953             688           Transfers out 2,090         864           Total Expenditures 30,930$     22,920$   Change in Net Position (9,080)$     (1,795)$   6/15/2017 7©2016 CliftonLarsonAllen LLPWEALTH ADVISORY  |  OUTSOURCING |  AUDIT, TAX, AND CONSULTINGStatement of ActivitiesFinancial Results Proprietary Fund Types, (in thousands)2016 2015 Revenues Charges for service 5,815$     5,705$      Operating grants & contributions 722           622            Capital  grants & contributions 703            ‐                  Other revenues 87              87               Transfers In 2,090        864            Total  Revenues 9,417$     7,278$      Expenditures Water 1,879$     1,699$      Sewer 2,251        2,061         Storm Sewer 398           394            Refuse 868           849            Pavilion/Ice Arena 483           463            Housing & Redevelopment Authority 617           610            Total  Expenditures 6,496$     6,076$      Change in Net Position 2,921$     1,202$     ©2016 CliftonLarsonAllen LLPWEALTH ADVISORY  |  OUTSOURCING |  AUDIT, TAX, AND CONSULTING • Governmental Accounting Standards Board Statement  Nos. 74 and 75 –#74 Applicable December 31, 2017 –#75 Applicable December 31, 2018 –Other Postemployment Benefits 14 Emerging Issues 6/15/2017 8 twitter.com/CLAconnectfacebook.com/ cliftonlarsonallen linkedin.com/company/ cliftonlarsonallen ©2016 CliftonLarsonAllen LLPCLAconnect.com Thank You! Dennis Hoogeveen, Principal (612) 397‐3063 Dennis.Hoogeveen@CLAconnect.com John Lorenzini, Manager (612) 397‐3268 John.Lorenzini@CLAconnect.com 15