HomeMy WebLinkAboutReceive and File Audited Financial Reports FYE June 30, 2010CITY OF PALM DESERT
FINANCE DEPARTMENT
Staff Report
REQUEST: RECEIVE AND FILE THE CITY OF PALM DESERT AUDITED
FINANCIAL REPORTS FOR THE FISCAL YEAR ENDED JUNE 30,
2010
DATE: April 14, 2011
SUBMITTED BY: Paul S. Gibson, Finance Director
CONTENTS: 1. City of Palm Desert Audited Financial Report for Fiscal Year
Ended June 30, 2010 (FULL REPORT AVAILABLE W/CLERK, ALSO ONLINE)
2. Auditor's Letter to City Council
3. Report on Internal Controls and Compliance
4. Appropriations Limit Worksheet No. 6
Recommendation
By Minute Motion, that the City Council receive and file the audited
Comprehensive Annual Financial Report (CAFR) for the City of Palm
Desert for the fiscal year ended June 30, 2010.
Committee Recommendation
The Audit, Investment and Finance Committee received the audited financial statements
at their January 25, 2011 meeting, and it was recommended that the statements for the
fiscal year ended June 30, 2010 be received and filed by the City Council.
Background
Diehl, Evans & Associates, LLP, performed and completed the annual independent audit
for the fiscal year ended June 30, 2010, for the City of Palm Desert in November 2010, in
accordance with generally accepted auditing standards. In the auditor's opinion, the
basic financial statements present fairly, in all material respects, the financial position of
the City of Palm Desert as of June 30, 2010, and the results of its operations and the cash
flows of its proprietary funds for the year then ended in conformity with accounting
principles generally accepted in the United States of America.
In conducting their audit, the auditors test the City's internal controls. Attached is the
Report on Internal Controls over Financial Reporting and on compliance and other
G:\Finance\Niamh Ortega\Staff Reports\Audit staff reports\Audit Staff Reports 2010\SR -Council audit CAFR 2010.docx
Staff Report
Receive and file CAFR for Fiscal Year ended June 30, 2010
April 14, 2011
Page 2 of 2
matters based on an audit of Financial Statements performed in accordance with
Government Auditing Standards.
The CAFR was submitted for the Certificate of Achievement for Excellence in Financial
Reportinq from the Government Finance Officers Association. In order to be awarded a
Certificate of Achievement, a government must publish an easily readable and efficiently
organized comprehensive annual financial report. This report must satisfy both generally
accepted accounting principles and applicable legal requirements. We believe that our
current comprehensive annual financial report continues to meet the Certificate of
Achievement Program's requirements, as it has for the past thirteen years.
Staff requests that the Council receive and file the City of Palm Desert's audited financial
reports for the fiscal year ended June 30, 2010.
Fiscal Impact
There is no fiscal impact as a result of this action.
Submitted by:
144&4-1
Paul S. Gibson, Finance Director/City Treasurer
PSG:JLE:nmo
CITY COUNCIL ACTION
APPROVED
RECEIVED 4 L l
MEETING DATE
AYES:
NOES:-If......y) e___
ABSENT: __A� nn ,-
ABSTAIN:
VERIFIED BY:
_
r!a
Original on File with City Clerk's
Office
proved:
ohn M. Wohlmuth, City Manager
G:\Finance\Niamh Ortega\Staff Reports\Audit staff reports\Audit Staff Reports 2010\SR -Council audit CAFR 2010.docx
Staff Report
Receive and file CAFR for Fiscal Year ended June 30, 2010
April 14, 2011
Page 2 of 2
matters based on an audit of Financial Statements performed in accordance with
Government Auditing Standards.
The CAFR was submitted for the Certificate of Achievement for Excellence in Financial
Reportinq from the Government Finance Officers Association. In order to be awarded a
Certificate of Achievement, a government must publish an easily readable and efficiently
organized comprehensive annual financial report. This report must satisfy both generally
accepted accounting principles and applicable legal requirements. We believe that our
current comprehensive annual financial report continues to meet the Certificate of
Achievement Program's requirements, as it has for the past thirteen years.
Staff requests that the Council receive and file the City of Palm Desert's audited financial
reports for the fiscal year ended June 30, 2010.
Fiscal Impact
There is no fiscal impact as a result of this action.
Submitted by: proved:
Paul S. Gibson, Finance Director/City Treasurer ohn M. Wohlmuth, City Manager
PSG:JL.E:nmo
G:\Finance\Niamh Ortega\Staff Reports\Audit staff reports\Audit Staff Reports 2010\SR -Council audit CAFR 2010.docx
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DIEHL, EVANS & COMPANY, LLP
CERTIFIED PUBLIC ACCOUNTANTS & CONSULTANTS
ACHAEL R. LLMIN, CPA
A PARTX13LSW Wp.UDING ACCOUNTANCY CORPORATIONS CRAIG W. SPRAJCM CPA
NITIN P. PATE, CPA
ROSERTI CALLANAN,CPA
5 CORPORATE PARK SLUE 100 'PHIId K HOLTXAAQ, CPA
IRVNE, CALIFOR.NIA 92606-5165 'MOMAS M PERLOWStq CPA
•HARYEY I. SCHROEDER. CPA
(949) 399-0600 • FAX (949) 399-0610 K04NM X AMES, CPA
W W W. dichIcyCLS.COm WUILAM C. PFML CPA
November 29, 2010 -A °ROM90NAL CORPORATION
To the Honorable City Council
of the City of Palm Desert
Palm Desert, California
We have audited the financial statements of the governmental activities, the business -type activities,
the discretely presented component unit, each major fund, and the aggregate remaining fund
information of the City of Palm Desert for the year ended June 30, 2010. Professional standards require
that we provide you with information about our responsibilities under generally accepted auditing
standards, as well as certain information related to the planned scope and timing of our audit. We have
communicated such information in our engagement letter to you dated March 19, 2010 and our
meeting on planning matters on July 27, 2010. Professional standards also require that we
communicate to you the following information related to our audit.
SigWficant Audit Findingl
Qualitative Aspects ofAccounting Practices
Management is responsible for the selection and use of appropriate accounting policies. The significant
accounting policies used by the City of Palm Desert are described in Note 1 to the financial statements.
Other than the implementation of Governmental Accounting Standards Board Statement No. 57,
"Accounting and Financial Reporting for Derivative Instruments", no new accounting policies were
adopted and the application of existing policies was not changed during June 30, 2010. We noted no
transactions entered into by the governmental unit during the year for which there is a lack of
authoritative guidance or consensus. All significant transactions have been recognized in the financial
statements in the proper period.
Accounting estimates are an integral part of the financial statements prepared by management and are
based on management's knowledge and experience about past and current events and assumptions
about future events. Certain accounting estimates are particularly sensitive because of their
significance to the financial statements and because of the possibility that future events affecting them
may differ significantly from those expected.
OTHER OFFICES AT
SE
2%5 ROOSEVELT STREET 613 W vAL1EY PARKWAY. SUITE 330
CARLSBAD. CALIFORNIA 9200S-2399 ESCONDIDO. CA1-0:0R.VIA 92025-15y8
(760) 729-2343 - FAX (760) 729-123/ (750) 741.3141 - FAX (760) 741.9890
Significant Audit Findings (Continued)
Qualitative Aspects ofAccounting Practices (Continued)
The most sensitive estimates affecting the City's financial statements were:
• Management's estimate of the fair market value of investments is based on market
values provided by outside sources.
• Management's estimate of the value of capital assets (infrastructure) is based on
industry standards.
• The estimated useful lives of capital assets for depreciation purposes are based on
industry standards.
• The funded status and funding progress of the public defined benefit plan with
Ca1PERS which is based on an actuarial valuation.
• The estimated net OPEB asset which is based on an actuarial valuation.
We evaluated• the key factors and assumptions used to develop these estimates in determining that they
were reasonable in relation to the financial statements taken as a whole.
Certain financial statement disclosures are particularly sensitive because of their significance to
financial statement users. The most sensitive disclosure affecting the financial statements were
reported in Note 10 regarding the defined benefit pension plan and Note 14 regarding other
post -employment benefits.
Diculdes Encountered in Performing the Audit
We encountered no significant difficulties in dealing with management in performing and completing
our audit.
Corrected and Uncorrected Misstatements
Professional standards require us to accumulate all known and likely misstatements identified during
the audit, other than those that are trivial, and communicate them to the appropriate level of
management. Management has corrected all such misstatements. In addition, none of the
misstatements detected as a result of audit procedures and corrected by management were material,
either individually or in the aggregate, to each opinion unit's financial statements taken as a whole.
Disagreements with Management
For purposes of this letter, professional standards define a disagreement with management as a
financial accounting, reporting, or auditing matter, whether or not resolved to our satisfaction, that
could be significant to the financial statements or the auditor's report. We are pleased to report that no
such disagreements arose during the course of our audit.
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Management Representations
We have requested certain representations from management that are included in the management
representation letter dated November 29, 2010.
Management Consultations with Other Independent Accountants
In some cases, management may decide to consult with other accountants about auditing and
accounting matters, similar to obtaining a "second opinion" on certain situations. If a consultation
involves application of an accounting principle to the governmental unit's financial statements or a
determination of the type of auditor's opinion that may be expressed on those statements, our
professional standards require the consulting accountant to check with us to determine that the
consultant has all the relevant facts. To our knowledge, there were no such consultations with other
accountants.
Other Audit Findings or Issues
We generally discuss a variety of matters, including the application of accounting principles and
auditing standards, with management each year prior to retention as the governmental unit's auditors.
However, these discussions occurred in the normal course of our professional relationship and our
responses were not a condition to our retention.
This information is intended solely for the use of City Council and management of the City of Palm
Desert and is not intended to be and should not be used by anyone other than these specified parties.
17'",ci,Lj ��uKd , ALA
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DIEHL, EVANS & COMPANY, LLP
CERTIFIED PUBLIC ACCOUNTANTS 6T CONSULTANTS
A PARTNER3HV INCLL'DWO ACCOUNTANCY CORPORATIONS
S CORPORATE PARK SUriE 100
IRVINF, CALIFORNIA 92606-3165
(949) 399-0600 • FAX (949) 399-0610
www.dichicyans.com
WC]"M R. LVDLV, CPA
CRAIO W SPRAIO 3 , CPA
NRtV P. ?ATET., CAA
ROBERT I. CALLAXAN, CAA
'n" H HOLTRAMP, CPA
'MOMAS!L PERLOWS1Q, CPA
-HARVEY I SCHROMER, CPA
XINN 3IH R. APAM CAA
WMIAM C. PENTI; CPA
November 29, 2010 '""FAVIS90HALCOMORAMN
INDEPENDENT AUDITORS' REPORT ON INTERNAL CONTROL OVER
FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS
BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN
ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS
The Honorable City Council
City of Palm Desert
Palm Desert, California
We have audited the financial statements of the governmental activities, the business -type activities,
the discretely presented component unit, each major fund and the aggregate remaining fund
information of the City of Palm Desert, California as of and for the year ended June 30, 2010, which
collectively comprise the City of Palm Desert, California's basic financial statements and have issued
our report thereon dated November 29, 2010. We conducted our audit in accordance with auditing
standards generally accepted in the United States of America and the standards applicable to financial
audits contained in Government Auditing Standards, issued by the Comptroller General of the United
States.
Internal Control Over Financial Reporting
In planning and performing our audit, we considered the City's internal control over financial reporting
as a basis for designing our auditing procedures for the purpose of expressing our opinions on the
financial statements, but not for the purpose of expressing an opinion on the effectiveness of the City's
internal control over financial reporting. Accordingly, we do not express an opinion on the
effectiveness of the City's internal control over financial reporting.
A deficiency in internal control exists when the design or operation of a control does not allow
management or employees, in the course of performing their assigned functions, to prevent, or detect
and correct misstatements on a timely basis. A material weakness is a deficiency, or a combination of
deficiencies, in internal control such that there is a reasonable possibility that a material misstatement
of the City's financial statements will not be prevented, or detected and corrected on a timely basis.
OTHER OFFICES AT 2%3 ROOSEVELT STREET 613 W. VALLEY PARKWAY, SUITE 330
CARLSBAD. CALWORNIA 920012389 ESCONDIDO, CALWORNIA 92025.2598
(760) 729.2343 . FAX (760) 729.2234 (760) 741.3141 - FAX (760) 741.9890
C
Internal Control Over Financial Reporting (Continued)
Our consideration of internal control over financial reporting was for the limited purpose described in
the first paragraph of this section and was not designed to identify all deficiencies in internal control
over financial reporting that might be deficiencies, significant deficiencies or material weaknesses. We
did not identify any deficiencies in internal control over financial reporting that we consider to be
material weaknesses, as defined above.
Compliance and Other Matters
As part of obtaining reasonable assurance about whether the City of Palm Desert, California's financial
statements are free of material misstatement, we performed tests of its compliance with certain
provisions of laws, regulations, contracts and grant agreements, noncompliance with which could have
a direct and material effect on the determination of financial statement amounts. However, providing
an opinion on compliance with those provisions was not an objective of our audit and, accordingly, we
do not express such an opinion. The results of our tests disclosed no instances of noncompliance and
other matters that are required to be reported under Government Auditing Standards.
This report is intended solely for the information and use of the City Council, management of the City
of Palm Desert, California and others within the City, and is not intended to be and should not be used
by anyone other than these specified parties.
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D
CITY OF PALM DESERT
QAPPROPRIATIONS LIMIT WORKSHEET NO.6
WITH INDEPENDENTACCOUNTANTS' REPORT
ON AGREED -UPON PROCEDURES
APPLIED TO APPROPRIATIONS LEWIT WORKSHEET
FOR THE YEAR ENDED JUNE 30, 2010
C
u
DIEHL, EVANS & COMPANY, LLP
0
CERTIFIED PUBLIC ACCOUNTANTS & CONSULTANTS
A PARTNERSHIP IIVC! UDIIQO ACCOUNTANCY CORPORATIONS
1bIICHAEL R. LIMBf. CPACRAIO W. SPRAMER, CPA
Nn-IN P. PAM , CPA
5 CORPORATE PARK, SUITE 100
ROBERT I. CAU ANAK CPA
-PBu.Q H. HOLTB AW, CPA
IRVINE, CALIFORNIA 92606-5165
-THOMAS X PERLOWSn CPA
(949) 399-0600 • FAX (949) 399-0610
w W.diehley=_00m
-HARVEYL SCHROMEk CPA
KDOCEH R AME& CPA
WRIUM C. PEM-A CPA
November 29, 2010
-A FROFESS0NAL 0OMPORA7M
INDEPENDENTACCOUNTANTS' REPORT
ON AGREED -UPON PROCEDURES APPLIED
TO APPROPRIATIONS LIMIT WORKSHEET
To the Honorable Mayor
and Members of City Council
City of Palm Desert
Palm Desert, California
a We have performed the procedures enumerated below to the accompanying Appropriations Limit
Worksheet No. 6 of the City of Palm Desert, California for the year ended June 30, 2010. These
procedures, which were agreed to by the City of Palm Desert, California and the League of California
Cities (as presented in the League publication entitled "Article YM-B Appropriations Limit Uniform
Guidelines") were performed solely to assist the City of Palm Desert, California in meeting the
requirements of Section 1.5 of Article XIIIB of the California Constitution. The City of Palm Desert's
management is responsible for the Appropriations Limit Worksheet No. 6.
This agreed -upon procedures engagement was conducted in accordance with attestation standards
established by the American Institute of Certified Public Accountants. The sufficiency of the
procedures is solely the responsibility of those parties specified in this report. Consequently, we make
no representation regarding the sufficiency of the procedures described below either for the purpose for
which this report has been requested or for any other purpose.
The procedures performed and our findings were as follows:
1. We obtained the completed Worksheet No. 6 for the year ended June 30 2010 and compared the
limit and annual adjustment factors included in that worksheet to the limit and annual adjustment
�] factors that were adopted by resolution of the City Council. We also compared the population and
l inflation options included in the aforementioned worksheet to those that were selected by a
recorded vote of the City Council.
No exceptions were noted as a result of this procedure.
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OTHER OFFICES AT: 2%5 ROOSEVELT STREET 613 W. VALLEY PARKWAY, SUITE 330
CARLSBAD, CALIFORNIA 92008-2389 ESCONDIDO, CALIFORNIA 92025-2598
(760) 729-2343 9 FAX (760) 729-2234 (760) 741.3141 • FAX (760) 741-9990
I� 2. For the accompanying Appropriations Limit Worksheet No. 6, we added last year's limit to the
total adjustments, and compared the resulting amount to this year's limit. We also recalculated the
a adjustment factor and the adjustment for inflation and population, and compared the results to the
amounts on Worksheet No. 6.
No exceptions were noted as a result of this procedure.
3. We compared the prior year appropriations limit presented in the accompanying Appropriations
Limit Worksheet No. 6 to the prior year appropriations limit adopted by the City Council for the
prior year.
No exceptions were noted as a result of our performing this procedure.
We were not engaged to, and did not, perform an audit, the objective of which would be the expression
of an opinion on the accompanying Appropriations Limit Worksheet No. 6. Accordingly, we do not
express such an opinion. Had we performed additional procedures, other matters might have come to
our attention that would have been reported to you. No procedures have been performed with respect
to the determination of the appropriation limit for the base year, as defined by the League publication
entitled "Article 7M Appropriations Limitation Uniform Guidelines".
This report is intended solely for the information and use of the City Council and management of the
City of Palm Desert, California and is not intended to be, and should not be, used by anyone other than
Qthese specified parties.
L:
I)'L&4,k� E, ,,,,V, u,r,,d. , ALP
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CITY OF PALM DESERT
APPROPRIATIONS LIMIT WORKSHEET NO.6
For the year ended June 30, 2010
Appropriations limit for fiscal year ended June 30, 2009 (see Note 2)
Adjustment factors for the fiscal year ended June 30, 2010 (see Note 2):
Inflation
Population
Factor
Factor Combined
(Note 3)
(Note 4) Factor
1.00620000
1.01620000 1.02250044
Adjustment for inflation and population
Other adjustments (Note 5)
Total adjustments
Appropriations limit for fiscal year ended June 30, 2010
$ 89,302,615
x .02250044
2,009,348
2,009,348
$ 21.311.963
See accompanying independent accountants' report on agreed -upon procedures applied to
appropriations limit worksheet and accompanying notes.
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CITY OF PALM DESERT
(� NOTES TO APPROPRIATIONS LIMIT WORKSHEET NO.6
l� For the year ended June 30, 2010
1. PURPOSE OF LIMITED PROCEDURES REVIEW:
L J, Under Article XIIIB of the California Constitution (the Gann Spending Limitation Initiative),
California governmental agencies are restricted as to the amount of annual appropriations from
Dproceeds of taxes. Effective for years beginning on or after July 1, 1990, under Section 1.5 of
Article XIIIB, the annual calculation of the appropriations limit is subject to a limited procedures
review in connection with the annual audit.
2. METHOD OF CALCULATION:
Under Section 10.5 of Article XM, for fiscal years beginning on or after July 1, 1990, the
appropriations limit is required to be calculated based on the limit for the fiscal year 1986-87,
adjusted for the inflation and population factors discussed at Notes 3 and 4 below.
3. INFLATION FACTORS:
A California governmental agency may adjust its appropriations limit by either the annual
percentage change in the 4th quarter per capita personal income (which percentages are supplied by
the State Department of Finance), or the percentage change in the local assessment roll from the
preceding year due to the change of local nonresidential construction. The factor adopted by the
City of Palm Desert for the fiscal year 2009-2010 represents the annual percentage change for per
capita personal income.
4. POPULATION FACTORS:
QA California governmental agency may adjust its appropriations limit by either the annual
percentage change of the jurisdiction's own population, or the annual percentage change in
population in the County where the jurisdiction is located. 'The factor adopted by the City of Palm
Desert for fiscal year 2009-2010 represents the annual percentage change in population for the City
of Palm Desert.
5. OTHER ADJUSTMENTS:
A California government agency may be required to adjust its appropriations limit when certain
events occur, such as the transfer of responsibility for municipal services to, or from, another
government agency or private entity. The City of Palm Desert had no such adjustments for the year
ended June 30, 2010.
See accompanying independent accountants' report on agreed -upon procedures applied to
appropriations limit worksheet.
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