HomeMy WebLinkAbout12/19/2011 Council Work Session
December 19, 2011
4:25 p.m.
Council Chambers
Roll Call.
Approval of Agenda, as proposed or amended.
1. Auditor review of the FYE2011 audited financial statements—Submitted by
Michelle Weidner, Chief Financial Officer.
ADJOURNMENT
Suzy Schares
City Clerk
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City of Waterloo, Iowa
Report to the Honorable Mayor and City Council
December 15, 2011
McGladrey McGladrey&Pullen, LLP
Certified Public Accountant;
McGladrey&Pullen,LLP
Certified Public Accountants
! McGladrey
December 15, 2011
To the Honorable Mayor and City Council
City of Waterloo, Iowa
715 Mulberry Street
Waterloo, Iowa 50703
We are pleased to present this report related to our audit of the financial statements and compliance of
City of Waterloo, Iowa for the year ended June 30, 2011. This report summarizes certain matters required
by professional standards to be communicated to you in your oversight responsibility for City of Waterloo,
Iowa's financial and compliance reporting process.
This report is intended solely for the information and use of the Honorable Mayor and City Council and
management and is not intended to be and should not be used by anyone other than these specified
parties. It will be our pleasure to respond to any questions you have regarding this report.We appreciate
the opportunity to continue to be of service to City of Waterloo, Iowa.
McGladrey is the brand under which RSM McGladrey,Inc.and McGladrey&Puilen,UP serve clients`business needs, Member of R5M International network a network of
The two fines operate as separate legal entities In an aiternative practice structure, independent accounting,tax and consulting firms.
ontents
■
Required Communications 1 —2
Summary of Accounting Estimates 3—4
Summary of Uncorrected Misstatements 5
Exhibit A-Significant Written Communications between Management and Our Firm
Representation Letter
Written Communications of Control Deficiencies
Independent Auditor's Report on Compliance with Requirements that Could Have a Direct and
Material Effect on the Passenger Facility Charge Program and on Internal Control Over Compliance
Required Communications
Auditing guidance requires the auditor to communicate certain matters to keep those charged with
governance adequately informed about matters related to the financial statement audit that are, in our
professional judgment, significant and relevant to the responsibilities of those charged with governance in
overseeing the financial reporting process. The following summarizes these communications:
Area Comments
Auditor's Responsibility Under Our responsibility under auditing standards generally accepted
Professional Standards in the United States of America and Government Auditing
Standards, issued by the Comptroller General of the United
States, and provisions of OMB Circular A-133 and OMB's
Compliance Supplement has been described to you in our
arrangement letter dated April 18, 2011.
Accounting Practices Adoption of, or Change in,Accounting Policies
Management has the ultimate responsibility for the
appropriateness of the accounting policies used by the City.
Following is a description of significant accounting policies or
their application that were either initially selected or changed
during the year.
• GASB Statement No. 54, Fund Balance Reporting and
Governmental Fund Type Definitions. As described in
Note 22 to the basic financial statements, the City
reclassified the fund balances for all governmental
func .
• GASB Statement No. 59, Financial Instruments
Omnibus, issued June 2010. The adoption of this
Statement required additional note disclosures for the
City in the current year.
Significant or Unusual Transactions
We did not identify any significant or unusual transactions or
significant accounting policies in controversial or emerging
areas for which there is a lack of authoritative guidance or
consensus.
Alternative Treatments Discussed with Management
We did not discuss with management any alternative
treatments within generally accepted accounting principles for
accounting policies and practices related to material items
during the current audit period.
Management's Judgments and Summary information about the process used by management
Accounting Estimates in formulating particularly sensitive accounting estimates and
about our conclusions regarding the reasonableness of those
estimates is in the attached"Summary of Accounting
Estimates."
Page 1
Area Comments
Audit Adjustments Audit adjustments recorded by City of Waterloo, Iowa are
attached to the representation letter included within Exhibit A.
Uncorrected Misstatements Uncorrected misstatements are summarized in the attached
"Summary of Uncorrected Misstatements."
Disagreements with Management We encountered no disagreements with management over the
application of significant accounting principles, the basis for
management's judgments on any significant matters, the
scope of the audit or significant disclosures to be included in
the financial statements.
Consultations with Other We are not aware of any consultations management had with
Accountants other accountants about accounting or auditing matters.
Significant Issues Discussed with No significant issues arising from the audit were discussed or
Management were the subject of correspondence with management.
Difficulties Encountered in We did not encounter any difficulties in dealing with
Performing the Audit management during the audit.
Accounting Pronouncements Please refer to Note 23 of the financial statements for new
accounting pronouncements that have been recently issued
that may affect the City's financial reporting in future periods.
Letter Communicating Significant We have separately communicated the significant deficiencies
Deficiencies and instances of noncompliance identified during our audit of
the financial statements and major awards, as required by the
Government Auditing Standards and OMB Circular A-133, and
this communication is included within the compliance section
of the City of Waterloo, Iowa's financial report for the year
ended June 30, 2011.
Significant Written Copies of significant written communications between our firm
Communications Between and the management of the City are attached as Exhibit A.
Management and Our Firm
Page 2
City of Waterloo, Iowa
Summary of Accounting Estimates
Year Ended June 30, 2011
Accounting estimates are an integral part of the preparation of financial statements and are based upon
management's current judgment. The process used by management encompasses their knowledge and
experience about past and current events and certain assumptions about future events. You may wish to
monitor throughout the year the process used to compute and record these accounting estimates. The
following describes the significant accounting estimates reflected in the City's June 30, 2011, basic
financial statements:
Area Accounting Policy Estimation Process Comments
Depreciable Useful The depreciable useful The determination is We believe the
Life of Capital Assets life of capital assets is made at the time the estimates and the
set at the estimated asset is placed into process used by
useful life of the related service and involves management are
asset. various judgments and reasonable.
assumptions based on
prior experience.
Incurred but Not The City recognized a The City relies on the We tested the propriety
Reported (IBNR) liability for IBNR which actuarial computed of the information
Liability for is established based IBNR based on data provided to the actuary.
DentalNision and upon an actuarial provided by the City of We believe the
Health Insurance Self- calculation. outstanding claims, estimates and
Insurance Liability history of claims and processes used by
various judgments and management are
assumptions. reasonable.
Management reviews
the actuarial results.
Worker's Liabilities are reported The City calculated the We tested the propriety
Compensation and for the cost of claims IBNR liability using of the information
Automobile Liability that have been reported various judgments and underlying
but not settled and an assumptions and management's
estimate of claims that records a liability for estimates. Based on our
have been inured but claims incurred. procedures, we
not reported. concluded
management's estimate
is reasonable.
Page 3
Area Accounting Policy Estimation Process Comments
Other OPEB accounting and Numerous assumptions We tested the
Postemployment disclosures are based are used by the actuary information provided to
Benefit Plan (OPEB) upon calculations and include employee- the actuary and
Assumptions performed by an related factors such as obtained the actuarial
actuary. turnover, retirement age calculation reports.We
and mortality.These believe the estimates
factors and estimated and processes used by
discount rate used to management are
determine the present reasonable.
value of liabilities are
based upon historical
data and general market
data. The amount is
calculated by an
actuary.
Allowance for The allowance for The allowance is We tested the
Doubtful Accounts doubtful accounts is adjusted as information underlying information
based on about specific accounts supporting this
management's estimate becomes available. The allowance, including the
of collectability of City also compares most recent aging
identified receivables, current allowance reports and collection
as well as aging of amounts to prior-year experience.We
customer accounts. collection or write-off concluded that
experience. management's estimate
is reasonable.
Allocation of Indirect Operating funds, Annually, management We tested the
Costs departments and estimates the value of underlying information
activities receive these services and supporting the
services from records applicable underlying allocations.
supporting funds indirect allocations. We concluded that
departments and management's estimate
activities. is reasonable.
Community Low interest loans, low- The loans are monitored We tested the
Development Block income housing loans for collectability by underlying information
Grant Loans and forgivable loans management and supporting this
receivable are valued at management has allowance. We
$0 with 100 percent developed an allowance concluded that
allowance for doubtful as information about management's estimate
accounts. These loans specific accounts is reasonable.
are not recorded as an becomes available.
asset on the balance
sheet or statement of
net assets.
Page 4
City of Waterloo, Iowa
Summary of Uncorrected Misstatements
Year Ended June 30, 2011
During the course of our audit, we accumulated uncorrected misstatements that were determined by
management to be immaterial, both individually and in the aggregate, to the statements of financial
position, results of operations and cash flows and to the related financial statement disclosures. Following
is a summary of those differences:
Debit(Credit)to Correct the Misstatements
Major fund-General Fund Assets liabilities Net Assets Revenue Expense
Description;
Over accrual of workers'compensation claim kabity $ - $ 320.000 $ (45,000) $ (275.000) $
Effect of current year passed adjustments on
net assets (275.000)
Total $ (320,000)
Page 5
Exhibit A — Significant Written
Communications between Management
and Our Firm
CITY OF WATERLOO , IOWA
y+`'�•"4t':'�j. ' CITY CLERK AND FINANCE DEPARTMENT
715 Mutbeny Street + Waterloo,IA 50703 • (319)291.4323 Fax(319)291-4571
O SUZY SCRAMS • City Clerk MICHELLE WEIDNER,CPA • Chief Financial Officer
erioo
Mayor
BUCK
CLARK
December 15, 2011
COUNCIL
MEMBERS
McGladrey&Pullen, LLP
201 North Harrison Street
Suite 300
DAVID Davenport, Iowa 52801
JONES
Ward I
CAROLYN In connection with your audit of the basic financial statements of the City of Waterloo,
Iowa(the City) as of and for the year ended June 30, 2011,we confirm that we are
COLE responsible for the fair presentation in the financial statements of financial position,
Ward 2 changes in financial position, and cash flows in conformity with accounting principles
generally accepted in the United States of America.
HAROLD
GE'ITY We confirm to the best of our knowledge and belief, as of December 15,2011, the
Ward following representations made to you during your audit:
1. The financial statements referred to above are fairly presented in conformity with
QUENTIN M. accounting principles generally accepted in the United States of America.
HART
Ward 4 2. We have identified for you all organizations that are a part of this reporting entity
or with which we have a relationship,as these organizations are defined in
RON Section 2100 of the Governmental Accounting Standards Board's Codification of
WELPER Governmental Accounting and Financial Reporting Standards, that are:
Ward 5 a. Component units.
BOB b. Other organizations for which the nature and significance of their
GREENWOOD relationship with the City of Waterloo, Iowa are such that exclusion would
At-Large cause the reporting entity's financial statements to be misleading or
incomplete.
STEVE c. Jointly governed organizations in which we participated.
SCHMITT
At-Large 3. We have identified for you all of our funds,governmental functions, and
identifiable business-type activities.
4. We have properly classified all funds and activities.
5. We have properly determined and reported the major governmental and
enterprise funds based on the required quantitative criteria.We have determined
the Local Option Sales Tax Fund, special revenue fund, to be major for public
interest reasons.We believe that all judgmentally determined major funds are
particularly important to the financial statement users.
CITY WEBSITE:www.cityofwaterlooiowa.com
WE'RE WORKING FOR YOU!
An Equal Opportunity/Affirmative Action Employer
McGladrey& Pullen, LLP
December 15,2011
Page 2
6. We are responsible for compliance with laws and regulations applicable to City including
adopting, approving and amending budgets.
7. We have identified and disclosed to you all laws and regulations that have a direct and material
effect on the determination of financial statement amounts including legal and contractual
provisions for reporting specific activities in separate funds.
8. We have made available to you:
• a. All financial records and related data of all funds and activities, including those of all special
•
funds, programs, departments, projects, activities, etc., in existence at any time during the
period covered by your audit.
b. All minutes of the meetings of the governing board and committees of board members or
summaries of actions of recent meetings for which minutes have not yet been prepared.
c. All communications from grantors, lenders, other funding sources, or regulatory agencies
concerning noncompliance with:
i. Statutory, regulatory or contractual provisions or requirements.
ii. Financial reporting practices that could have a material effect on the financial
statements.
9. We have no knowledge of fraud or suspected fraud affecting the entity involving:
a. Management.
•
b. Employees who have significant roles in the internal control, or
c. Others where the fraud could have a material effect on the financial statements.
•
10. We acknowledge our responsibility for the design and implementation of programs and controls to
provide reasonable assurance that fraud is prevented and detected.
11. We have no knowledge of any allegations of fraud or suspected fraud affecting the City of
Waterloo, Iowa received in communications from employees,former employees, analysts,
regulators or others. There were no material weaknesses.
12. We have informed you of all significant deficiencies in the design or operation of internal controls
that could adversely affect the entity's ability to record, process, summarize,and report financial
data.
13. There have been no communications from regulatory agencies concerning noncompliance with,
or deficiencies in,financial reporting practices.
14. We have no plans or intentions that may materially affect the carrying value or classification of
assets and liabilities.
15. The following have been properly recorded and/or disclosed in the financial statements :
a. Related-party transactions, including those with component units for which the City of
Waterloo, Iowa is accountable and jointly governed organizations in which the City of
Waterloo, Iowa participates,as defined in Section 2100 of the Governmental Accounting
Standards Board's Codification of Governmental Accounting and Financial Reporting
Standards, and interfund transactions, including interfund accounts and advances
receivable and payable, sale and purchase transactions, interfund transfers, long-term
loans, leasing arrangements, and guarantees, all of which have been recorded in
accordance with the economic substance of the transaction and appropriately classified and
reported.
b. Arrangements with financial institutions involving compensating balances or other
arrangements involving restrictions on cash balances.
•
McGladrey&Pullen, LLP
December 15,2011
Page 3
•
• c. Security agreements in effect under the Uniform Commercial Code.
• d. Any other liens or encumbrances on assets or revenues or any assets or revenues which
were pledged as collateral for any liability or which were subordinated in any way.
e. The fair value of investments.
f. Amounts of contractual obligations for construction and purchase of real property or
equipment not included in the liabilities or encumbrances recorded on the books.
g. Debt issue provisions.
h. All leases and material amounts of rental obligations under long-term leases.
i. All significant estimates and material concentrations known to management which are
required to be disclosed in accordance with the AICPA's Statement of Position No. 94-6,
Disclosure of Certain Significant Risks and Uncertainties.Significant estimates are
estimates at the balance sheet date which could change materially within the next year.
Concentrations refer to volumes of business, revenues, available sources of supply, or
markets for which events could occur which would significantly disrupt normal finances
within the next year.
j. Authorized but unissued bonds and/or notes.
k. Risk financing activities.
• I. The effect on the financial statements of GASB Statement Nos. 57, 60, 61, 62, 63, and 64
which have been issued, but which we have not yet adopted.
m. Deposits and investment securities category of custodial credit risk, credit risk, interest rate
risk, concentration of credit risk.
16. We are responsible for making the accounting estimates included in the financial statements.
Those estimates reflect our judgment based on our knowledge and experience about past and
current events and our assumptions about conditions we expect to exist and courses of action we
expect to take. In that regard,adequate provisions have been made:
a. To reduce receivables to their estimated net collectable amounts.
b. For risk retention, including uninsured losses or loss retentions(deductibles)attributable to
events occurring through June 30,2011,and/or for expected retroactive insurance premium
adjustments applicable to periods through June 30,2011.
c. For pension obligations, postretirement benefits other than pensions, and deferred
compensation agreements attributable to employee services rendered through June 30,
2011.
•
17. There are no:
•
• a. Material transactions that have not been properly recorded in the accounting records
•
underlying the financial statements.
b. Violations or possible violations of laws or regulations whose effects should be considered
for disclosure in the financial statements or as a basis for recording a loss contingency. In
that regard,we specifically represent that we have not been designated as,or alleged to be,
a"potentially responsible party"by the Federal Environmental Protection Agency or any
equivalent state agencies in connection with any environmental contamination.
c. Other material liabilities or gain or loss contingencies that are required to be accrued or
disclosed by Statement of Financial Accounting Standards No. 5 and/or GASB Statement
No. 10.
d. Lines of Credit or similar arrangements.
McGladrey&Pullen, LLP
December 15,2011
Page 4
e. Agreements to repurchase assets previously sold.
f. Liabilities which are subordinated in any way to any other actual or possible liabilities.
g. Debt issue repurchase options or agreements, or sinking fund debt repurchase ordinance
requirements.
h. Derivative financial instruments.
i. Special and extraordinary items.
j. Arbitrage rebate liabilities.
k. Impairment of capital assets.
I. Obsolete, damaged or excess inventories
m. Investments, intangibles, and other assets which have permanently declined in value.
n. Material losses to be sustained in the fulfillment of, or from the inability to fulfill, and service
commitments.
o. Material losses to be sustained as a result of purchase commitments.
p. Environmental cleanup obligations.
q. Guarantees, whether written or oral, under which the Government is contingently liable.
• 18. There are no unasserted claims or assessments that our lawyer has advised us are probable of
assertion and must be disclosed in accordance with Statement of Financial Accounting Standards
No. 5 and/or GASB Statement No. 10.
19. We have no direct or indirect, legal or moral obligation for any debt of any organization, public or
private that is not disclosed in the financial statement.
20. We have satisfactory title to all owned assets.
21. We have complied with all aspects of contractual agreements that would have a material effect on
the financial statements in the event of noncompliance.
22. Net asset components (invested in capital assets, net of related debt; restricted; and unrestricted)
and fund balances are properly classified and,when applicable, approved.
23. Expenses or expenditures have been appropriately classified in or allocated to functions and
programs in the statement of activities, and allocations have been made on a reasonable basis.
24. Revenues are appropriately classified in the statements of activities within program revenues and
general revenues.
•
• 25. Capital assets, including infrastructure assets,are properly capitalized, reported and depreciated.
26. Required supplementary information is properly measured and presented.
27. We are responsible for and have reviewed and approved the proposed adjustments to the trial
• balances identified during the audit,which are included in the summarized schedule of posted
adjustments and will post all adjustments accordingly. These adjustments are attached as
Appendix A.We have reviewed, approved,and are responsible for overseeing the preparation
and completion of the basic financial statements and related notes.
28. We believe that the adoption of GASB Statement Nos. 54 and 59 were appropriate and their
effect is properly disclosed in the financial statements.
McGladrey&Pullen, LLP
December 15, 2011
Page 5
29. In connection with your audit, conducted in accordance with Government Auditing Standards,we
confirm:
a. We are responsible for:
i. Compliance with the laws, regulations and provisions of contracts and grant
agreements applicable to the City of Waterloo, Iowa.
• ii. Establishing and maintaining effective internal control over financial reporting.
b. We have identified and disclosed to you:
i. All laws, regulations and provisions of contracts and grant agreements that have a
direct and material effect on the determinations of financial statement amounts or
other financial data significant to audit objectives.
ii. Violations(and possible violations) of laws, regulations, and provisions of contracts
and grant agreements whose effects should be considered for disclosure in the
auditor's report on noncompliance.
c. We have a process to track the status of audit findings and recommendations.
d. We have identified for you previous audits,attestation engagements, performance audits, or
other studies related to the objectives of the audit being undertaken and the corrective
action taken to address significant findings and recommendations.
e. We have provided you with our views on your reported findings, conclusions, and
recommendations,as well as our planned corrective actions for the report.
f. We have reviewed,approved, and take full responsibility for the financial statements and
related notes and acknowledge the auditor's role in the preparation of this information.
g We have reviewed,approved, and take full responsibility for all accrual adjustments and an
acknowledgement of the auditor's role in the preparation of the adjustments.
30. In connection with your audit of federal awards conducted in accordance with OMB Circular
A-133,Audits of States, Local Governments, and Non-Profit Organizations, we confirm:
a. We are responsible for complying, and we have complied,with the requirements of OMB
Circular A-133.
• b. We are responsible for understanding and complying with the requirements of laws,
regulations, and the provisions of contracts and grant agreements related to each of our
federal programs.
c, We are responsible for establishing and maintaining, and we have established and
maintained, effective internal control over compliance for federal programs that provides
reasonable assurance that we are managing federal awards in compliance with laws,
regulations and the provisions of contracts or grant agreements that could have a material
effect on our federal programs.
d. We have prepared the schedule of expenditures of federal awards in accordance with
Circular A-133 and have included expenditures made during the period being audited for all
awards provided by federal agencies in the form of grants,federal cost-reimbursement
contracts, loans, loan guarantees, property(including donated surplus property),
cooperative agreements, interest subsidies, insurance, food commodities, direct
appropriations and other assistance.
e. We have identified and disclosed to you the requirements of laws, regulations, and the
provisions of contracts and grant agreements that are considered to have a direct and
material effect on each major program.
McGladrey& Pullen, LLP
December 15, 2011
Page 6
f. We have made available all contracts and grant agreements(including amendments, if any)
and any other correspondence relevant to federal programs and related activities that have
taken place with federal agencies or pass-through entities.
g. We are not aware of any amounts questioned and all known noncompliance with the direct
• and material compliance requirements of federal awards.
h. We believe that we have complied with the direct and material compliance requirements as
outlined in Circular A-133.
I. We have made available all documentation related to compliance with the direct and
material compliance requirements, including information related to federal program financial
reports and claims for advances and reimbursements.
• j. We have provided you our interpretations of any compliance requirements that are subject
•
to varying interpretations.
k. We have disclosed to you any communications from grantors and pass-through entities
concerning possible noncompliance with the direct and material compliance requirements,
including communications received from the end of the period covered by the compliance
audit to the date of your report.
I. We have disclosed to you the findings received and related corrective actions taken for
previous audits, attestation engagements, and internal or external monitoring that directly
relate to the objectives of the compliance audit, including findings received and corrective
actions taken from the end of the period covered by the compliance audit to the date of your
report.
• m. We have provided you with all information on the status of the follow-up on prior audit
findings by federal awarding agencies and pass-through entities, including all management
decisions.
• n. We are not aware of any subsequent events that provide additional evidence with respect to
conditions that existed at the end of the reporting period that affect noncompliance during
• the reporting period.
o. There are no known instances of noncompliance with direct and material compliance
requirements occurring subsequent to the period covered by your report.
p. There have been no changes in internal control over compliance or other factors that might
significantly affect internal control, including any corrective action taken by us with regard to
significant deficiencies in internal control over compliance(including material weaknesses in
internal control over compliance), have occurred subsequent to the date as of which
compliance is audited.
q. Federal program financial reports and claims for advances and reimbursements are
supported by the books and records from which the basic financial statements have been
prepared.
r. The copies of federal program financial reports provided to you are true copies of the
reports submitted, or electronically transmitted, to the federal agency or pass-through entity,
as applicable.
s. We have monitored subrecipients to determine that they have expended pass-through
assistance in accordance with applicable laws and regulations and have met the
requirements of Circular A-133.
t. We have issued management decisions timely after the receipt of subrecipients'auditor's
reports that identified noncompliance with laws, regulations, or the provisions of contracts or
grant agreements, and we have ensured that subrecipients have taken the appropriate and
timely corrective action on findings.
McGladrey&Pullen, LLP
December 15,2011
Page 7
u. We have considered the results of subrecipient audits and have made any necessary
adjustments to our own books and records.
v. We have charged costs to federal awards in accordance with applicable cost principles.
w. We are responsible for, and have accurately prepared,the summary schedule of prior audit
findings to include all findings required to be included by Circular A-133.
x. We have accurately completed the appropriate sections of the data collection form.
No events or transactions, other than those disclosed in the financial statements, have occurred
subsequent to the balance sheet date that would require adjustment to, or disclosure in, the financial
statements.
During the course of your audit, you may have accumulated records containing data which should be
reflected in our books and records.All such data have been so reflected.Accordingly,copies of such
records in your possession are no longer needed by us.
As of and for the year ended June 30, 201,we believe that the effects of the uncorrected misstatements
aggregated by you and summarized below are immaterial, both individually and in the aggregate to the
opinion units of the financial statements. For purposes of this representation, we consider items to be
material, regardless of their size, if they involve the misstatement or omission of accounting information
that, in light of surrounding circumstances,makes it probable that the judgment of a reasonable person
relying on the information would be changed or influenced by the omission or misstatement.
Miner fund• Deb)(Credit)to Correct the Misstatements
General Fund Assets (iauitites Net Assets Revenue Expense
Description:
Over accrual of workers'compensation claim)ebitty $ - $ 320.000 $ (45,000) S (275,000) $
Effect of current year pasted adjustments on
net assets
Total (275,000)
$ (320,000)
City of Waterloo,Iowa
4/111111111,
•
•
•
Ernest Clark, Mayor
,tl..
Michelle Weidner, Chief Financial Officer
City of Waterloo, Iowa
Appendix A
•
•
•
Debit Credit
1. 224 15500 45,000.00
224 32 58541706 45,000.00
224 32 5854 3350 45,000.00
224 13600 45,000.00
••
224 30000 45,000.00
224 31200 45,000.00
To record check# 177527 as a prepaid expense and reclassify to nonspendable
fund balance.
2. 520 14 8955 1145 30,555.00
520 29950 30,555.00
521 15 5400 1145 12,441,00
525 29950 12,441.00
To adjust NOO to use actual claims paid on behalf of retirees(less
retiree contributions)as the employer contribution to the plan.
3. 520 13650 5,937.82
525 13650 5,937.82
525 13600 69,942,13
525 15 5400 3345 69,942.13
520 14 5200 3345 69,942,13
520 13600 69,942.13
525 13650 9,537.24
525 15 5400 3361 9,537.24
520 14 5200 3361 9,537.24
520 13650 9,537.24
To record payment received for sewer work done in sewer fund(dept
had reversed two project worksheet numbers between sewer and
sanitation previously).
•
• 4. 205 07 7500 3112 4,525.13
• 205 13650 4,525.13
• 205 26000 4,525.13
205 07 7500 3112 4,525.13
To adjust local option tax receivable estimate to actual amount.
City of Waterloo, Iowa
Appendix A
5. 010 12 1412 3350 17,714.48
010 27 2510 3350 2,506.85
010 26 4265 3361 5,784.00
010 26000 26,005.33
To record unearned grant revenue at June 30,2011.
6. 010 13650 29,087.85
010 37 4100 3345 29,087.85
010 37 4100 3345 29,087.85
010 26000 29,087.85
266 13650 50,278.18
266 19 7100 3345 50,278.18
266 19 7100 3345 50,278.18
266 26000 50,278.18
010 13650 3,231.98
010 37 4100 3361 3,231.98
01037 4100 3361 3,231.98
010 26000 3,231.98
266 13650 5,586.46
266 19 7100 3361 5,586.46
266 19 7100 3361 5,586.46
266 26000 5,586.46
520 13650 3,906.68
520 14 5320 3361 3,906.68
525 15 5400 3361 4,010.21
525 13650 4,010.21
To adjust FEMA receivables/revenue to correct amounts at June 30,2011.
7. 520 13650 107,707.12
520 13600 107,707.12
525 13650 69,942.13
525 13600 69,942.13
To reclassify FEMA amounts paid through the state to state receivables
from federal receivables.
8. 010-22000 290,918.00
010-27750 290,918.00
• To reclassify AP balance due to Visitor's Bureau to'Due to Component Unit'
9. 010 11 1100 3873 10,789.07
• 010 22 5100 3873 4,201.05
010 33 3100 3873 6,558.02
To correct deposits posted incorrectly.
•
•
City of Waterloo, Iowa
Appendix A
•
10. GOVW 04 7830 2100 316,384.00
GOVW 04 7839 7050 316,384.00
• To correct entry 2011-108 to record donated infrastructure included
in the infrastructure additions.
11. 101 08 6250 2250 11,794,81
101 08 6250 2251 4,327.19
101 08 6250 1795 16,122.00
To correct entry 2011-70 to include Young Development Agreement debt in
the reclassification from rebates to debt repayments.
12 GOVW0457001358 1,596,019.00
GOVW 04 8980 2211 18,693.00
GOVW 27650 18,693.00
GOVW 28400 118,466.00
GOVW 29400 1,477,553.00
To record Deer Creek Economic Development commitment debt and interest
payable.
City of Waterloo, Iowa
Appendix A
Debit Credit
•
1 GOVW-EXPENSE 270,401.00
•
GOVW-29950 G34G 270,401.00
To adjust the OPEB liability to use actual contributions for fiscal year 2011
2 TB-GOVW-26000 263,643.00
GOVW-04-5700-7050 263,643.00
To adjust the Government Wide entry to eliminate the proper amount of deferred revenues.
McGladrey&Pullen,LIP
Certified Public Accountants
MCGIadrey •
To the Honorable Mayor and City Council
City of Waterloo, Iowa
Waterloo, Iowa
In connection with our audit of the financial statements of the City of Waterloo, Iowa ("the City") as of and
• for the year ended June 30, 2011, we identified deficiencies in internal control over financial reporting
(control deficiencies).
A control deficiency exists when the design or operation of a control does not allow management or
employees, in the normal course of performing their assigned functions, to prevent, or detect and correct
misstatements on a timely basis. A deficiency in design exists when a control necessary to meet the
control objective is missing, or when an existing control is not properly designed so that even if the control
operates as designed, the control objective would not be met. A deficiency in operation exists when a
properly designed control does not operate as designed or when the person performing the control does
not possess the necessary authority or qualifications to perform the control effectively.
A material weakness is a deficiency, or a combination of deficiencies, in internal control, such that there is
a reasonable possibility that a material misstatement of the financial statements will not be prevented, or
detected and corrected on a timely basis.
A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less
severe than a material weakness, yet important enough to merit attention by those charged with
governance.
Certain control deficiencies that have been previously communicated to you, in writing, by us or by others
within your organization are not repeated herein.
We have separately communicated, to you and management, identified deficiencies that we determined
to be significant deficiencies.
Following are descriptions of other identified control deficiencies that we determined did not constitute
significant deficiencies or material weaknesses:
Schedule of expenditures of federal awards: We noted certain expenditures of federal awards were
expended in fiscal year 2010 but not recorded as federal expenditures on the schedule of
expenditures of federal awards until fiscal year 2011. Additionally, adjustments to revenue and
deferred income were required to properly recognize grant income during the year. Failure to properly
record and report expenditures of federal awards can result in noncompliance with federal grant
agreements.We recommend that the City continue to review expenditures of federal awards to
ensure they are recorded and reported in the proper period.
Grant expense allocation: In the City's Economic Development Initiative program we noted one
instance of an employee's salary being charged to the grant for time spent on non-grant related
activities. The employee's allocation of$7 retirement contribution was incorrectly charged to the
grant.We recommend management perform reviews over employee time cards to ensure time spent
on program-related activities is properly charged to those respective programs.
Other postemplovment benefits: The City initially recognized employer contributions based upon the
2010 actuarial report suggested contribution rather than actual contributions for fiscal year 2011.We
recommend the City review the contribution and disclosure requirements of other postemployment
benefits and adjust the liability based upon actual contributions on a yearly basis.
1
McGladmy is tha brand under which RSM McGladrey,Inc.and MCGladrey&Pullen,LLP serve chants'business needs. Member of RSM International netsvore,a network of
The two firms operate as separate legal entities In an alternative practice structure: independent accounting.tax and consulting firms.
This communication is intended solely for the information and use of management, the Mayor, City
Council and others within the organization, and is not intended to be and should not be used by anyone
other than these specified parties.
lc"e4t419 /,4(ee Gf:5
Davenport, Iowa
December 15, 2011
2
McGladrey&Pullen,LLP
Certified Public Accountants
McGladrey
Independent Auditor's Report on Compliance with
Requirements that Could Have a Direct and Material Effect on the
Passenger Facility Charge Program and on
Internal Control Over Compliance
Waterloo Regional Airport Board and
Honorable Mayor and City Council
Waterloo Regional Airport
City of Waterloo, Iowa
Waterloo, Iowa
Compliance
We have audited the compliance of the City of Waterloo, Iowa (the City), which includes the Federal
Aviation Agency Projects Fund, a special revenue fund of the City, with the compliance requirements
described in the Passenger Facility Charge Audit Guide for Public Agencies, issued by the Federal
Aviation Administration (Guide), that could have a direct and material effect on its passenger facility
charge program for the year ended June 30, 2011. Compliance with the requirements of laws and
regulations applicable to its passenger facility charge program is the responsibility of the City's
management. Our responsibility is to express an opinion on the City's compliance based on our audit.
We conducted our audit of compliance in accordance with auditing standards generally accepted in the
United States of America, the Guide and the standards applicable to financial audits contained in
Government Auditing Standards, issued by the Comptroller General of the United States. Those
standards and the Guide require that we plan and perform the audit to obtain reasonable assurance
about whether noncompliance with the types of compliance requirements referred to above that could
have a direct and material effect on the passenger facility charge program occurred. An audit includes
examining, on a test basis, evidence about the City's compliance with those requirements and performing
such other procedures as we considered necessary in the circumstances. We believe that our audit
provides a reasonable basis for our opinion. Our audit does not provide a legal determination on the
City's compliance with those requirements.
In our opinion, the City of Waterloo, Iowa, which includes the Federal Aviation Agency Projects Fund, a
special revenue fund of the City, complied, in all material respects, with the compliance requirements
referred to above that could have a direct and material effect on its passenger facility charge program for
the year ended June 30, 2011.
Internal Control Over Compliance
The management of the City of Waterloo, Iowa, which includes the Federal Aviation Agency Projects
Fund, a special revenue fund of the City, is responsible for establishing and maintaining effective internal
control over compliance with requirements of laws and regulations applicable to the passenger facility
charge program. In planning and performing our audit, we considered the City's internal control over
compliance with requirements that could have a direct and material effect on the passenger facility charge
program in order to determine our auditing procedures for the purpose of expressing our opinion on
compliance and to test and report on internal control over compliance in accordance with the Guide, but
not for the purpose of expressing an opinion on the effectiveness of internal control over compliance.
Accordingly, we do not express an opinion on the effectiveness of the City of Waterloo, Iowa's, which
includes the Federal Aviation Agency Projects Fund, a special revenue fund of the City, internal control
over compliance.
McGladreyis the brand under which ASM MtG1»drey,Ire,and McGladrey&Pullen,LIP serve fients'bustness needs.
The two hems operate as separate legal entitles In an alternative Pmctce structure.
A deficiency in internal control over compliance exists when the design or operation of a control over
compliance does not allow management or employees, in the normal course of performing their assigned
functions, to prevent or detect and correct noncompliance with a type of compliance requirement of the
passenger facility program on a timely basis. A material weakness in internal control over compliance is a
deficiency, or combination of deficiencies, in internal control over compliance, such that there is a
reasonable possibility that material noncompliance with a type of compliance requirement of the
passenger facility charge program will not be prevented or detected and corrected, on a timely basis.
Our consideration of internal control over compliance was for the limited purpose described in the first
paragraph of this section and was not designed to identify all deficiencies in internal control over
compliance that might be deficiencies, significant deficiencies or material weaknesses. We did not identify
any deficiencies in internal control over compliance that we consider to be material weaknesses, as
defined above.
Schedule of Passenger Facility Charges Collected and Expensed and Schedule of Passenger
Facility Charges Cash Activity
We have audited the financial statements of the governmental activities, business-type activities,
aggregate discretely presented component units, each major fund, and the aggregate remaining fund
information of the City of Waterloo, Iowa, which includes the Federal Aviation Agency Projects Fund, a
special revenue fund of the City, as of and for the year ended June 30, 2011, and have issued our report
thereon dated December 15, 2011. Our report includes a reference to other auditors. Our audit was
performed for the purpose of forming opinions on the financial statements that collectively comprise the
City of Waterloo, Iowa's basic financial statements. The accompanying schedule of passenger facility
charges collected and expended and schedule of passenger facility charges cash activity are presented
for purposes of additional analysis as specified in the Guide and are not a required part of the basic
financial statements. Such information has been subjected to the auditing procedures applied in the audit
of the basic financial statements and, in our opinion, is fairly stated, in all material respects, in relation to
the basic financial statements taken as a whole.
This report is intended solely for the information and use of the City Council, the Airport Board,
management and the Federal Aviation Administration of the U.S. Department of Transportation and is not
intended to be and should not be used by anyone other than those specified parties.
/CKo'�7/.O e—, G
Davenport, Iowa/
December 15, 2011
2
City of Waterloo, Iowa
Schedule of Passenger Facility Charges Collected and Expended
Year Ended June 30,2011
Beginning
Ending
Application Balance
Balance
Approval Unliquidated PFC Interest Unliquidated
Number PFC Collections Earned Expenditures PFC
Reconstruction of terminal
area ramp 03-06-C-00-ALO $ 64,893 $ - $ - $ - $ 64,893
Obstruction removals 07-07-C-00-ALO 847 - - 761 86
Master plan update 07-07-C-00-ALO 6,730 - - 1,155 5,575
PFC administration costs 07-07-C-00-ALO 10,359 - - 10,359 -
•
Runway 18/36 rehabilitation and
edge listing,phase 1 09-08-C-00-ALO 10,063 (2,814) -
7,249 -
•
Rehab Airfield Vault&Control System 09-08-C-00-ALO 28,637 30,866 - - 59,503
Snow removal equipment 09-08-C-00-ALO 31,964 - - 25,988 5,976
De-Icing Truck 10-09-C-00-ALO 11,000 (3,005) - 7,995 -
Snow removal equipment 10-09-C-00-ALO 11,997 12,103 - 375 23,725
Design Taxiway A,B,E&Ramp 11.10-C-00-ALO - 11,155 3,904 7,251
Rehab Taxiway E 11-10-C-00-ALO - - -
PFC Administration Costs 11-10-C-00-ALO - 34,569 723 117 35,175
Total $ 176,490 $ 82,874 $ 723 $ 57,903 $ 202,184
Passenger Facility Charges(PFCs)are expended as the local match required for CFDA#20.106,Airport Improvement Program,as displayed
on the schedule of expenditures of federal awards plus additional amounts approved by the Federal Aviation Administration(FAA).
Cumulative approvals for collections and uses are both$2,721,751.
' Project completed
3
City of Waterloo, Iowa
Schedule of Passenger Facility Charges Cash Activity
Year Ended June 30, 2011
Totals Totals Totals
Description July 1,2010 Quarter#1 Quarter#2 Quarter#3 Quarter#4 for Year June 30,2011
Passenger Facility Charges
collected $ 2,168,246 $ 20,121 $ 23,143 $ 17,547 $ 22,062 $ 82,874 $ 2,251,120
Interest 30,113 165 183 185 190 723 30,836
Expended (2,021,869) (3,244) (959) (19,367)
(34,333) (57,903) (2,079,772)
Total $ 176,490 $ 17,043 $ 22,367 $ (1,635) $ (12,081) $ 25,694 $ 202,184
4