2011032105 - CAFR - Comprehensive Annual Fiscal ReportMEETING DATE: 3/21/2011
ITEM NO: r
COUNCIL/AGENCY AGENDA REPORT
DATE: MARCH 15, 2010
TO: MAYOR AND TOWN COUNCIL/
CHAIR AND MAMBERS OF THE REDEVELOPMENT AGENCY ¢�
FROM: GREG LARSON, TOWN MANAGER/EXECUTIVE DIRECTOR tap -
SUBJECT: ACCEPT THE FY 2009/10 COMPREHENSIVE ANNUAL FINANCIAL
REPORT (CAFR)
RECOMMENDATION:
Accept the FY 2009/10 Comprehensive Annual Financial Report (CAFR).
BACKGROUND:
The attached FY 2009/10 CAFR presents the Town of Los Gatos and Town of Los Gatos
Redevelopment Agency's financial, operational, and current economic condition for the fiscal
year ending June 30; 2010. The CAFR received an unqualified opinion from C.G. Uhlenberg
LLP, the Town's external auditors. An unqualified opinion indicates the financial data of the
Town is fairly presented according to general accounting principles. New auditing standards
require that any "significant deficiency" or "material weaknesses" discovered in the audit be
communicated in writing to management. A material weakness is a significant deficiency which
could lead to a material misstatement of the financial statements. The auditor's report found the
Town's internal control structure to have no reportable material weaknesses.
DISCUSSION:
C.G. Uhlenberg LLP, the Town's auditors, conducted an audit in accordance with Generally
Accepted Auditing Standards (GAAS) and the standards for fmancial audits contained in the
Government Audit Standards (1994 Revision), issued by the Comptroller General of the United
States. These standards require that they plan and perform the audits to obtain reasonable
assurance as to whether the financial statements are free of material misstatement.
/
PREPARED BY: STEPHEN D CONWAY� l�
Finance and Administrative e e rD rector
SDC:pg
NAFINANCE\CAFR\FY 2009-101CAFR Agenda Report 2009-1 0.doc
Reviewed by: Assistant Town Manager/Deputy Director
Counsel Clerk Administrator/Secretary .4[% Finance
Community Development
(Li11 Town Attorney/General
PAGE 2
MAYOR AND TOWN COUNCIL/CHAIR AND MEMBERS OF THE REDEVELOPMENT
AGENCY
SUBJECT: ACCEPT THE FY 2009/10 COMPREHENSIVE ANNUAL FINANCIAL
REPORT (CAFR) AND MANAGEMENT LETTER
MARCH 15, 2010
On March 14, 2010, the Council Finance Committee reviewed the CAFR for year ending June
30, 2010 with the Town's auditors and received an unqualified or "clean" opinion for the year,
meaning that the financial statements were fairly presented and contained no material
misstatements. The review also included a discussion of Town assets. The CAFR reported that
the Town's assets exceeded liabilities by approximately $124 million. Of the $124 million, $66.2
million are capital infrastructure assets, or non -cash assets. The remaining $57.8 million reflects
a comprehensive accounting of working capital and restricted funds, which ensure responsible
fiscal management, and funds designated for specific purposes.
The $57 8 million is classified into 3 reserve categories: Restricted/Obligated, Financial Best
Practices, and Designated. Restricted/Obligated funds represent a mix of restricted reserves that
have been legally appropriated for a specific use and obligated cash to cover outstanding
operating costs or legally binding contracts for services. The Financial Best Practices category
recognizes the prudent use of "pre -funding" methods for ongoing business needs like vehicle
replacement or the establishment of emergency reserves for catastrophic events. Designated
funds are those that have been dedicated for specific purposes via Council policy. Examples of
designated reserves include capital and special projects, land acquisition, and revenue•
stabilization to preserve basic services to the community while making incremental
organizational adjustments to align services with revenues over time.
CONCLUSION:
As noted in the auditor's opinion, the CAFR fairly presents the fiscal year ending June 30, 2010
financial activity for the Town of Los Gatos and Redevelopment Agency. After reviewing the
financial documents with the Town's external auditors and Town staff, the Council Finance
Committee recommends that the Council accept the CAFR for year ending June 30, 2010.
ENVIRONMENTAL ASSESSMENT:
Is. not a project defined under CEQA, and no further action is required.
Attachments:
Comprehensive Annual Financial Report (CAFR) — Available for viewing in the Clerk
Department and at the Los Gatos Public Library.