Audited Financial Results for the Fiscal Year Ended June 30, 2015 - - PowerPoint PPT Presentation

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Audited Financial Results for the Fiscal Year Ended June 30, 2015 - - PowerPoint PPT Presentation

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Audited Financial Results for the Fiscal Year Ended June 30, 2015 December 8, 2015 1 Cherry Bekaert Comments FY 2015 Audited Financial Statements Entity Wide Statements GASB 34 General Fund School Operating Fund Water

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Audited Financial Results for the Fiscal Year Ended June 30, 2015 December 8, 2015

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 Cherry Bekaert Comments

  • FY 2015 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, 2015

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Presentation to City Council The City of Virginia Beach, Virginia

December 8, 2015

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Engagement Summary

You have engaged us to provide the following:

  • Audit of the City's, School Board’s and Economic Development

Authority’s FY 2015 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

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Overall Audit Results

 Our opinion on the 2015 financial statements was unmodified or “clean” opinion  Testing of material balances and transactions  Internal controls assessed for planning purposes only  Comparability of financial statements to FY14:

 Implementation of New Standards  Reclassification of the Waste Management Fund

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Overall Audit Results

 Our opinions on compliance were unmodified or “clean” opinion  Internal control deficiencies over financial reporting and compliance

 None reported

 Compliance with grants, agreements, laws and regulations:

 One instance detailed in the Schedule of Findings and Questioned Costs

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Auditor’s Required Communications

Accounting Policies

  • Adoption of new accounting policies effective July 1, 2014
  • GASB Stmt No. 68 – Accounting and Financial Reporting for

Pensions – an amendment of GASB Stmt No. 27

  • GASB Statement No. 71 – Pension Transition for Contributions

Made Subsequent to Measurement Date – an amendment of GASB Stmt No. 68

  • Change in accounting policies
  • The application of existing policies was not changed during 2014

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Auditor’s Required Communications

Management Judgment and Accounting Estimates

  • Allowance for Doubtful Accounts and Taxes Receivable
  • Depreciation Expense
  • Actuarially-computed Liabilities

Disagreements with Management

  • There were no disagreements with management regarding

accounting or auditing issues

Consultation with Other Accountants

  • We are not aware of any

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Auditor’s Required Communications

Audit Adjustments and Uncorrected Misstatements

  • None

Difficulties Encountered in Performing the Audit

  • We encountered no difficulties in preforming the audit

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

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GASB statements effective for FY 2016:

 GASB Statement No. 72 – Fair Value Measurement and Application

  • Significantly changes fair value measurement and disclosures
  • Use valuation techniques that are appropriate in the circumstances and for

which sufficient data are available to measure fair value

  • Established a hierarchy for measurement of assets or liabilities

– Level 1 – Quoted prices in active markets – Level 2 – Direct or indirect observations other than quoted prices – Level 3 – Unobservable inputs

 GASB Statement No. 77 – Tax Abatement Disclosures

  • The new standard will require detailed disclosure related to taxes that

were abated during the year, including type of tax being abated, a description of abatements, amount of abatements, eligibility criteria, and provisions for recapturing abated taxes

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New Accounting and Reporting Changes

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GASB statements effective for FY 2017:

 GASB Statement No. 74 – Financial Reporting for Postemployment Benefit Plans Other Than Pension Plans

  • Covers reporting by OPEB plans that administer benefits on

behalf of governments

GASB statements effective for FY 2018:

 GASB Statement No. 75 – Accounting and Financial Reporting for Postemployment Benefits Other Than Pensions

  • Requires governments to report a liability on the face of the financial

statements for OPEB obligations

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New Accounting and Reporting Changes

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Contact Information

Krista Edoff Partner 757.228.7058 kedoff@cbh.com Laura Harden Manager 757.228.7065 lharden@cbh.com

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 Cherry Bekaert Comments

  • FY 2015 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, 2015

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CAFR Exhibit 1

City Schools CDC Total Assets 5,411.1 $ 650.1 $ 32.9 $ 6,094.1 $ Deferred Outflows of Resources 54.9 59.6 0.0 114.5 City Liabilities (1,604.9) (118.0) (16.6) (1,739.5) GASB68 Pension Liabilties (333.8) (634.8) 0.0 (968.6) Deferred Inflows of Resources (101.2) (117.7) 0.0 (218.9) Net Position: Net Investment in Capital Assets 3,011.1 501.2 10.9 3,523.2 Restricted 556.1 29.9 0.0 586.0 Unrestricted (141.1) (692.0) 5.4 (827.7) Total Net Position 3,426.1 $ (160.9) $ 16.3 $ 3,281.5 $

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Net Pension Liability

 Addition of Net Pension Liability due to GASB68

effective FY15

 City Net Pension Liability of $333.8M distributed

amongst the entity-wide and enterprise funds

 The Net Pension Liability reduces the Net Position

(equity) of these funds Waste Management Enterprise Fund

 Full accrual

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Fund Balance as a percent of FY 2016 Revenues is 9.3% * Reflects encumbrances of $10.5 million

CAFR Exhibit 5

% of BUDGET ACTUAL VARIANCE Budget LOCAL 849.5 $ 849.8 $ 0.3 $ 0.0% STATE 150.7 147.8 (2.9)

  • 1.9%

FEDERAL 19.1 19.4 0.3 1.6% TOTAL REVENUES 1,019.3 $ 1,017.0 $ (2.3) $

  • 0.2%

CITY 661.2 $ 626.5 $ 34.7 $ 5.2% SCHOOLS 410.9 398.6 12.3 1.6% TOTAL EXPENDITURES 1,072.1 $ 1,025.1 $ 47.0 $ 4.4% REVENUES OVER (UNDER) (52.8) $ (8.1) $ 44.7 $ FUND BALANCE - JULY 1 171.9 LESS: RESERVATIONS (66.8) * UNASSIGNED FUND BALANCE - JUNE 30 97.0 $

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159.3 143.5 143.8 145.4 149.3 150.7 156.1 140.7 144.1 143.4 145.9 147.8

$0 $25 $50 $75 $100 $125 $150 $175 FY 2010 FY 2011 FY 2012 FY 2013 FY 2014 FY 2015 Revenues $ Million Budget Actual

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Policy = 8-12% of Revenues

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$123.4 $103.4 $117.8 $92.7 $102.1 $113.0 $104.0 $102.4 $96.1 $97.0 12.8% 10.1% 11.0% 8.9% 10.1% 11.9% 10.7% 10.4% 9.5% 9.3% 0.0% 4.0% 8.0% 12.0% 16.0% $0 $50 $100 $150 $200 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 % of Budgeted GF Revenue Dollars (Millions)

Unassigned GF Balance % of Budgeted GF Revenue

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Budget Actual Variance REVENUES: City 390.2 $ 390.2 $

  • $

Local 2.7 3.5 0.8 School's Reserve & Other Funds 19.2 19.1 (0.1) State Share of Sales Tax 70.1 70.4 0.3 Commonwealth 252.6 250.2 (2.4) Federal Government 16.0 14.3 (1.7) Total Revenues 750.8 $ 747.7 $ (3.1) $ EXPENDITURES (756.8) $ (741.4) $ * 15.4 $ Total Reversion to City 12.3 $

* Reflects encumbrances of $9.3 million

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Budget Actual Diff Charges for Services 70.1 $ 75.7 $ 5.6 $ Sale of Water 45.9 45.3 (0.6) Other 4.3 7.2 2.9 Total Revenues 120.2 $ 128.2 $ 8.0 $ Water Services Contract 25.0 $ 23.8 $ 1.2 $ Operating Expenses 63.2 54.4 8.8 Debt Service 24.4 15.0 9.4 Transfers to CIP 13.8 13.8 0.0 Total Expenditures 126.4 $ 107.0 $ 19.4 $ Net Change in Position 21.3 $

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Budget Actual Diff Charges for Services 38.9 $ 39.1 $ 0.2 $ Other 0.5 0.9 0.4 Total Revenues 39.4 $ 40.0 $ 0.6 $ Operating Expenses 19.0 $ 17.5 $ 1.5 $ Debt Service 2.8 1.6 1.2 Transfers to CIP 9.5 9.5 0.0 Total Expenditures 31.3 $ 28.6 $ 2.7 $ Net Change in Position 11.4 $

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Budget Actual Diff Charges for Services 33.8 $ 34.6 $ 0.8 $ SPSA Rebate 8.0 8.0 0.0 Other 1.0 0.9 (0.1) Total Revenues 42.8 $ 43.5 $ 0.7 $ Program Support 1.1 $ 0.5 $ 0.6 $ Waste Disposal 18.9 18.2 0.7 Waste Collection 12.0 11.3 0.7 Yard Debris/Hazardous Waste 2.2 1.9 0.3 Recycling 5.0 4.7 0.3 Transfers to Water & Sewer 0.5 0.5 0.0 Transfers to General Fund 2.1 2.1 0.0 Total Expenditures 41.8 $ 39.2 $ 2.6 $ Net Change in Position 4.3 $

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Budget Actual Diff Hotel Room Tax 15.3 $ 15.8 $ 0.5 $ Restaurant Meal Tax 11.5 11.5 (0.0) Amusement Tax 5.8 5.9 0.1 Cigarette Tax 0.9 1.0 0.1 Other 1.5 1.3 (0.2) Total Revenues 35.0 $ 35.5 $ 0.5 $ Debt Service 24.2 $ 24.1 $ 0.1 $ SGA Special Events 3.3 3.1 0.2 Operating Expenses 2.4 2.2 0.2 Transfer to Sandbridge SSD 2.3 2.5 (0.2) Transfer to CIP 2.8 2.8 0.0 Transfer to General Fund 2.1 2.1 0.0 Total Expenditures 37.1 $ 36.8 $ 0.3 $ Net Change in Fund Balance (1.3) $

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General Government 54.1% Agriculture Reserve Program 3.2% Storm Water 3.6% Water and Sewer 14.8% Schools 24.3%

Total Debt ‐ $1.305B

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  • Fund Balance within Policy, lower than 2014
  • (9.3% FY15 vs 9.5% FY14)
  • Reservations for FY16 operating budget include:
  • SPSA - $5.2M
  • FY16 CIP Budget - $16.0M
  • School Reversion & Revenue Sharing - $12.9M
  • Actual revenues were 0.2% under budget
  • Actual expenditures were 4.4% under budget
  • Entity-wide statements represent the municipal

corporation

  • Pension liabilities total $968.6M, which includes

$333.8M for the City and $634.8M for the Schools

  • Next GASB75 – OPEB Liabilities

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 December Interim - 6 months

Jan 26, 2016

 FY17 Budget Proposal

Mar 22, 2016

 FY17 Budget Adoption

May 10, 2016