To: Honorable Mayor and Members of Town Council
From: Trish Muller, CPA, Finance Director
Title
Presentation of the 2019 Comprehensive Annual Financial Report (CAFR) and 2019 Popular Annual Financial Report (PAFR)
Body
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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. An independent firm of licensed certified public accountants must perform the audit. In accordance with this requirement, staff submits, for Council’s information and review, the Comprehensive Annual Financial Report (CAFR) of the Town for the year ended December 31, 2019 (Attachment B).
A representative from BKD, LLP will make a short presentation which will address the following areas:
Annual Audit Process
• BKD, LLP issued a clean or unmodified opinion on the Town’s financial statements for the year ended December 31, 2019. In other words, the Town’s financial statements appear fairly stated in all material respects, in accordance with generally accepted accounting principles (GAAP).
• 2019 was the second year BKD, LLP performed the financial audit for the Town of Castle Rock. The Town commends them on their thoroughness and their high level of professionalism.
• Requirements under OMB Uniform Guidance require an audit to include reporting on major federal award programs when Federal Grant funds received exceed $750,000 during the year. BKD, LLC performed the Single Audit (Attachment C) for the Town for the year ended December 31, 2019.
Comprehensive Annual Financial Report (CAFR)
• For the year ended December 31, 2019, the Town had a positive net income for the Town as a whole.
• The Town continued to experience improvement in its major revenues during 2019.
• Staff will submit the CAFR to the Government Finance Officers Association for consideration of the Certificate of Achievement for Excellence in Financial Reporting.
• The Castle Rock Urban Renewal Authority and The Festival Park Commons General Improvement District are included as blended component units, and the Castle Rock Downtown Development Authority is included as a discretely presented component unit.
• The Town passed on incorporating an immaterial entry into the 2019 CAFR and is noted in the Report to Governance (Attachment A) in the Uncorrected and Corrected Misstatements paragraph.
• The Town adopted Governmental Accounting Standards Board (GASB) Statement No. 95, Postponement of the Effective Dates of Certain Authoritative Guidance, which allows the Town to defer implementation of GASB Statement No. 83, Certain Asset Retirement Obligations; GASB Statement No. 84, Fiduciary Activities; and GASB Statement No. 88, Certain Disclosures Related to Debt including Direct Borrowings and Direct Placements to 2020.
• Due to the extent of unexpected remote working conditions that resulted from the pandemic, the Town filed for a 60-day extension from the GFOA for submittal of the CAFR and PAFR.
Report to Governance
• As part of the 2019 financial statement audit, BKD, LLP reviewed the Town’s internal control structure and various policies and procedures of the Town. Auditors issue three levels of comments:
o Material Weaknesses - most severe level of comment noting that the internal control is not adequate to prevent significant misstatement or fraudulent activities.
o Significant Deficiencies - less severe, however, the internal control system is weak and the financial integrity may be compromised.
o Advisory Comments - suggestions to enhance an existing control structure or procedure.
• BKD, LLP reported no Material Weaknesses or Significant Deficiencies resulting from the audit on the Town’s financial statements and communicated this in their Report to Governance (Attachment A).
• There were no findings reported as a result of the testing based on the requirements of the Uniform Guidance.
Popular Annual Financial Report (PAFR)
• The PAFR (Attachment D) provides an overview of the Town’s financial position as reported in the 2019 CAFR.
• Finance staff designs this report as an easily understandable version for the general public and other interested parties.
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 2019 Financial Statement Audit
Attachment B: 2019 Comprehensive Annual Financial Report (CAFR)
Attachment C: Single Audit for the Year Ended December 31, 2019
Attachment D: 2019 Popular Annual Financial Report (PAFR)
The Comprehensive Annual Financial Report (CAFR) and Popular Annual Financial Report (PAFR) for the Town for the year ended December 31, 2019 can also be found on the Town’s website at: <http://CRgov.com/FinancialReports>