Audited Financial Results for the Fiscal Year Ended June 30, December 9, 2014

Transcription

1 Audited Financial Results for the Fiscal Year Ended June 30, 2014 December 9,

2 Cherry Bekaert Comments FY 2014 Audited Financial Statements Entity Wide Statements GASB 34 General Fund School Operating Fund Water & Sewer Fund Storm Water Fund Waste Management Fund TIP Fund Debt June 30, 2014 Fiscal Year 2015 Through November 30,

3 Presentation to City Council The City of Virginia Beach, Virginia December 9, 2014

4 Table of Contents Engagement Summary Overall Audit Results Auditor s Required Communications with Those Charged with Governance Significant Future Accounting and Reporting Changes 4

5 Engagement Summary You have engaged us to provide the following: Audit of the City's, School Board s and Economic Development Authority s FY 2014 financial statements Audit of the City s major federal programs required by OMB Circular A-133 Audit of the City s compliance with the laws, regulations, grants and other agreements, including the City s compliance with the Auditor of Public Accounts Specifications for Audits of Counties, Cities and Towns 5

6 Overall Audit Results Our opinion on the 2014 financial statements was unmodified or clean opinion Internal control deficiencies over financial reporting None reported Internal control deficiencies and compliance with major federal programs: One instance of noncompliance and related internal control deficiency related to major federal programs identified in our testing of Medicaid Eligibility Compliance with non-federal grants, agreements, laws and regulations: No instances of noncompliance noted in our testing 6

7 Auditor s Required Communications Accounting Policies Adoption of new accounting policies No significant new accounting policies adopted during 2014 Change in accounting policies The application of existing policies was not changed during 2014 Management Judgment and Accounting Estimates Allowance for Doubtful Accounts and Taxes Receivable Depreciation Expense Pension Liability Other Postemployment Benefits Liability Self-Insurance Claims Liability Landfill Liability 7

8 Auditor s Required Communications Audit Adjustments and Uncorrected Misstatements Audit Adjustments: None Uncorrected Misstatements: None Disagreements with Management There were no disagreements with management regarding accounting or auditing issues 8

9 Auditor s Required Communications Difficulties Encountered in Performing the Audit We encountered no difficulties in preforming the audit Consultation with Other Accountants We are not aware of any Material Client Communications Representation letter Independence We are not aware of any relationship that we believe, based on current authoritative guidance, would impair our independence 9

10 Future Accounting and Reporting Changes GASB statement effective for 2015: GASB Statement No. 68 Accounting and Financial Reporting for Pensions (amendment of GASB 27) Significantly changes pension accounting for accrual basis financial statements Requires recording of the Net Pension Liability for the first time on the Statement of Net Position Calculated using the Entry Age actuarial cost method and fair value, not actuarial value, of investments 10

11 Future Accounting and Reporting Changes GASB Exposure Drafts: Financial Reporting for Postemployment Benefit Plans Other Than Pension Plans Significantly changes OPEB accounting for accrual basis financial statements Requires recording of the Net OPEB Liability for the first time on the Statement of Net Position Anticipated effective for

12 Contact Information Krista Edoff Partner Robert Bielat Senior Consultant Laura Harden Manager Jessica English Manager

13 Cherry Bekaert Comments FY 2014 Audited Financial Statements Entity Wide Statements GASB 34 General Fund School Operating Fund Water & Sewer Fund Storm Water Fund Waste Management Fund TIP Fund Debt June 30, 2014 Fiscal Year 2015 Through November 30,

14 City Schools CDC Total Assets $ 5,286.2 $ $ 33.5 $ 5,966.5 Deferred Outflows of Resources Liabilities (1,570.1) (114.7) (16.9) (1,701.7) Deferred Inflows of Resources (8.3) (8.3) Net Position: Net Investment in Capital Assets 2, ,493.8 Restricted Unrestricted Total Net Position $ 3,709.1 $ $ 16.6 $ 4,257.8 CAFR Exhibit 1 14

15 City Schools CDC Total Assets $ 5,286.2 $ $ 33.5 $ 5,966.5 Deferred Outflows of Resources City Liabilities (1,570.1) (114.7) (16.9) (1,701.7) GASB68 Pension Liabilties (498.3) (761.9) 0.0 (1,260.2) Deferred Inflows of Resources (8.3) (8.3) Net Position: Net Investment in Capital Assets 2, ,493.8 Restricted Unrestricted (330.0) (760.6) 5.7 (1,084.9) Total Net Position $ 3,210.8 $ (229.8) $ 16.6 $ 2,

16 % of BUDGET ACTUAL VARIANCE Budget LOCAL $ $ $ (10.3) -1.3% STATE (3.4) -2.3% FEDERAL % TOTAL REVENUES $ $ $ (12.8) -1.3% CITY $ $ $ % SCHOOLS % TOTAL EXPENDITURES $ 1,039.7 $ 1,003.4 * $ % REVENUES OVER (UNDER) $ (49.6) $ (26.1) $ 23.5 FUND BALANCE - JULY LESS: RESERVATIONS (66.7) UNASSIGNED FUND BALANCE - JUNE 30 $ 96.1 Fund Balance as a percent of FY 2015 Revenues is 9.5% * Reflects encumbrances of $9.1 million CAFR Exhibit 5 16

17 $175 $ $125 Revenues $ Million $100 $75 $50 $25 $0 FY 2008 FY 2009 FY 2010 FY 2011 FY 2012 FY 2013 FY 2014 Budget Actual 17

18 $ % 12.8% Dollars (Millions) $150 $100 $ % $96.6 $ % $ % $ % $ % $ % $ % 10.4% $104.0 $ % $ % 8.0% 4.0% % of Budgeted GF Revenue $ % Unassigned GF Balance % of Budgeted GF Revenue Policy = 8-12% of Revenues 18

19 Budget Actual Variance REVENUES: City $ $ $ - Local School's Reserve & Other Funds (0.1) Commonwealth (0.2) Federal Government (4.3) Total Revenues $ $ $ (3.9) EXPENDITURES $ (735.5) $ (716.1) * $ 19.4 Total Reversion to City $ 15.5 * Reflects encumbrances of $6.0 million 19

20 Budget Actual Diff Charges for Services $ 65.6 $ 68.2 $ 2.6 Sale of Water (0.6) Other Total Revenues $ $ $ 9.7 Water Services Contract $ 27.0 $ 23.2 $ 3.8 Operating Expenses Debt Service Transfers to CIP Total Expenditures $ $ $ 20.0 Net Change in Position $

21 Budget Actual Diff Charges for Services $ 37.0 $ 37.0 $ 0.0 Other (0.0) Total Revenues $ 37.4 $ 37.4 $ 0.0 Operating Expenses $ 19.6 $ 15.3 $ 4.3 Debt Service Transfers to CIP Total Expenditures $ 35.9 $ 31.6 $ 4.3 Net Change in Position $

22 Budget Actual Diff Charges for Services $ 34.3 $ 31.2 $ (3.1) SPSA Rebate (0.2) Other Total Revenues $ 42.4 $ 39.1 $ (3.3) Program Support $ 1.2 $ 1.1 $ 0.1 Waste Disposal Waste Collection Yard Debris/Hazardous Waste Recycling Transfers to Water & Sewer Transfers to General Fund Total Expenditures $ 42.9 $ 41.0 $ 1.9 Net Change in Fund Balance $ (1.9) 22

23 Budget Actual Diff Hotel Room Tax $ 15.5 $ 15.1 $ (0.4) Restaurant Meal Tax (0.3) Amusement Tax Cigarette Tax (0.1) Other (0.0) Total Revenues $ 35.0 $ 34.3 $ (0.7) Debt Service $ 25.0 $ 25.0 $ 0.0 SGA Special Events Operating Expenses Transfer to Sandbridge SSD (0.2) Transfer to General Fund Total Expenditures $ 35.1 $ 35.0 $ 0.1 Net Change in Fund Balance $ (0.7) 23

24 General Government 53.58% Total Debt $1.287B Agriculture Reserve Program 3.22% Storm Water 1.90% Water and Sewer 15.69% Schools 25.61% 24

25 Fund Balance within Policy, lower than 2013 (9.5% FY14 vs 10.4% FY13) Reservations for FY15 operating budget include: Schools - $2.0M Risk Management - $1.0M FY15 CIP Budget - $25.0M School Reversion - $12.2M Departments continue to manage their budgets Reductions in personnel have operating impacts Actual revenues were 1.3% under budget 25

26 FY2015 Through November 26

27 Annual YTD Budget Actual Variance Revenues Local (83.3% of budget) $ $ $ (562.4) State (14.8% of budget) (114.5) Federal ( 1.9% of budget) (12.1) Total Revenues $ 1,011.3 $ $ (689.0) Expenditures City Operations $ $ $ School Operations Total Expenditures $ 1,049.2 $ $ Less Amounts Funded from Fund Balance Encumbrances/Carryforwards at 6/30/14 $ 9.9 City and School Capital Projects 25.0 School's Operating Budget 2.0 Risk Management 1.0 Adjusted Expenditures $ 1,

28 100% ACTUAL REVENUES = $322.3M 91.5% 100.0% Percent of Total Expenditures 80% 60% 40% 20% 0% ACTUAL EXPENDITURES = $466.3M 83.5% 8.8% 75.8% 75.9% 68.6% 60.7% 53.0% 58.3% 55.2% 44.5% 45.0% 49.1% 37.1% 44.4% 31.9% 41.8% 37.3% 27.5% 31.3% 19.4% 28.4% 11.3% 20.4% 14.3% 12.4% 10.4% 14.3% 1.3% 3.8% 1.7% 4.2% Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Rev Trend % of FY15 Rev Budget Expenditure Trend % of FY15 Exp Budget 28

29 December Interim - 6 months Jan 27, 2015 FY16 Budget Proposal Mar 24, 2015 FY16 Budget Adoption May 12,