Minutes - Council Work Session - 06/25/2013

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2.03: Review 2012 Comprehensive Annual Financial Report (CAFR), Management Report, and Special Purpose Audit Reports Finance Director Lund reviewed the staff report and indicated the 2012 Annual Report has been completed. Aaron Nielsen, Malloy, Montague, Karnowiski, Radosevich & Company (MMKR), presented the Comprehensive Annual Financial Report (CAFR), Management Report, and Special Purpose Audit Report on the Single Audit that is required since the City received in excess of $500,000 in federal grant awards during a calendar year (parking ramp expansion). He stated a clean opinion has been issued on the City's report, there were no internal control findings or weakness or issues of noncompliance in the single audit. Mr. Nielsen described the seven areas of legal compliance they audited and one finding identified with a short-term investments not in compliance with requirements of State Statutes, an unrated mutual fund, and the other was an obligation that was rated high enough to be allowable but over time fell below the level it needs to be rated. Finance Director Lund explained that the finding was based on a $44,000 interest principal payment that came due on December 31, 2013. Since the City was changing banks, it was put into a non -rated account until January 3, 2013. That was the issue on which the auditor made a finding. Mr. Nielsen completed overview of the CAFR, opinions, and findings. Councilmember Riley thanked Finance Director Lund for explaining the finding, noting it does not involve a big issue. He stated Ramsey had a sizeable decrease in surplus funds and asked Mr. Nielsen if he has seen the same issue with other municipalities. Mr. Nielsen stated he does not have that type of comparison, noting other municipalities may be using a different type of tool such as Tax Increment Financing. Councilmember Kuzma commended Finance Director Lund and noted the City did change banks. Councilmember Tossey noted it is more difficult to project revenues and stated the City was quite close to that projection. Finance Director Lund explained that towards the close of the year, she does an amendment, which is why the revenue is so close. She explained monthly reports are provided so the numbers can be reviewed and the City is required to do this amendment. Mayor Strommen asked about the percentage of unpaid taxes. Mr. Nielsen stated that figure is in the audit, Page 139, showing that in 2011, the City collected 93% and in 2012, it collected 98 %. He referenced Page 51 indicating revenues were within $4,000 after amendment but the original was very close in projecting revenues. City Council Work Session / June 25, 2013 Page 5 of 8