To: Honorable Mayor and Members of Town Council
From: Trish Muller, Finance Director
Title
Presentation of the 2017 Comprehensive Annual Financial Report
Body
________________________________________________________________________________
Executive Summary
Colorado state law and the Town of Castle Rock Home Rule Charter require an annual audit of the Town’s financial statements. The goal of an audit is to provide reasonable assurance that the financial statements of the Town are presented in conformity with generally accepted accounting principles. The audit must be performed by an independent firm of licensed certified public accountants. In accordance with this requirement, staff submits for your information and review, the Comprehensive Annual Financial Report (CAFR) of the Town for the year ended December 31, 2017.
A representative from Eide Bailly, LLP will be making a short presentation which will address the following areas:
Annual Audit Process
Eide Bailly, LLP issued a clean or unmodified opinion on the Town’s financial statements for the year end December 31, 2017. In other words, the Town’s financial statements appear fairly stated in all material respects, in accordance with general accepted accounting principles (GAAP).
2017 was the fifth year Eide Bailly, LLP performed the financial audit for the Town of Castle Rock. We commend them on their thoroughness and their high level of professionalism.
During their interim fieldwork, the auditors visited Town departments to document cash handling and revenue streams in detail. The testing and documentation of Town departments will be rotated each year depending on materiality and the complexity of the system.
The auditors also worked extensively with Finance staff to document accounting processes and the related controls. These conversations included procedures performed by Development Services, Payroll, Sales Tax and various other functions of the Town.
In late April 2018, the auditors returned to the Town to test year-end asset, liability and fund balances. In addition, several analytic procedures were performed on significant revenue and expense accounts. No material adjustments were noted.
Comprehensive Annual Financial Report (CAFR)
For the year ended December 31, 2017, the Town had a positive net income for the Town as a whole.
The Town continued to experience improvement in its major revenues during 2017.
The CAFR will be submitted to the Government Finance Officers Association for consideration of the Certificate of Achievement for Excellence in Financial Reporting.
The Castle Rock Urban Renewal Authority is included as a blended component unit and the Castle Rock Downtown Development Authority is included as a discretely presented component unit.
The Town received a revised financial statements from PCWRA after the 2017 CAFR was completed that resulted in an immaterial entry that the Town passed on incorporating in the 2017 CAFR. This passing entry is noted in the Report to Governance in the Uncorrected and Corrected Misstatements paragraph.
The Town implemented accounting policies to adopt provisions of GASB 82, Pension Issues, an amendment of GASB Statements 67, 68 and 73.
Report to Governance
As part of the 2017 financial statement audit Eide Bailly, LLP reviewed the Town’s internal control structure and various policies and procedures of the Town. There are three levels of comments that are issued by the auditors:
- Material Weaknesses - most severe level of comment noting that the internal control is not adequate to prevent significant misstatement or fraudulent activities.
- Significant Deficiencies - less severe, however, the internal control system is weak and the financial integrity may be compromised.
- Advisory Comments - suggestions to enhance an existing control structure or procedure.
Eide Bailly, LLP had no comments in any category resulting from the audit and communicated this in their Report to Governance.
We would like to thank the Finance staff for their dedicated efforts in the preparation of the financial statements and in the audit process.
Attachments
Attachment A: Report to Governance Resulting from the 2017 Financial Statement Audit
Attachment B: 2017 Comprehensive Annual Financial Report (CAFR)
(Comprehensive Annual Financial Report (CAFR) for the Town for the year ending December 31, 2017 can also be found on the Town’s website at: <http://crgov.com/DocumentCenter/View/21332>)