#6 Comprehensive Annual Financial Report
ADMINISTRATIVE SERVICES MEMORANDUM
June 15, 2010
TO: City Council
FROM: Patty Lynch, Comptroller
SUBJECT: 2009 Comprehensive Annual Financial Report - Report on Internal Control
Please find attached a copy of our 2009 Comprehensive Annual Financial Report (CAFR)
for Council’s review. The main component of the CAFR is the City’s audited financial
statements. There is also an introductory section which provides background information
about the City, its major initiatives, economic condition, and general information. Following
the financial information there is a series of 18 statistical schedules that primarily show 10-
year trend data for items such as fund balance, revenue trends, and debt capacity.
Wisconsin State Statues require that an annual audit be conducted by an independent
certified public accountant. Baker Tilly Virchow Krause, LLP, Certified Public Accounts,
have audited and issued the opinion that Janesville’s Financial Statements have presented
fairly the financial position of the City, as of December 31, 2009. We request that the
Council accept the report during their meeting scheduled on June 28, 2010.
In addition to the audited financial statements, our auditors have also issued a report
which references our internal controls over financial reporting and compliance with certain
provisions of laws, regulations, contracts, grant agreements, and other financial matters.
Please find attached for Council's review a copy of the City of Janesville’s 2009 Report on
Internal Control. In this report, Baker Tilly Virchow Krause, LLP have reported a material
weakness in internal accounting controls. A material weakness is reported if there is more
than a remote likelihood that a material misstatement will not be prevented or detected by
our internal controls.
Material Weaknesses – Internal Accounting Controls
The auditors have reviewed and evaluated the City’s internal controls over
significant accounting transaction cycles. This analysis has identified a
weakness in levels of review during in the year-end audited financial statement
preparation.
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With all internal controls procedures there needs to be a consideration of the
cost of avoiding the weakness to its related benefit. The City prepares high
quality financial statements, conversion entries, and footnote disclosures for the
auditors to review. However, because of the City’s size, management does not
believe it is cost effective to hire additional staff with the expertise to review all
aspects of financial reporting to scrutinize the statements internally to the same
degree that the auditors do later, and we rely on the auditor for this review.
In addition to reporting the material weakness, the Report on Internal Control also includes
required communications with the City Council. Such items include the auditors’ responsibilities
and management’s responsibilities to the audited financial statements. The auditors also point out
that there were no significant difficulties in dealing with management in performing the audit, and
no audit adjustments were proposed.
The CAFR is available on the City website, and paper copies are available at the Hedberg Public
Library and in the City Clerk’s office for the public’s review.
Ms. Heather Acker, CPA, Partner, Baker Tilly Virchow Krause, LLP, will be attending the June 28
Council meeting to address any questions that the Council may have.
cc: Jacob J. Winzenz, Director of Administrative Services/Assistant City Manager
Eric J Levitt, City Manager
Attachments
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