CLEARLAKE, Calif. – The Clearlake City Council recently accepted its annual audit for fiscal year 2012-13.
The audit was performed by independent certified public accounting firm Terry Krieg, CPA.
Completion of the audit brings the city up-to-date in its auditing process.
“We are on top of where our finances are,” City Manager Joan Phillipe said. “We've made significant progress in identifying the health of the city's finances. We've been able to bring the audits up-to-date and combined with the establishment of financial management policies, along with economic development goals, the city is situating itself to become financially stable.”
City management is responsible for the preparation and fair presentation of financial statements in accordance with accounting principles generally accepted in the United States.
Those responsibilities include the design, implementation and maintenance of internal control relevant to the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
It is the auditor's responsibility to evaluate such statements to obtain reasonable assurance that they are free from material misstatement.
“Generally speaking, it's a clean audit, clean report,” Phillipe said. “The dissolution of the redevelopment agency is where the main impacts were seen.”
The audit involves the performance of procedures to obtain audit evidence about the amounts and disclosures in the financial statements.
The auditor considers internal control relevant to the city's preparation and fair presentation of those financial statements in order to design audit procedures that are appropriate to the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the city's internal control.
The audit also includes evaluating the appropriateness of accounting procedures used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.
Krieg said he believes the audit evidence he obtained was sufficient and appropriate to provide the basis for his audit opinions.
Krieg said, in his opinion, the city's financial statements “present fairly,” in all material respects, the respective financial position of the government activities, each major fund, and the aggregated remaining fund information of the city as of June 30, 2013, and the respective changes in its financial position for the year then ended in accordance with accounting principles generally accepted in the United States.
Krieg's audit report identifies financial highlights in four areas including those that describe the general fund, the city's net position, overall revenues and other non-major governmental funds.
At the end of 2013, the general fund reported a fund balance of $499,171, which Krieg said is a 23.6-percent decrease over fiscal year 2011-12.
He said this is mainly because of the return of funds to the successor agency, which manages the dissolution of the Clearlake Redevelopment Agency.
According to Krieg, after conducting all operations and programs, the city's net position showed an increase of $557,156, or 2 percent, over 2011-12.
He said the net position totaled $31.1 million at year end; of that amount, $1.7 million is mostly a longterm receivable from the successor agency.
According to Krieg, the $1.7 million is unrestricted and may be used in the long term to meet the government's ongoing obligations to its citizens and creditors.
Phillipe said the receivable involves a loan from the city to the redevelopment agency. “We now have approval from the state allowing repayment of that loan. It will be repaid over a number of years,” she said.
Krieg said that, over time, increases and decreases in net position may serve as a useful indicator of whether the financial position of the city is improving or deteriorating.
Overall, citywide revenues from governmental activities, grants and taxes decreased $595,103 compared to the 2012 fiscal year, Krieg said.
“When you back out the redevelopment agency from 2012 revenues increased by $400,173. The increase is a result of higher revenues in sales taxes and capital grants,” he said.
The city's other nonmajor government funds ended 2013 with a fund balance of about $608,300.
Krieg said the increase of about $134,000 is primarily the result of bringing in more revenue than was spent.
The fiscal year 2012-13 audit report is available for public review at Clearlake City Hall, 14050 Olympic Drive, during regular business hours.
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