Finance Highlights 2010 0302 - Laserfiche WebLink

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is a lack of authoritative guidance or consensus. All significant transactions have been recognized in the financial statements in the proper period." Staff is pleased to report these positive comments to the Finance Committee. Difficulties Encountered in Performing the Audit: In this section the auditors report that there were no difficulties encountered in performing the audit. This section speaks to the planning of the audit and staff's response to auditor questions and requests. Staff is pleased to report no negative findings in this area. Corrected and Uncorrected Misstatements: In this section the auditors noted three transactions that required correction prior to the issuance of the year end financial statements. The auditors discussed these items with staff and staff agrees with the auditor's recommendations. Accordingly, the items are correctly reported in the CAFR for the year ended June 30, 2009. The items noted by the auditors are discussed below: Cost of issuance comment. The RDA issued Tax Allocation Bonds in 2008-09. Any costs of issuance must be amortized over the life of the bonds. As a practical matter this amortization is made at the end of the fiscal year. Staff is aware of this requirement, but had not made the adjustment prior to the preparation of the draft year end financial statements. The auditors noted this and staff will ensure that all adjustments are made prior to the preparation of the draft financial statements. CDBG overstatement of Loans Receivable and Deferred Revenue by $368,680. This was an arithmetic error in the preparation of the CAFR. Staff will perform additional review procedures in the future to address this possibility. RDA Low and /Moderate Housing understatement of Loans Receivable and Deferred Revenue by $496,041. This comment refers to a specific type of loan which is generally referred to as a "forgivable" loan. More specifically, if the borrower complies with certain conditions, then the note will be forgiven. While the City maintains detailed records of all such loans, they were not reported at the CAFR level, in accordance with prior guidance. In reviewing the issue this year, the auditors were of the opinion that the loans and accompanying deferred revenue should be reported in the year end financial statements. Staff is in agreement and will report such loans and deferred revenue in the City's annual CAFR. Disagreements with Management: The auditor's indicated that they were pleased to note that no disagreements (defined as a financial accounting, reporting or auditing matter) arose during the course of the audit. Staff concurs. Management Representations: The auditors noted that they had requested and obtained certain representations from management, (as required by auditing standards). Management Consultation with Other Independent Accountants: The auditors confirmed that the City did not attempt to obtain a "second opinion" on any financial reporting issues. This standard addresses an important concern which is generally referred to as "opinion shopping" While rarely, if ever, seen among governmental units, it is an important part of the annual audit.