PURPOSE   

The purpose of this report is to formally submit the Fiscal Year End 2005-2006 Comprehensive Annual Financial Report (CAFR) to the City Council.

BACKGROUND

The City Council engaged an independent certified public accounting firm, Mayer, McCann, and Hoffman (formerly Conrad and Associates), to perform the annual audit of the City of Burbank and its component units.  The results of the audit performed are formally published in the CAFR.

The CAFR will be submitted to the Government Finance Officers� Association (GFOA) for an annual national achievement award.  In order to qualify for this award, the City must publish an easily readable and effectively organized CAFR.  Furthermore, the contents of the CAFR have to conform to the rigorous standards established by the award program.  This report must satisfy both Generally Accepted Accounting Principles (GAAP) and applicable legal requirements.    The City has received this national achievement award for 22 consecutive years, and staff believes that the report submitted to the City Council will continue to conform to the standards established by this award program. 

Additionally, the CAFR is sent out to numerous government agencies and financial institutions in order to comply with various reporting, financial, and subsequent bond disclosure requirements. 

ANALYSIS

The overall financial picture of the City is presented, in accordance to the Governmental Accounting Standards Board (GASB) pronouncements, on a Government-wide basis.  This is designed to provide readers with a broad overview of the City�s finances similar to a private-sector business. These statements show the June 30, 2006 fiscal year balances and overall results of operations for the period then ended, for all City funds, the Redevelopment Agency, the Housing Authority, the Parking Authority, the Burbank Community Services Fund, the Youth Endowment Services (YES) Fund, the Public Facilities Financing Authority, and the Burbank Public Financing Authority.  The statements are as follows:

�         The statement of net assets presents information on all of the City�s assets and liabilities, with the difference between the two reported as net assets.  Over time, increases or decreases in net assets may serve as a useful indicator of whether the financial position of the City is improving or deteriorating.

�         The statement of activities presents information showing how the City�s net assets changed during the most recent fiscal year.  All changes in net assets are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of related cash flows. Thus, revenues and expenses are reported in this statement for some items that will only result in cash flows in future fiscal periods (e.g., earned but unused vacation and sick leave).

Both of the government-wide financial statements distinguish functions of the City that are principally supported by taxes and intergovernmental revenues (governmental activities).  The governmental activities of the City include general government, public safety, public services, culture and recreation and interest on long-term debt.  The business-type activities of the City include operations of the electric, water, wastewater, solid waste utilities, as well as operation of the golf course.

Management�s Discussion and Analysis (MD & A). This discussion and analysis starts the financial section of the CAFR and serves as an executive summary.  GAAP requires that management provide this narrative introduction, overview and analysis to accompany the basic financial statements.  The letter of transmittal, which precedes the MD & A in the introductory section, is designed to compliment the MD & A and should be read in conjunction with it. The MD & A is found immediately following the report from the independent auditors.  The report from the auditors contains an opinion letter in which an entity can receive basically 3 opinions; unqualified, qualified, and adverse.  An unqualified opinion from the auditors is the highest given.  For the 2005-06 fiscal year audit, the City of Burbank, again, received an unqualified opinion.

Following the government-wide statements in the CAFR, the Balance Sheet, and the Statement of Revenues, Expenditures and Changes in Fund Balances are presented for all major and non-major governmental funds. A major fund is one of material significance and is determined through prescribed calculations. The General Fund is always considered a major fund by definition. Other governmental funds can be declared major funds by management due to other factors, even if they fail the qualifications resulting from the calculations.  Non-major funds are all combined together for presentation. Reconciliations between these governmental statements and the government-wide statements are also presented, as well as a budget to actual comparison for the General Fund.  

Proprietary fund statements follow the governmental funds.  Included here are the Statement of Net Assets, the Statement of Revenues, Expenses and Changes in Fund Net Assets, and the Statement of Cash Flows.  As with the governmental funds, these are also broken into major and non-major fund categories.  All of these statements are followed by the Notes to the Basic Financial Statements.

The next two sections of the CAFR provide statements for each individual non-major governmental fund, as well as the internal service funds.  The governmental funds are presented in their various categories: special revenue funds, debt service funds, and capital project funds.

The last section of the CAFR, which is unaudited, contains statistical data about the City of Burbank.  All of the tables and schedules present numerous facts about the City, many for the last 10 years. The statistical facts include population figures, principal taxpayers, and assessed valuations of taxable property to name a few. This section was completely revised and expanded pursuant to the implementation of GASB statement # 44.

FISCAL IMPACT

There is no fiscal impact as this is only a recording of the previous fiscal year�s financial results.

RECOMMENDATION

Staff recommends that the City Council note and file the Fiscal Year end 2005-06 CAFR.

Attachment

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