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HomeMy WebLinkAbout3.1 Mayors ReportItem Cover Page 10% wubject Annual Report of the Audit Committee and Acceptance of Comprehensive Annual Financial Report Meeting July 21, 2020 - REGULAR MEETING OF THE MOUNT PROSPECT VILLAGE BOARD - ':1scal Impact fa I so el - C. Oategory MAYORS REPOR . I Type Action Item The Audit Committee has prepared it is annual report to the Village Board on Committee actives for the past year. A primary function of the Audit Committee is oversight of the annual audit process. The audit process for 2019 has concluded, and the Comprehensive Annual Financial Report (CAFR) has been provided to the Village Board for review and final acceptance. The Audit Committee Chair and staff will be on hand to present information and answer questions on the recently concluded audit process and 2019 CAFR. Please click here to view the 2019 CAFR Report. The major items to consider from the (CAFR) is: 2) For the year 2019, the independent audit firm Sikich, LLP has issued a clean and unqualified opinion on the financial statement. Per the audit report, the financial g-tatements are free from any material misstatement, and it fairly represents the financial condon of the Village. The financial statements are also prepared in accordance with the generally accepted accounting principles. b) The Management letter communicates if there are any material weaknesses in the internal controls, and the auditor has identified none. 1 c) The General Fund reported a surplus of $3.6 million of the expenses and the ending unassigned fund balance for the General Fund is $22.9 million. The total General Fund reserves are $26.7 million, of which $$3-8 million is either committed or restricted for gpecific purposes/projects. 4) The GASB 83 - Certain Assets Retirement Obligations and GASB 84 - Fiduciary Activities ire implemented in FY 2019. The implementation of the new standards do not have any material impact on the financial statements of the Village. ,c) The Audit was conducted in March to May 2020 and was concluded in June 2020. The itxtensive fieldwork was completed in May 2020. The Audit Committee approved and ,?ccepted the audit on June 18, 2020. award. f) The CAFR also included the Certificate of Achievement for Excellence in the Financial Reporting received from GFOA for 2018 Audit. This marks 26th consecutive year of the Village receiving this award. The Village will also be submitting the 2019 CAFR for the • The year 2019 is the last engagementfor auditors Village has published an RFP seeking proposals from various audit firms. The Audit Committee will be recommending a new five year engagement with a new audit firm after the review of all the responses in Oct -2020. Alternatives Alternatives Action 1. Accept the annual report of the Audit Committee and Comprehensive Annu Financial Report of the Village for the period ending December 31, 2019. 2. at the discretion of .!e Board. • t • 2 Accept the annual report of the Audit Committee and Comprehensive Annual Financial Report of the Village for the period ending December 31, 2019. ATTACH M E NTS: Annual Report Audit Committee - 2019.pdf V? g Villa e of Mount Prospect mmint Mount Prospect, Illinois INTEROFFICE MEMORANDUM TO: VILLAGE PRESIDENT AND BOARD OF TRUSTEES FROM: TIM MCDERMOTT, AUDIT COMMITTEE CHAIR DATE: JULY 21, 2020 SUBJECT: ANNUAL REPORT OF AUDIT COMMITTEE — 2019 The audit for the fiscal year 2019 is complete and included as part of your materials for review and acceptance. The audit firm of Sikich LLP performed the Village's external audit. This audit marked the completion of the sixth and final year of engagement with the Village. During the past year, the Audit Committee met on June 18, 2020. Included on the agenda for this meeting was a discussion on results of the 2019 Comprehensive Annual Financial Report (CAFR), Auditor Communication to the Village Board, and Management Letter comments as prepared by Sikich LLP. The committee also discussed the annual report the Audit Committee is to make to the Village Board. Audit Committee activities included: • At the June 18 meeting, the Audit Committee met with Village staff and the audit manager in charge of the audit, Martha Trotter, and the overall audit in charge and signing partner Jim Savio. A presentation on the 2019 audit was made by staff and Auditors. Items discussed included the overall results of the audit, financial statement, and the impact of the application of GASB 83 (Certain Asset Retirement Obligations) on the financial statement. The impact of the implementation of both the new GASBs is negligible as the Village does not own any nuclear power plant or similar assets, which can cause significant retirement costs. The Village has five deep wells, and the Village will incur some costs, which will be amortized over the life of SO years, and the impact of the same is immaterial. The following are some of the significant items from the 2019 Audit. • On page two of the Comprehensive Annual Financial Report, the firm expresses in their opinion that the financial statements present fairly in all respects the financial position for the year ended December 31, 2019, in accordance with generally accepting accounting principles. o While the actual statement at the top of the page is much more detailed, it is the key statement from the audit firm demonstrating that they found no significant issues that impact their overall determination on the accuracy of the Village's financial statements and position. E Annual Report of Audit Committee — 2018 Activities August 20, 2019 Page 2 • The Committee also reviewed the audit firm's Management Letter and Auditor Communication to the Board that accompanied the audit report. The Management Letter communicates whether there are any material weaknesses in internal control. The Auditor identified none. Auditor Communication to the Board communicates certain information related to the performance of the audit. Also included in this report are recommendations for addressing any deficiency in internal control as well as an update from any recommendation made during the prior year's audit. o There were no management letter comments identified for the current year. • Other information provided in the auditor communication for 2019 included future accounting pronouncements. These future pronouncements are changes to accounting rules that may have an impact on Village finances in the future. The major pronouncement is GASB 87 about leases and will be implemented in the coming years. • There were no federal grants received in excess of $750,000; hence no single audit was performed. There were some state grants, and the audit pert the GATA guidelines were performed, and a clean report was issued for the compliance. • The final item we are highlighting from the Comprehensive Annual Financial Report is under the first tab (Introduction). On page viii is the Certificate of Achievement for Excellence in Financial Reporting that the Village received for its 2018 report. This marks the 26th consecutive year the Village has received this award. Application has been made to the Certificate program for the fiscal year 2019. Notice of the award is expected toward the end of 2020. • The Auditor also commended the efforts carried out by staff, and in spite of most of the fieldwork was performed remotely, the staff has provided all the needed details in a timely manner, and the books are maintained very well, neat and clean. The next meeting of the Audit Committee is expected in late 2020 to discuss the audit engagement for 2021 and onwards. The Audit Committee has approved an RFP for the audit services for the year 2020 to 2024. The RFP is circulated amongst the top Accounting firms, and the response is due at the end of August. The Audit Committee will be reviewing the responses from all the firms and will recommend a new agreement for the audit services in the fall of 2020. Please contact me should you have any questions or need additional information related to this report or the Audit Committee activities. Respectfully Submitted, Tim McDermott