Loading...
HomeMy WebLinkAbout2010-05-05 Agenda Packet - Board (17) Agenda Item # 10 -7 Public Utility District ACTION To: Board of Directors From: Bob Mescher Date: May 05, 2010 Subject: Consideration of the Draft Audit Reports for 2009 and 2008 1. WHY THIS MATTER IS BEFORE THE BOARD The District is required to have its financial records audited each year. The Board is responsible for hiring auditors. The auditors present their findings directly to the Board. 2. HISTORY In August 2008, the Board extended their contract with Baker/Tilly (previously Virchow Krause & Company LLP) accounting firm to perform the District's annual audits for 2008 through 2010. 3. NEW INFORMATION The 2009 audit is now complete and ready to be presented to the Board of Directors. Tom Unke will be at the Board meeting to go over the results of the audit which includes drafts of the Consolidated Financial Statements and the Primary Government Only Financial Statements for the years ended December 31, 2009 and 2008. Mr. Unke will also present the management letter which includes their recommendations. Attached are copies of the draft audit statements, the management letter and the audit representation letter that is signed by the General Manager and myself. 4. FISCAL IMPACT This is a report on the financial activity for 2009 and 2008. There is no fiscal impact. 5. RECOMMENDATION Adopt the draft Audited Financial Reports for 2009 and 2008. A ^� Mary Chapman Michael D. Holley Administrative Services Manager General Manager Truckee Donner Public UtilityDistrict Board of Directors ° Joseph R.Aguera Jeff Bender J. Ron Hemig John Hillstrom Tony Laliotis MANAGEMENT REPRESENTATION LETTER General Manager Michael D. Holley May 5, 2010 Baker Tilly Virchow Krause, LLP Ten Terrace Court P.O. Box 7398 Madison,WI 53707 Dear Auditors: We are providing this letter in connection with your audit of the financial statements of the Truckee Donner Public Utility District as of December 31,2009 and December 31, 2008 and for the years then ended for the purpose of expressing an opinion as to whether the financial statements present fairly, in all material respects, the respective financial position, results of operations, and cash flows of Truckee Donner Public Utility District in conformity with accounting principles generally accepted in the United States of America. We confirm that we are responsible for the fair presentation in the financial statements of financial position, results of operations and cash flows in conformity with accounting principles generally accepted in the United States of America. We are also responsible for adopting sound accounting policies, establishing and maintaining internal control and preventing and detecting fraud. Certain representations in this letter are described as being limited to matters that are material. Items are considered material regardless of size, if they involve an omission or misstatement of accounting information that, in the 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. We confirm, to the best of our knowledge and belief, the following representations made to you during your audit. 1. The combined financial statements referred to above are fairly presented in conformity with accounting principles generally accepted in the United States of America.We have engaged you to advise us in fulfilling that responsibility.The financial statements include all properly classified funds of the oversight unit and all component units required by accounting principals generally accepted in the United States of America to be included in the financial reporting entity. 2. We have made available to you all— a. Financial records and related data. b. Minutes of the meetings of the board of directors and summaries of actions of recent meetings for which minutes have not yet been prepared. 3. There have been no communications from regulatory agencies concerning noncompliance with, or deficiencies in,financial reporting practices. R O. Box 309—Truckee, CA 96160—Phone 530-587-3896—www.tdpud.org Baker Tilly Virchow Krause, LLP May 5, 2010 Page 2 4. There are no material transactions that have not been properly recorded in the accounting records underlying the financial statements. 5. We believe the effect of the uncorrected financial statement misstatement summarized in the attached schedule is immaterial to the financial statements taken as a whole. 6. We acknowledge our responsibility for the design and implementation of programs and controls to prevent and detect fraud. 7. We have no knowledge of any fraud or suspected fraud affecting the entity involving: a. Management, b. Employees who have significant roles in internal control, or c. Others where the fraud could have a material effect on the financial statements. 8. We have no plans or intentions that may materially affect the carrying value or classification of assets, liabilities or fund equity. 9. The following, if any, have been properly recorded or disclosed in the combined financial statements: a. Related party transactions, including revenues, expenses, loans, transfers, leasing arrangements, and guarantees, and amounts receivable from or payable to related parties. b. Guarantees,whether written or oral, under which the utility is contingently liable. c. All accounting estimates (including fair value measurements), that could be material to the financial statements, including the key factors and significant assumptions underlying those estimates and measurements are reasonable in the circumstances consistently applied, and adequately disclosed. 10. We are responsible for compliance with the laws, regulations, and provisions of contracts and grant agreements applicable to us, including debt contracts and debt covenants; and we have identified and disclosed to you all laws, regulations and provisions of contracts and grant agreements that we believe 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. 11. There are no— a. Violations or possible violations of budget ordinances, provisions of contracts and grant agreements, laws or regulations including those pertaining to adopting and amending budgets, tax or debt limits, and any related debt covenants whose effects should be considered for disclosure in the combined financial statements or as a basis for recording a loss contingency, or for reporting on noncompliance. Baker Tilly Virchow Krause, LLP May 5, 2010 Page 3 b. Rates being charged to customers other than the rates as authorized by the district board. c. Violations of restrictions placed on revenues as a result of a bond resolution covenants—such as revenue distribution, or debt service funding. d. Unasserted claims, assessments or pending lawsuits that our lawyer has advised us are probable of assertion and must be disclosed in accordance with Financial Accounting Standards Board(FASB)Statement No.5,Accounting for Contingencies. e. Other liabilities or gain or loss contingencies that are required to be accrued or disclosed by Statement of Financial Accounting Standards No.5. f. Reservations or designation of fund equity that was not properly authorized and approved. 12. Provision, when material, has been made to reduce excess or obsolete inventories to their estimated net realizable value. 13. The organization has satisfactory title to all owned assets, and there are no liens or encumbrances on such assets nor has any asset been pledged as collateral that have not been disclosed. 1.4. The organization has complied with all aspects of contractual agreements that would have a material effect of the financial statements in the event of noncompliance. 15. Provisions for uncollectible receivables have been properly identified and recorded. 16. The financial statements include all component units as well as joint ventures with an equity interest, and properly disclose all other joint ventures and other related organizations. 17. The financial statements properly classify all funds, activities and component units. 18. Net asset components (invested in capital assets, net of related debt; restricted; and unrestricted) and fund balance reserves and designations are properly classified and, if applicable, approved. 19. Expenses 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. 20. Interfund, internal, and intra-entity activity and balances have been appropriately classified and reported. 21. Deposits and investment securities are properly classified as to risk, and investments are properly valued. 22. Capital assets, including infrastructure assets, are properly capitalized, reported, and if applicable, depreciated. 23. Required supplementary information (RSI) is measured and presented within prescribed guidelines. Baker Tilly Virchow Krause, LLP May 5, 2010 Page 4 24. We understand that you prepared the trial balance for use during the audit and that your preparation of the trial balance was limited to formatting the information in the organizations general ledger into a working trial balance. 25. We have a process to track the status of audit findings and recommendations. 26. We have identified to you any previous financial audits, attestation engagements, performance audits, or other studies related to the objectives of this audit being undertaken and the corrective actions taken to address significant findings and recommendations. To the best of our knowledge and belief, no events, including instances of noncompliance, have occurred subsequent to December 31, 2009 and through the date of this letter that would require adjustment to, or disclosure in, the aforementioned financial statements. Signed ,n Michael D. olley General Manager, May 5, 2010 Signed Robert Mescher Finance & Accounting Manager, May 5, 2010 i i TRUCKEE DONNER PUBLIC UTILITY DISTRICT SUMMARY OF PASSED ADJUSTING JOURNAL ENTRIES December 31,2009 and 2008 l 2009 Financial Statements Effect- Increase(Decrease)to Financial Statement Total Current Long-Term Total Current Long-Term Total Total Total Total Net Department Assets Assets Assets Liabilities Liabilities Liabilities Net Assets Revenues Expenses Income Electric $ - $ $ - $ Water 30,024 - 30,024 - - - 30,024 30,024 - 30,024 Old Greenwood - - - _ Grays Crossing - - - - $ 30,024 $ 30,024 $ $ 30,024 Total Net Audit Differences $ 30,024 $ - $ 30,024 $ - $ - $ - -