HomeMy WebLinkAbout(P4) 2020 Audit COPA Council PowerpointAudit Insights
Understanding Your Financial Reports
City of Port Arthur, Texas
Overview
•Audit Process
•Audit Results and Communications
•Financial Highlights
–Primary Government
–Governmental Funds
–Proprietary Funds
–General Fund
•Questions
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Audit Process
Audit Process
➢Audit Standards —Performed the audit in accordance with Generally
Accepted Auditing Standards (GAAS) and Generally Accepted Government
Auditing Standards (GAGAS)
➢Single Audit —Performed the single audit of federal awards in accordance
with the Uniform Administrative Requirements, Cost Principles, and Audit
Requirements for Federal Awards (Uniform Guidance). Performed state single
audit in accordance with Texas Uniform Grant Management Standards.
➢Compliance —Performed tests of the City’s compliance with certain
provisions of laws, regulations, contracts and grant agreements, including
items such as compliance with PFIA and procurement.
➢Basis of Accounting —Government-wide and proprietary statements are
reported on the economic resources measurement focus and the accrual
basis of accounting. The governmental fund financial statements are
reported on the current financial resources measurement focus and modified
accrual basis of accounting.
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Audit Process
➢Risk-based approach focused on specific risks, such as:
•Improper revenue recognition on exchange and non-exchange revenues
and receivables
•Management override of controls
•Unauthorized cash disbursements and payroll expenditures/expenses
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Audit Process
➢Obtain an understanding of key internal controls over significant
transaction cycles:
•Cash receipts and cash disbursements
•Financial reporting and closing
•Grant payments and compliance audits
•Payroll procedures
•Purchasing and procurement
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TRANSITION SLIDE TITLE
Audit Results and
Communications
Audit Results:
Financial Statements/Single Audit
➢Type of reports issued:Unmodified
Internal control over financial reporting/single audit:
➢Material weaknesses
identified?Yes
➢Significant deficiencies
that are not material
weaknesses?Yes
➢Noncompliance material
to financial statements/single
audit noted?Yes
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Audit Results:
Findings
Material Weakness 2020-001: Prior Period Adjustment
Finding relates to correction of useful lives of capital assets causing an $8.7M
increase in beginning accumulated depreciation. Once the corrections were
made, the useful lives of assets appear to be properly stated and finding is not
expected to recur.
Material Weakness 2020-002: Financial Statement Adjustments
Finding relates to material errors that were identified during the audit. The City
has plans to hire and train additional staff to ensure accuracy of accounting
information. Plan appears reasonable and should remedy issue going forward
and improve timeliness of financial reporting.
Noncompliance 2020-003: Procurement
During our testing we identified a long-term vendor of the City providing
services without a current contract. The City will implement processes to ensure
required vendors have valid contracts (i.e. renewals and extensions). The
vendor contract noted has been remediated.
Significant Deficiency 2020-004: Grant Reporting
During our single audit testing, it was identified that financial information for the
EDC grant was not being submitted timely or accurately. The City will make
improvements to its grant reporting process to remediate this finding.
*The City’s corrective action plan for these findings can be found in more detail
in the single audit report.9
➢All material corrected and
uncorrected audit adjustments have
been provided as attachments in our
separately issued governance letter.
➢No transactions were entered into by
the City during the year for which
there is a lack of authoritative
guidance or consensus
➢No disagreements with management
arose during the course of our audit
➢No independence issues noted
➢No consultations or request for a
second opinion from other
accountants
Auditor Communications
Governance
Letter
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Financial Highlights
Financial Highlights
Changes in Net Position
(in Thousands)
12
2020 2019 2020 2019
Total Revenues 97,640$ 95,488$ 40,734$ 35,759$
Total Expenses (88,979) (85,605) (39,590) (37,091)
Total Transfers 6,745 8,797 (6,745) (8,797)
Change in Net Position 15,406$ 18,680$ (5,601)$ (10,129)$
Governmental
Activities
Business-Type
Activities
Financial Highlights
Comparison of Revenues by Source-Governmental Funds
27%
16%
10%
9%
34%
4%
FY 2020 Revenues
Property Tax
$23,929,422
Sales and Use Taxes
$14,330,725
Franchise Taxes
$8,734,643
Intergovernmental
$8,326,360
Industrial District
Payments
$31,000,321
Other
$3,869,057
22%
14%
10%15%
34%
5%
FY 2019 Revenues
Property Tax
$19,859,790
Sales and Use Taxes
$12,711,677
Franchise Taxes
$9,271,760,
Intergovernmental
$13,384,392
Industrial District
Payments
$30,834,585
Other
$4,955,431
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Financial Highlights
Comparison of Expenditures -Governmental Funds
$0
$5,000,000
$10,000,000
$15,000,000
$20,000,000
$25,000,000
$30,000,000
$35,000,000
$40,000,000
2019
2020
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Financial Highlights
The City’s governmental fund reported in FY 2020 a combined ending fund balance of
$58.1 million as follows:
Nonspendable 1.6
Restricted 39.3
Unassigned 17.2
58.1
3%
67%
30%
Nonspendable
Restricted
Unassigned
The governmental fund balance increased approximately $5.3 million due to net transfers in of $3.5
million, insurance proceeds of $1.2 million, and issuance of bonds of $10.1 million.
Governmental Fund Balances
(in millions of dollars)
15
Financial Highlights
Comparison of Revenues by Source-Proprietary Funds
$26,849,587 , 74%
$8,476,038 , 23%
$1,035,353 , 3%
FY 2020 Revenues
Water and Sewer
Fund
Solid Waste Fund
Pleasure Island Fund
$26,114,117 , 74%
$7,924,847 , 23%$947,305 , 3%
FY 2019 Revenues
Water and Sewer
Fund
Solid Waste Fund
Pleasure Island Fund
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Financial Highlights
Comparison of Expenditures-Proprietary Funds
$0
$2,000,000
$4,000,000
$6,000,000
$8,000,000
$10,000,000
$12,000,000
$14,000,000
$16,000,000
2019
2020
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Financial Highlights
The City’s proprietary fund reported in FY 2020 a combined ending net position of
$145.7 million as follows:
Net Investment
in Capital Assets $ 164.9
Unrestricted (19.2)
$ 151.5
90%
-10%Net
Investment in
Capital Assets
Unrestricted
The proprietary net position decreased approximately $5.9 million due to transfers out of $8.8
million.
Proprietary Net Position
(in millions of dollars)
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Budgetary Highlights
General Fund Budget
19
Revenue Expenditures Net
Final Budget $66,302,461 $67,058,842 $(756,381)
Actual $68,933,714 $62,108,297 $6,825,417
Variance $2,631,253 $4,950,545 $7,581,798
At the end of the current fiscal year, the unassigned fund
balance in the general fund represented 187 days of the
total general fund expenditures, which is $20.1M in excess
of the City’s general fund balance policy requirement of
60 days plus $1.5M for extraordinary events.
Thank you!
We appreciate
the opportunity
to serve the
City of
Port Arthur,
Texas.