FY 2000 Financial Rep Parking eCITY OF DUBUQUE, IOWA
MEMORANDUM
January 11, 2001
TO:
FROM:
SUBJECT:
The Honorable Mayor and City Council Members
Michael C. Van Milligen, City Manager
Submission of Fiscal Year 2000 Comprehensive Annual Financial Report
(CAFR), Parking Facilities Financial Statements, Management Letter and
Responses to Management Letter
Finance Director Ken TeKippe is transmitting the Fiscal Year 2000 Comprehensive Financial
Report (CAFR), Parking Facilities Financial Statements, Management Letter and City Responses
to the Management Letter.
Mic aeC/91 C."'/VJ an Milliken ~
MCVM/jh
Attachment
cc: Barry Lindahl, Corporation Counsel
Tim Moerman, Assistant City Manager
Kenneth J. TeKippe, Finance Director
CITY OF DUBUQUE, IOWA
MEMORANDUM
TO:
FROM:
SUBJECT:
DATE:
Michael Van Milligen, City Manager
Submission of Fiscal Year 2000 Comprehensive Annual Financial Report (CAFR),
Parking Facilities Financial Statements, Management Letter and Responses to
Management Letter
January 10, 2001
INTRODUCTION
The purpose of this memorandum is to submit the Fiscal Year 2000 CAFR and Parking Facilities
Financial Statements audited by Eide Bailly, LLP, and to enclose the Auditor's Management
Letter along with the City Finance staff's response. The City's independent auditor found no
instances of non-compliance with all applicable laws, regulations, contracts, and grants; and found
the general-purpose financial statements free of material misstatement. The auditor's report also
notes that there are no material weaknesses in the City's internal control structure.
BACKGROUND
The City of Dubuque is required to have an annual audit in accordance with generally accepted
auditing standards, Chapter 11 of the Code of Iowa, Government Auditing Standards and Office
of Management and Budget (OMB) Circular A- 133.
This Comprehensive Annual Financial Report is in conformance with the standards set by OMB
Circular A-133. This federal regulation mandates audit standards for federal programs.
The financial reports for governmental funds were prepared on the modified accrual basis of
accounting, under which revenues are recorded when they are measurable and available and
expenditures (other than interest on long-term debt) are recorded when the liability is incurred.
Financial reports for enterprise activities (Sewage Disposal Works, Water Utility, Parking
Facilities, Refuse Collection, Transit System) were prepared on a full accrual basis.
Separate financial statements are required for Parking Facilities and Dubuque Metropolitan Area
Solid Waste Agency and have been received. The financial information for these entities is
included in the City of Dubuque Comprehensive Annual Financial Report.
AUDITOR'S MANAGEMENT LETTER
As part of the annual audit, the Auditor provides comments in a management letter for improving
the financial management system of the City. The Auditor's comments are attached as well as
Finance Department responses.
ACTION STEP
It is recommended that the City Council receives and flies the Fiscal Year 2000 reports identified
above and receives and files this communication and related enclosures.
Should any Council Member desire a copy of the financial statements for the Dubuque
Metropolitan Area Solid Waste Agency, they are available in the Finance Department.
KYr/gmm
Enclosures
City of Dubuque FY 00 CAFR
Parking Facilities Financial Statements
Auditor Management Letter
Responses to Comments in Management Letter
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EideBaillyLLP
Consultants · Certified Public Accountants
To the Honorable Mayor and
Members of the City Council
City of Dubuque, Iowa
We have audited the fmanciaI statements of the City of Dubuque, Iowa, as of June 30, 2000, and have
issued our report thereon dated December 4, 2000.
Our professional standards require that we communicate with you concerrfmg matters that may be of
interest to you in fulfilling your obligation to oversee the financial reporting and disclosure process for
which the management of the City is responsible. We have prepared the following comments to assist the
Mayor, City Council, and management in fulfilling that obligation.
Our Responsibility Under Generally Accepted Auditing Standards and OMB Circular A-133
We conducted our audit of the City's 2000 financial statements in accordance with generally accepted
auditing standards; Chapter 11 of the Code of Iowa; and the standards applicable to financial audits
contained in Government Auditing Standards, issued by the Comptroller General of the United States.
Those standards and provisions reqtCnce that we plan and perform the audit to obtain reasonable, rather
than absolute, assurance about whether the financial statements are free of mater/al misstatement. Those
standards and provisions also require that we obtain an understanding of the City's internal control
sufficient to enable us to properly plan our audit. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit also includes assessing the
accounting principles used and the significant estimates made by management, as well as evaluating the
overall financial statement presentation.
Our audit does not provide absolute assurance or guarantee the accuracy of the financial statements and is
subject to the inherent risk that errors, fraud or illegal acts, if they exist, have not been detected.
In plann/ng and perfornfmg our audit, we considered the City's internal control over financial reporting in
order to determine our auditing procedures for the purpose of expressing our opinion on the financial
statements and not to provide assurance on the internal control over financial reporting. We also
considered internal control over compliance with requirements that could have a direct and material effect
on a major federal program in order to determ/ne our auditing procedures for the purpose of expressing
our opinion on compliance and to test and report on internal control over compliance in accordance with
OMB Circular A-133.
As part of obtaining reasonable assurance about whether the City's financial statements are free of
material misstatement, we performed tests of its compliance with certain provisions of laws, regulations,
contracts and grants, noncompliance with which could have a cFtrect and material effect on the
determination of financial statement amounts. However, provicFmg an opinion on compliance with those
provisions was not an objective of our audit. Also, in accordance with OMB Circular A-133, we
examined, on a test basis, evidence about the City's compliance with the types of compliance
requirements described in the ~S. Office of Management and Budget (OMB) Circular A-133 Compliance
Supplement applicable to each of its major federal programs for the purpose of expressing an opinion on
the City's compliance with those reqttirements. While our audit provides a reasonable basis for our
opinion, it does not provide a legal determination on the City's compliance with those requirements.
3999 Pert~yIvania Ave. · Suite i00 · Dubuque, Iowa52002-2639 · 319.556.1790 · Fax 319.557.7842
Offices in Ar/zona, liowa, Minnesota, Montana, Notch Dakota and South Dakota · Equal Opportanity Employer
To the Honorable Mayor and
Members of the City Council
Page 2
Significant Accounting Policies
The City's significant accounting policies are disclosed m the notes to the financial statemants. ~here
were no changes to the sigth~cant accounting policies during the year.
Significant Audit Adjustments
We discussed all adjusimants to the financial statements with the City's staff during the audit. There w~re
no significant audit adjustments made to the financial statements.
Disagreements with Management
We had no disagreements with management regarding the application of accounting principles, the basis
for management's judgments about accounting estimates, the scope of the audit, the disclosures to be
included in the financial statements or the wording of our report in the 2000 financial statements.
Difficulties Encountered in Performing the Audit
We experienced no difficulties in dealing with management relating to the performance of our audit. We
received excellent cooperation of management and staff. We believe that we had cVrrect and unrestricted
access to the City's management.
Other Comments
We have included additional comments regarcrmg the financial statements and operations. These
commants are not a result of m-depth study of any specific areas but are based on observations made
during the course of our audit.
We would like to take this opportunity to express our appreciation to your staff for the cooperation that
we received during the course of our audit. If you have any questions concerning the matters presented
herein, or wish to discuss any other aspect of the audit, we will be pleased to meet with you at your
convanience.
Tiffs report, a public record by law, is mtanded solely for the information and use of the officials,
employees, and citizcms of the City of Dubuque, Iowa, and other parties to whom the City of Dubuque,
Iowa, may report. This report is not intcnaded to be and should not be used by anyone other than these
specified parties.
December 4, 2000
Dubuque, Iowa
CITY OF DUBUQUE, IOWA
YEAR ENDED JUNE 30, 2000
OTHER COMMENTS
Conversion of Accounting Records
7he City maintains its accounting records using the cash basis of accounting. However, in order to
comply with generally accepted accounting principles, the comprehensive annual financial report (CAFR)
must be prepared using the modified accrual/accrual basis of accounting. Eide Bailly LLP currently makes
all adjustments at year-end which are necessary to convert the City's cash-basis amounts to the amounts
used in the CAFR.
At this time, the City is only doing the workpapers needed to convert the accounting records to the
modified accrual/accrual basis at year-end. Eide Bailly LLP must still make the journal entries and prepare
the financial statements. Although it may require increased Staffing levels, we encourage the Finance
Department to continue in their advancement of converting to the modified accrual/accrual basis and
preparation of the fmanciaI statements required in the CAFR.
Policies and Procedures
We noted that the City has begun to develop a written manual of accounting policies and procedures but
that the manual is not complete at this time. Such a manual helps to define the roles and duties of
employees and ensures that policies and procedures are consistently applied. The City should continue to
develop the manual of accounting polices and procedures and complete it as soon as possible.
Five Flags Cash Account
The City has two checking accounts for the Five Flags Civic Center; one for the box office and one for
concessions. Five Flags personnel prepare a monthly financial statement for the Civic Center and in the
following month remit a check to the City for the City's share of the previous month's revenue generated
by the Civic Center. The City should record the revenue from Five Flags in the same period as it is
received at the Civic Center since this money is both measurable and available rather than in the
following month as is currently done. This will ensure that this revenue is recorded in the proper
accounting period.
Federal Awards
The City receives many federal awards each year. Some of these award programs are ongoing from year
to year, such as the CDBG Entitlement Program. There are other federal programs that last from one to
three years.
For all federal programs, 'there are federal requirements that must be adhered to in order to be in
compliance with federal laws and regulations.
Prese2tly, the City of Dubuque has a part-time person in the Finance Department giving limited
accounting assistance to some of the departments with fedaral programs.
We recommend that the City expand this position to offer compliance assistance, in addition to
accounting assistance, to all departments that receive federal grants. This position would assist the City in
staying in compliance with federal laws and regulations and would eliminate much unnecessary time
being spent in various City departments trying to detm-mine which compliance elements apply to their
particular grant.
CITY OF DUBUQUE, IOWA
YEAR ENDED JUNE 30, 2000
OTHER COMMENTS
Outstanding Checks
In reviewing bank reconciliations, we noted numerous old outstanding checks on both the general account
and the payroll account. These items should be investigated, and the old checks written off if appropriate.
.GASB 34
The Governmental Accounting Standards Board has issued Statement 34, Basic Financial Statements -
and Management's Discussion and Analysis -for State and Local Governments. Tiffs statement presents
the most sweeping changes ever in financial reporting for local governments. When implemented it will
create new information and will restructure much of the information that governments have presented in
the past. The following are some of the major changes req~frred by the statement:
Management's discussion and analysis of the financial statements will be reqtfired supplementary
information.
The basic financial statements will now include additional entity-wide financial statements
prepared on the accrual basis.
The fund level statements will present "major funds" rather than having totals for each individual
fund type. Since the fired level statements for governmental funds will continue to be presented
on the modified accrual basis, a reconciliation to the entity-wide statements must be presented.
Fixed assets and long-term debt, wl'fich had previously been reported in account groups separate
from the funds, will now be reported within the funds in the entity-wide statements, and
depreciation must be recorded on the fixed assets. Also, the fixed assets are to include
infrastructure assets determined on a retroactive as well as prospective basis. Infrastructure assets
must also be depreciated unless you choose to adopt the allowable modified approach described
in the statement.
Budget to actual comparisofis will now be required supplemental information and must include
information on the original adopted budget as well as the final adopted budget.
There are many more changes that will be required to your financial reporting in order to comply with all
of the provisions of Statc~ment 34. We recommend that you familiarize yourselves with the statement and
begin planning for the many changes that will be needed. The requirements of the statement are effective
in three phases based on a government's total revenues (excluding extraordinary items) for the year ended
June 30, 1999. Based on this information, we beheve the City of Dubuque is required to adopt the
statement for the fiscal year ending June 30, 2003.
CITY OF DUBUQUE, IOWA
MEMORANDUM
TO:
FROM:
SUBJECT:
DATE:
Michael Van Milligen, City Manager
Kenneth J. TeKippe, Finance Director
Audit Management Letter-Year Ended June 30, 2000
January 10, 2001
INTRODUCTION
Responses to the "other comments" section of the December 4, 2000 m~agement letter issued
by Eide Bailly LLP subsequent to completion of the FY 00 audit of the City are hereby submitted.
BACKGROUND
A separate section in the Comprehensive Annual Financial Report (CAFR) for FY 00 details
specific findings and recommendations as well as City responses. Pages 99-103 of the report
provide this information. In addition to the comments in the report, a management letter dated
December 4, 2000 was issued which includes more general comments relative to improving the
City's overall accounting and control systems.
DISCUSSION
Finance Department responses to the other comments follow:
Conversion of Accounting Records- As noted in the management letter, City staffprepared all
workpapers to convert records to the modified accrual/accrual basis. City staffwill continue to
work towards converting records from cash to GAAP at year end. Increasing hours for
professional accounting staffwill be beneficial to addressing this issue.
Policies and Procedures - Selected policies and procedures, such as travel reimbursement, fixed
asset accounting, and purchasing are documented by Citywide administrative policies. The
Finance Department will prepare a manual of accounting polices and procedures to help define
roles and duties of employees. This manual will be beneficial in cross training employees and
training new employees.
Five Flags Cash Account - Adjustments w'dl be made in revenue recording to assure that revenue
is recorded in the accounting period in which it is earned.
Federal Awards - The City Finance Department has expanded consolidated record keeping for
federal and state grants. The number of grants and departments involved in grant projects has
grown considerably over the past few years, with the number of individual grants doubling. We
will review the need to expand the grant account'mg function to include compliance elements
other than financial.
Outstanding Checks - All old outstanding checks are being investigated and will continue to be
reviewed on a regular basis. Payees on old checks are being contacted. Checks will be reissued,
voided, or cashed as appropriate.
GASB 34 - Finance Department management has begun the process of preparing for
implementing GASB 34. The FY 02 budget includes the ut'flization ora consulfmg firm to assist
with the project. The implementation will be a major project for the Finance Department and will
require the assistance of other city departments.
KJT/gmm
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