City and Borough of Juneau
Assembly Finance Committee Meeting
Tuesday, March 6, 2012 – 5:30 pm
Assembly Chambers

I. Call to Order

II. Roll Call

III. Approval of Minutes
February 15, 2012 (pages 4 to 9)

IV. Financial Overview (postponed from the February 15, 2012 agenda)
Staff will provide a brief overview of the City and Borough’s fund structure. The presentation will include –
• A discussion of the fund structure (general, special revenue, enterprise and internal services funds,
• How the funds fit together financially,
• The accounting support provided by finance to other departments (funds), and
• The internal charging of general governmental services.

The PowerPoint Slides were distributed in the February 15, 2012 AFC meeting packet. Staff will have additional copies of the presentation as needed.

V. Presentation of the FY11 Financial Reports, (separate hand-out)
Enclosed with the packet are the City and Borough of Juneau’s FY11 general governmental financial reports. These reports are produced as part of the annual audit process. These reports were prepared by staff and our auditors, Elgee Rehfeld Mertz, LLC.

• Letter to the Assembly (which includes comments on internal controls and operations)
• Comprehensive Annual Financial Reports (CAFR)
• State Financial Assistance Report
• Expenditures of Federal Awards Report

The Letter to the Assembly was prepared by our auditors. The Comprehensive Annual Finance Report was prepared by the Finance Department staff. The State Financial Assistance and the Expenditures of Federal Awards Report were prepared as a joint effort. Staff prepared the single audit financial data and the Auditors prepared the opinions and findings information.

These reports contain detailed financial information on the CBJ’s operations. The following is a brief overview of each report-

The Letter to the Assembly is information provided by the auditor directly to the governing body. The Letter discloses the responsibilities of the auditor, what assurances the audit provides, any disagreements with management, any auditor adjustments, any poor judgment used in financial management and an analysis on operational items coming to the attention of the Auditors during the audit. The Letter also identifies issues that are opportunities for strengthening internal controls and/or operating efficiencies. There were no current year comments, but there were follow-ups comments from the prior year.


• Follow-ups on Prior Year Comments


-Develop and Maintain Documentation of Key Financial Reporting Processes and Controls.
In prior year we recommended that the City and Borough develop new procedures and controls in response to the implementation of the new accounting system and to review, and possibly streamline, existing procedures and controls. Auditors’ current status comment – No action was taken on this subsequent to the last audit. We continue to recommend that CBJ develops and maintains documentation on the key financial reporting processes and controls. We under stand that management will evaluate this subsequent to the implementation of the management systems. Staff comment – Staff are spending significant efforts in evaluating ways to improve our operational efficiencies as we plan for the implement of each PRISM system module. Developing the procedural manuals prior to the implementation of the new system modules was determined to be inefficient and distracted from the implemental processes. The system testing documentation (test scripts) will be used as key parts of our future documentation. In addition, the Lawson system comes with online training information and manuals. Once the systems are up and online, we will move forward with completing the system documentation. Staff are continuing to work on developing the appropriate operational documentation.

-Grant Monitoring and Compliance Training.
In prior year we recommended that employees involved in grant management attend training directly related to their responsibility for administering grants. Auditors’ Current Year Comment – See current year significant deficiencies (Federal Single Audit). We recommend that employees involved in grant management attend training directly related to their responsibility for administering grants. Staff comments – We recognize a need for overall grant management and continue to work on each grant manager’s understanding of their compliance responsibility. This past year we had a number of set backs with staffing issues and the development of the new accounting system. We will continue to work on developing reporting controls, staff cross training and oversight of the reporting responsibilities.

• The Comprehensive Annual Financial Report (CAFR) reports the results of our operations and financial balances. The Auditors’ issued a “clean opinion” regarding the CBJ’s general-purpose financial statements.

• The State Financial Assistance Report, commonly referred to as the state single audit, reports the CBJ’s compliance with the terms and conditions of grants received from the State. This report includes a listing of all State supported projects, the status of the grant funds and comments on compliance. There were no current year comments or questioned costs noted in the report.

• The Expenditure of Federal Awards Report, commonly referred to as the federal single audit, reports the CBJ’s compliance with the terms and conditions of the grants received from the federal government. This report includes a listing of all federally supported projects, the status of the grant funds and comments on compliance. There were two deficiencies noted in the Federal report. Both finding related to reporting compliance for the Auke Bay Loading Facility Phase II project. Staff will be developing and responding with a corrective action plan which includes oversight controls to help insure that the proper reports are filed.

Mr. Max Mertz, from Elgee Rehfeld Mertz CPAs, will be present to provide an overview of the annual audit process and answer questions.

Elgee Rehfeld Mertz CPAs also prepared a separate set of financial reports for the School District. These reports have been submitted to the School Board.

VI. FY13 and FY14 Budget Information and Discussion
The City Manager will present information on the FY13 and FY14 operating projections and options for closing the projected funding shortfall.

VII. Adjournment