CITY COMMISSION AGENDA ITEM

Department:	Finance		Commission Meeting Date:  6/6/2017
Staff Contact:	Bryan Kidney
Recommendations/Options/Action Requested:
Accept City’s 2016 Comprehensive Annual Financial Report (CAFR) from Mize, Houser & Company, P.A.
Executive Summary:		Background-What is a CAFR The Comprehensive Annual Financial Report (CAFR) comprises the City of Lawrence’s financial statements and reports the financial activities and related balances at the end of the fiscal year. The CAFR includes: 1. The Introductory Section that includes a transmittal letter from the Finance Department as well as basic background information about the City as a whole. 2. The Financial Section with the Independent Auditor’s Report, Management’s Discussion and Analysis (MDA) and audited financial statements. 3. The Statistical and Financial Trend Section. 4. The Single Audit Section that includes the auditor’s review of information relating to federal financial assistance. The CAFR complies with the accounting requirements set forth by the Governmental Accounting Standards Board. Why the CAFR is Important The CAFR is an integral part in communicating to our stakeholders the financial picture of the City of Lawrence. These stakeholders (bond holders, bond rating services, the city governing body, etc.) can use the CAFR to observe past trends and as an aid in future decision making. In addition, the CAFR provides the citizens of Lawrence important information about the financial position of the city in which they live. Overall, the CAFR aids in the mission of the city to provide excellent city services and to enhance the quality of life for the Lawrence community. It presents a picture of the growing and thriving community that is Lawrence. Financials & Management’s Discussion and Analysis (MDA) The financial statements were audited by Mize Houser & Company P.A. who returned an unmodified opinion (good opinion) that the financial statements are accurate and represent the respective financial position of the City’s governmental activities. The financials section of the CAFR includes various financial statements and corresponding notes as well as the Management’s Discussion and Analysis (MDA) section. For 2016, you may have noticed there is a restatement of beginning fund balance in the general fund. Per the discussion in the MDA, starting in 2016 the City changed its policy on recognizing sales tax receivables. This resulted in a one time increase to the fund balance. In addition, you may also notice all major enterprise funds had an increase in net position in 2016. This is outlined on page 8 of the MDA.  In general, the MDA provides a better understanding of city management’s representation of the financial status of the City. Statistical/Financial Trends To aid in future decision making and long term planning, the statistical section includes tables and charts presenting various financial, economic, social and demographic data about the City of Lawrence over the last ten years. You may notice Lawrence has seen a steady increase in sales tax revenue as well as a steady decrease in the unemployment rate. Consequently, the ability for the City to use sales tax to fund capital improvement projects is high. In addition, the ability to issue long term debt is important for the City to maintain existing infrastructure. For the past ten years, the City has been well within established debt guidelines with outstanding general obligation debt comprising less than 45% of the mandated threshold and is currently below 30% of that threshold. This demonstrates fiscal prudence as well as a significant community investment. The City has received the Certificate of Achievement for Excellence in Financial Reporting from the Government Finance Officers Association (GFOA) for the past 25 years. This achievement is given to governmental entities in recognition of reports that evidence the spirit of transparency and full disclosure. We are confident that the CAFR presented to you will also receive the GFOA award. In the course of the audit the auditors found areas for improvement and communicated these in a management recommendation letter. Staff agrees with the auditors’ recommendations. Printed copies will be available at the meeting.
Strategic Plan Critical Success Factor		Effective Governance/Professional Administration Sound Fiscal Stewardship
Fiscal Impact (Amount/Source):		N/A
Attachments:		2016 Comprehensive Annual Financial Report 2016 Management recommendation letter

Reviewed By: (for CMO use only)

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