HomeMy WebLinkAboutFY 2016-17 CAFR Presentation 03-26-18Town of Westlake
Council Meeting
March 26, 2018
Overview
•Introduction
•Audit Process
•Required Communications
•Audit Results
•Financial Highlights
•New Accounting Pronouncements
•Questions
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Introductions
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The Firm of Texas
Weaver is the largest independent accounting firm
based in Texas and the Southwest. We’ve served Texas
public sector entities for 66 years.
REGIONAL AND NATIONAL RANKINGS
Largest Firm based in the Southwest Region of the U.S. | Accounting Today (2016)
#4 National Leaders in Tax (firms under $100M)| Accounting Today (2016)
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#9 Largest Houston-Area Accounting Firms: Global Revenue | Houston Business Journal (2017)
#10 Largest North Texas Accounting Firms | Dallas Business Journal (2017)
#4 Largest Tarrant County Accounting Firms | Fort Worth Business Press (2016)
#10 Largest San Antonio Accounting Firms | San Antonio Business Journal (2017)
Best and Brightest Companies to Work For®| Dallas/Fort Worth (2016) and Houston (2015)
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Engagement Leadership
John DeBurro
Partner, Assurance
Services
Jerry Gaither
Partner, Assurance
Services
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Engagement Team
Town of Westlake
Ben Cohen
Manager
Jacqueline Diaz
Senior Associate I
Tom Winson, CPA
Advisory Services -ACL Data Specialist
Consulting
John DeBurro, CPA
Partner
Audit
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Audit Process
Engagement Timeline
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Initial Audit
Planning
Interim Fieldwork
Aug 21 –Aug 25
Final Fieldwork
Jan 22 –Feb 9
Release Audit
Opinion
March 23
Council Meeting
March 26
Discuss
Developments/
Issues
Continuous
Communication
Audit Process
•The audit was performed in accordance with
Generally Accepted Auditing Standards
(GAAS) and Generally Accepted Government
Auditing Standards (GAGAS)
•The audit process was a risk-based approach
in which we identified potential areas of risk
that could lead to material misstatement of
the financial statements. We tailored our audit
programs and resources to specifically
address the following areas of risk:
•Revenue recognition and related
receivables
•Capital projects, purchasing and
compliance with bidding procedures
•Payables, accrued liabilities, and
expenditures
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Audit Process
•Walkthrough of accounting controls over significant
transaction cycles:
•Purchasing and Accounts Payable
•Payroll
•Cash Receipts –taxes, municipal court, utility billing
•Capital Projects
•Budget
•Test of internal controls:
•Cash disbursements
•Payroll
•Test of compliance
•Public Funds Investment Act
•Bidding procedures
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Interim fieldwork and risk assessment were performed
in August 2017. Procedures included:
Audit Process
•Testing of significant account balances using a combination
of vouching of material transactions, sampling transactions
and applying analytical procedures.
•Assisting with the preparation of the financial statements.
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Final fieldwork-performed in January 2018
Procedures included:
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Auditor Communications
for the year ended September 30. 2017
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Required Communications to
Those in Charge of Governance
Communication Results
Auditor’s responsibility under
generally accepted auditing
standards (GAAS)
The financial statements are the responsibility
of the Town. Our audit was designed in
accordance with GAAS in the U.S. and
provide for reasonable rather than absolute
assurance that the financial statements are
free of material misstatement. Our
responsibility is to express an opinion about
whether the financial statements prepared
by management with your oversight are fairly
presented , in all material respects, in
conformity with U.S. generally accepted
accounting principles. Our audit of the
financial statements does not relieve you or
management of your responsibilities.
The audit of the fiscal year 2017 financial
statements has been completed and we
have issued an unmodified opinion.
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Required Communications to
Those in Charge of Governance
Communication Results
Auditor’s Responsibility under
Government Auditing
Standards
In addition to the GAAS responsibilities, we
are required to issue a written report on our
consideration of internal controls and identify
significant deficiencies, including material
weaknesses, if any. Our report does not
provide assurance on internal controls. We
design our audit to provide reasonable
assurance of detecting material
misstatements resulting from noncompliance
with provisions of contracts or grant
agreements that have a direct or material
effect on the financial statements. We have
issued a written report on the results of these
procedures; however, our report does not
express an opinion on compliance.
No findings noted.
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Required Communications to
Those in Charge of Governance
Communication Results
Unusual transactions and
the adoption of new
accounting principles
The significant accounting policies used by the Town
are described in Note 1 to the basic financial
statements.
New GASB pronouncements implemented in 2017
include GASB Statement No. 77,“Tax Abatement
Disclosures” which requires certain information to be
disclosed related to tax abatements.
We noted no transactions entered into by the Town
during the year for which there is a lack of
authoritative guidance or consensus.
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Required Communications to
Those in Charge of Governance
Communication Results
Fraud and illegal acts No fraud, irregularities, or illegal acts were
noted.
Material weakness in internal
control
No material weaknesses noted.
Other information contained in
documents containing audited
financial statements
We performed limited procedures on the
Management’s Discussion and Analysis
(MD&A) and Required Supplementary
Information (RSI). We did not provide any
assurance on this information.
Management judgments and
accounting estimates
Management’s estimates of state foundation
revenue, uncollectible receivables, net
pension liability, and useful lives of capital
assets were evaluated and determined to be
reasonable in relation to the financial
statements as a whole.
Management representations We requested certain representations from
management that were included in the
management representation letter.
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Required Communications to
Those in Charge of Governance
Communication Results
Difficulties encountered No significant difficulties were encountered during
our audit.
Management consultations We are not aware of management consulting with
other accountants for a second opinion.
Auditor independence No independence issues noted.
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Required Communications to
Those in Charge of Governance
Communication Results
Audit adjustments Professional standards require us to accumulate
all known and likely misstatements identified
during the audit, other than those that are trivial,
and communicate them to the appropriate level
of management.
During the current year, there were no material
adjustments posted as a result of our audit
procedures. There was one adjustment that
management deemed immaterial and,
therefore, has not been reflected in the Town’s
financial statements. The adjustment reduces
prepaid items and increases debt service
expenditures in the Westlake Academy Fund for
a $162,005 lease payment made in advance of
its due date.
Other material written
communications between
Weaver and Tidwell, L.L.P.,
and the Town
Nothing to note.
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Auditor Results
Auditor Results
•We have issued the Independent Auditor’s Report on the financial
statements
–Unmodified opinion
•We have issued the Independent Auditor’s Report on Internal
Control over Financial Reporting and on Compliance and Other
Matters Based on an Audit of Financial Statements Performed in
Accordance with Government Auditing Standards
–No findings noted.
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Financial Highlights
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Financial Highlights
Comparison of Governmental Funds Expenditures by Fund
(in millions of dollars)
$6.8
$9.2
$2.0
$0.3
$-
$9.3
$0.9
FY 2016 General Fund
Westlake Academy
Debt Service Fund
Capital Projects Funds
Westlake Academy
ExpansionSolana PID Capital
ProjectsNonmajor
Governmental Funds
Governmental Funds Expenditures for FY 2017 totaled $27.6 million, an $846K or 3% decrease. This
decrease is primarily attributable to the net effect of a $2.6 million decrease in capital outlay and a
$1.3 million increase in general government expenditures, the majority of which is due to the
relocation of the Town Hall.
$8.3
$8.8
$2.3
$2.1
$-$5.2 $0.9
FY 2017 General Fund
Westlake Academy
Debt Service Fund
Capital Projects
Funds
Westlake Academy
Expansion
Solana PID Capital
Projects
Nonmajor
Governmental Funds
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Financial Highlights
Comparison of Governmental Funds Expenditures
$4.6
$2.7
$0.2
$0.8
$0.2 $0.7
$8.8
$7.0
$2.6
$3.3
$2.5
$0.2
$0.8
$0.1
$0.7
$9.2 $9.6
$2.1
$-
$1.0
$2.0
$3.0
$4.0
$5.0
$6.0
$7.0
$8.0
$9.0
$10.0
2017
2016
(2 -year comparison –current year and prior year –in millions)
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Financial Highlights
Comparison of Governmental Revenues by Source
Governmental Revenues for FY 2017 totaled $22.6 million, a $2.7 million or 14%
increase. This increase is primarily due to a $1.4 million increase in contributions
and $0.8 million increase in building permits and fees in the current year.
20.8%
7.1%
7.1%
29.2%
7.5%
15.5%
12.8%
FY 2017 Revenues
Sales taxes
Property taxes
Other taxes
State program revenue
Contributions
Building permits and fees
Other
23.1%
7.5%
9.0%
32.7%
1.5%
13.6%
12.6%
FY 2016 Revenues
Sales taxes
Property taxes
Other taxes
State program revenue
Contributions
Building permits and
fees
Other revenues
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Financial Highlights
Comparison of Governmental Revenues by Source
(2 -year comparison –current year and prior year –in millions)
$4.7
$1.6 $1.6
$6.6
$1.7
$3.5
$2.9
$4.6
$1.5 $1.8
$6.5
$0.3
$2.7 $2.5
$-
$1.0
$2.0
$3.0
$4.0
$5.0
$6.0
$7.0
Sales taxes Property
taxes
Other taxes State
program
revenue
Contributions Building
permits and
fees
Other
2017
2016
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Financial Highlights
Fund Balances
Governmental Funds’ Fund Balances
As of September 30, 2017, the Town’s governmental funds reported a combined
ending fund balance of $27.8 million as follows:
•General Fund $10,937,492
•Westlake Academy 965,248
•Debt Service 11,963
•Capital Projects 12,869,877
•Solana PID CPF 797,234
•Other Funds 2,226,304
$27,808,118
Overall, fund balance of the Governmental Funds increased by $7.4 million.
General Fund fund balance increased $1,258,019 during FY17. Unassigned fund
balance ($10,363,702) represents 125% of fiscal year 2017 General Fund
expenditures.
39.3%
3.5%0.0%
46.3%
2.9%
8.0%General Fund
Westlake Academy
Debt Service
Capital Projects
Solana PID Capital
Project
Other Funds
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Financial Highlights
Budgetary Highlights –General Fund
The Town had a favorable budget variance of $1.1 million(net change
in fund balance):
•Actual revenues were $604K more than budgeted.
•Building permits and fees were $716K more than budgeted.
•Sales taxes were $43k more than budgeted.
•Miscellaneous revenue was $105k more than budgeted.
•Actual expenditures were below budget by $403k due to cost
savings realized in all areas.
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Financial Highlights
Comparison of Proprietary Funds Operating Revenue
and Expenses –FY 2017 and FY 2016 (in millions)
$4.8
$4.0 $4.0
$4.7
$3.6
$3.8
$4.0
$4.2
$4.4
$4.6
$4.8
$5.0
Operating Revenues Operating Expenses
2017
2016
Proprietary funds net position decreased by $166K during fiscal year 2017.
Operating revenues increased $846K due primarily to an increase in
charges for services.
Operating expenses decreased $684K from the previous year.
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Financial Highlights
Proprietary Funds Operating Expenses-(in thousands)
The $684K decrease in operating expenses is primarily the net result of:
•$1.1 million payment to City of Ft. Worth for the Town’s proportionate
share of water system upgrades in the prior year.
•$483K increase in other expenses, the result of a settle-up with City of
Southlake related to wastewater treatment in the current year.
$498
$95
$496
$31
$1,216
$1,687
$423
$1,193
$497
$32
$1,358
$1,204
$-
$200
$400
$600
$800
$1,000
$1,200
$1,400
$1,600
$1,800
Payroll costs Professional
services
Depreciation Amortization
of WW Rights
Water
Purchases
Other
2017
2016
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Standards Required to be
Implemented in FY2018
Effective for the year ended September 30, 2018
GASB 75 –Accounting and Financial Reporting for Postemployment
Benefits Other Than Pension (OPEB)
•Objective: to improve accounting and financial reporting by state
and local governments for OPEB.
GASB 86 –Certain Debt Extinguishment Issues
•Objective: to improve consistency in accounting and financial
reporting for in-substance defeasance of debt by providing guidance
for transactions in which cash and other monetary asset acquired
with only existing resources –resources other than the proceeds of
refunding debt –are placed in an irrevocable trust for the sole
purpose of extinguishing debt.
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We appreciate the
opportunity to work with
Town of Westlake
and look forward to our
continued relationship.
Questions?
John DeBurro, CPA | Partner
972.448.6970 | john.deburro@weaver.com