HomeMy WebLinkAboutCOUNCIL - AGENDA ITEM - 08/20/2019 - RESOLUTION 2019-088 ACKNOWLEDGING COMPLETION AND RAgenda Item 16
Item # 16 Page 1
AGENDA ITEM SUMMARY August 20, 2019
City Council
STAFF
Travis Storin, Accounting Director
John Duval, Legal
SUBJECT
Resolution 2019-088 Acknowledging Completion and Receipt of the City's 2018 Audited Comprehensive
Annual Financial Report and Federal Compliance Audit Report Prepared by BKD LLP, an Independent Public
Accounting Firm.
EXECUTIVE SUMMARY
The purpose of this item is to accept delivery of the City's 2018 audited financial reports provided by the
independent accounting firm, BKD LLP.
STAFF RECOMMENDATION
Staff recommends adoption of the Resolution.
BACKGROUND / DISCUSSION
An annual audit of the City's financial records was completed within six months of the City's 2018 fiscal year-
end of December 31, 2018. Separate audit opinions are issued for the basic financial statements of the City
and for compliance with major federal programs.
The City received unqualified and unmodified, or "clean", audit opinions for each report issued. No material
weaknesses in internal control were noted as part of the audit, and no noncompliance material to the financial
statements was noted. In the auditor's opinion, the financial statements present fairly, in all material respects,
the respective financial position of the City in accordance with accounting principles generally accepted in the
United States.
The audit team identified one significant deficiency (level 2 on a 3-scale of severity) related to Federal grants in
the Compliance Report, finding 2018-001. See Attachment 2, page 13 which reads in part (emphasis added):
The City originally passed an ordinance in 2005 allocating 0.25% tax for the construction of capital
assets in the Community Capital Improvement Program Fund (CCIP), a special revenue fund. The tax
was later extended by Ordinance No. 013-2015 commencing January 1, 2016 and expiring December
31, 2025. When the initiative was extended, the City created a separate fund for the proceeds until
which time the proceeds were expended for the approved capital projects. When the approved
projects were completed, the taxes were transferred from the CCIP Fund to a capital projects fund.
During the year-end financial reporting process, when the City identified capital asset-related
expenditures for capitalization, it inadvertently capitalized the same cost twice; once when the
expenditure was initially recorded in the CCIP Fund and a second time when those same costs
were transferred to the capital projects fund.
Agenda Item 16
Item # 16 Page 2
The finding results in an adjustment to reduce the City’s $1.6 billion of capital asset balances by approximately
$11.7 million, of which $8.4 million relates to prior periods. The City adjusted the 2018 financial statements and
issued a corrective action plan to prevent this condition in future years.
Other noted findings related to information technology and financial reporting are noted in the report but were
noted by the audit team as recommendations of best practice (Attachment 1, pages 6-7).
CITY FINANCIAL IMPACTS
The audit finding does not have an impact on fund balance, rating agencies, strategic planning, or budget.
Staff has put corrective measures in place.
BOARD / COMMISSION RECOMMENDATION
At the direction of the Council Finance Committee, staff is bringing the audit results to the full Council to ensure
awareness of the significant control finding.
PUBLIC OUTREACH
Staff has posted the documents on the City Finance website and copies of the reports are available upon
request. Pursuant to the Charter, a legal notice was published in the Coloradoan summarizing for citizens the
results of the audit.
ATTACHMENTS
1. Audit Communications Letter (PDF)
2. Single Audit Report (PDF)
Honorable Mayor and
Members of City Council and City Manager
City of Fort Collins, Colorado
Fort Collins, Colorado
As part of our audits of the financial statements and compliance of the City of Fort Collins,
Colorado (the City) as of and for the year ended December 31, 2018, we wish to communicate
the following to you.
AUDIT SCOPE AND RESULTS
Auditor’s Responsibility Under Auditing Standards Generally Accepted in the United
States of America and the Standards Applicable to Financial Audits Contained in
Government Auditing Standards Issued by the Comptroller General of the United States
and U.S. Office of Management and Budget (OMB) Title 2 U.S. Code of Federal
Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit
Requirements for Federal Awards (Uniform Guidance)
An audit performed in accordance with auditing standards generally accepted in the United
States of America and the standards applicable to financial audits contained in Government
Auditing Standards issued by the Comptroller General of the United States and U.S. Office of
Management and Budget (OMB) Uniform Guidance is designed to obtain reasonable, rather than
absolute, assurance about the financial statements and about whether noncompliance with the
types of compliance requirements described in the OMB Compliance Supplement that could have
a direct and material effect on a major federal program occurred. In performing auditing
procedures, we establish scopes of audit tests in relation to the financial statements taken as a
whole. Our engagement does not include a detailed audit of every transaction. Our engagement
letter more specifically describes our responsibilities.
These standards require communication of significant matters related to the financial statement
and compliance audits that are relevant to the responsibilities of those charged with governance
in overseeing the financial reporting process. Such matters are communicated in the remainder
of this letter or have previously been communicated during other phases of the audit. The
standards do not require the auditor to design procedures for the purpose of identifying other
matters to be communicated with those charged with governance.
Audits of the financial statements and compliance do not relieve management or those charged
with governance of their responsibilities. The professional services agreement more specifically
describes your responsibilities.
ATTACHMENT 1
Honorable Mayor and
Members of City Council and City Manager
City of Fort Collins, Colorado
Page 2
Qualitative Aspects of Significant Accounting Policies and Practices
Significant Accounting Policies
The City’s significant accounting policies are described in Note 1 of the audited financial
statements.
Alternative Accounting Treatments
We had discussions with management regarding alternative accounting treatments within
accounting principles generally accepted in the United States of America for policies and
practices for material items, including recognition, measurement and disclosure considerations
related to the accounting for specific transactions as well as general accounting policies, as
follows:
No matters are reportable
Management Judgments and Accounting Estimates
Accounting estimates are an integral part of financial statement preparation by management,
based on its judgments. The following areas involve significant areas of such estimates for
which we are prepared to discuss management’s estimation process and our procedures for
testing the reasonableness of those estimates:
Self-insurance reserves (IBNR)
Net pension liability
Other postemployment benefits liability
Fair value of investments
Allowances for accounts, grants and notes receivable
Depreciable lives of capital assets
Financial Statement Disclosures
Revenue recognition
Investments
Long-term debt
Honorable Mayor and
Members of City Council and City Manager
City of Fort Collins, Colorado
Page 3
Audit Adjustments
During the course of any audit, an auditor may propose adjustments to financial statement
amounts. Management evaluates our proposals and records those adjustments which, in its
judgment, are required to prevent the financial statements from being materially misstated.
Some adjustments proposed were not recorded because their aggregate effect is not currently
material; however, they involve areas in which adjustments in the future could be material,
individually or in the aggregate.
Areas in which adjustments were proposed include:
Proposed Audit Adjustments Recorded
Duplicate capitalization of assets
Proposed Audit Adjustments Not Recorded
Attached is a summary of uncorrected misstatements we aggregated during the current
engagement and pertaining to the latest period presented that were determined by
management to be immaterial, both individually and in the aggregate, to the financial
statements as a whole
Auditor’s Judgments About the Quality of the City’s Accounting Principles
During the course of the audit, we made the following observations regarding the City’s
application of accounting principles:
During 2018 the City adopted Governmental Accounting Standards Board Statement
(GASB) No. 86, Certain Debt Extinguishment Issues and GASB No. 89, Accounting for
Interest Cost Occurred Before the End of a Construction Period
Disagreements with Management
The following matters involved disagreements which if not satisfactorily resolved would have
caused a modified auditor’s opinion on the financial statements:
No matters are reportable
Honorable Mayor and
Members of City Council and City Manager
City of Fort Collins, Colorado
Page 4
Consultation with Other Accountants
During our audit we became aware that management had consulted with other accountants about
the following auditing or accounting matters:
No matters are reportable
Significant Issues Discussed with Management
Prior to Retention
During our discussion with management prior to our engagement, the following issues regarding
application of accounting principles or auditing standards were discussed:
No matters are reportable
During the Audit Process
During the audit process, the following issues were discussed or were the subject of
correspondence with management:
We had discussions with management over the handling of recording the receipt of Plant
Investment Fee (PIF) Revenue
Difficulties Encountered in Performing the Audit
Our audit requires cooperative effort between management and the audit team. During our audit,
we found significant difficulties in working effectively on the following matters:
No matters are reportable
Other Material Communications
Listed below are other material communications between management and us related to the
audit:
Management representation letter (attached)
Honorable Mayor and
Members of City Council and City Manager
City of Fort Collins, Colorado
Page 5
We orally communicated to management other deficiencies in internal control identified
during our audit that are not considered material weaknesses or significant deficiencies
INTERNAL CONTROL OVER FINANCIAL REPORTING
In planning and performing our audit of the financial statements of the City of Fort Collins,
Colorado (the City) as of and for the year ended December 31, 2018, in accordance with auditing
standards generally accepted in the United States of America and the standards applicable to
financial audits contained in Government Auditing Standards issued by the Comptroller General
of the United States, we considered the City’s internal control over financial reporting (internal
control) as a basis for designing our auditing procedures for the purpose of expressing our
opinion on the financial statements, but not for the purpose of expressing an opinion on the
effectiveness of the City’s internal control. Accordingly, we do not express an opinion on the
effectiveness of the City’s internal control.
Our consideration of internal control was for the limited purpose described in the preceding
paragraph and was not designed to identify all deficiencies in internal control that might be
significant deficiencies or material weaknesses and, therefore, there can be no assurance that all
deficiencies, significant deficiencies or material weaknesses have been identified. However, as
discussed below, we identified certain deficiencies in internal control that we consider to be a
significant deficiency.
A 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 of the City’s financial statements on a timely basis. A deficiency in design
exists when a control necessary to meet a control objective is missing or an existing control is
not properly designed so that, even if the control operates as designed, a 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 competence 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 City’s financial
statements will not be prevented or detected and corrected on a timely basis.
A significant deficiency is a deficiency, or 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.
Honorable Mayor and
Members of City Council and City Manager
City of Fort Collins, Colorado
Page 6
We observed the following matter that we consider to be a significant deficiency.
Significant Deficiency
Refer to the Independent Auditor’s Report on Internal Control Over Financial Reporting and on
Compliance and Other Matters Based on an Audit of the Financial Statements Performed in
Accordance with Government Auditing Standards.
Deficiencies
Information Technology (IT)
The secondary data center is located within five miles of the primary data center. Given
their proximity, both data centers could be affected by the same regional events resulting
in an extended service outage. Furthermore, the City’s secondary/backup co-location
data center is managed by a third party. A Service and Organization Controls (SOC) or
similar report has not been received and evaluated by the City to verify the effectiveness
of physical and environmental controls of the third party. We recommend that the City
perform an evaluation of the location of the secondary data center and consider steps to
reduce the risks associated with the proximity of the data centers. We further recommend
that the City obtain the SOC report from the third party manager of the data center when
this report becomes available.
We noted there is not a periodic formal documented process to review the ongoing need
of City personnel to have physical access to the secondary data center. We recommend
implementing a periodic review, which provides management with the opportunity to
verify ongoing need and to remove access for terminated users that were not otherwise
caught in the normal termination process.
The City does not have an enterprise-wide Incident Response Program to provide
uniform guidance on classifying and handling incidents. We recommend the City
consider the feasibility of implementing an enterprise-wide Incident Response Program.
A formal periodic user access and permission review is not evidenced for the applications
listed below. We recommend a documented periodic user access review be performed to
ensure access to the below applications is appropriate.
o JD Edwards
o CIS
o Tungsten
o MS Govern
o Accela
o Active Directory (AD)
Honorable Mayor and
Members of City Council and City Manager
City of Fort Collins, Colorado
Page 7
Financial Reporting
Reconciliations for various accounts are not performed on a periodic basis and therefore there are
multiple outstanding items spanning upwards of 20 years. A summary of items identified
include:
Deposits that cleared the December bank statement were included as reconciling items on
the bank reconciliation and in accounts receivable.
Transportation Fund – Customer accounts receivable included an unreconciled amount.
Reconciliations for developer escrows are not completed periodically causing variances
between the balance recorded in the general ledger and the supporting documentation. A
passed adjustment was posted in the general fund in order to reflect the balance that
agreed to supporting documentation.
General Fund – the City has an unearned revenue account for building permits that is not
reconciled. There are amounts included in the detail dating back to 1997.
The City performs high-level analytics on the parking citation accounts receivable, but
does not formally reconcile this account. BKD would suggest looking at the aging and
considering if an allowance is necessary.
Developer Escrows (Storm Water fund) – during testing of developer escrows, it was
noted that there are items dating back to 1997. Per discussions with staff, we note that
most commonly, the City does not collect on these escrows and therefore these items
should be removed from the escrow payable.
While none of the issues noted materially affected the financial statements, reconciliations are an
important part of the internal control structure and we recommend that reconciliations be
performed at least on an annual basis to ensure account balances are properly stated.
We observed matters that we consider to be deficiencies that we communicated to management
verbally.
OTHER MATTERS
Although not considered material weaknesses, significant deficiencies or deficiencies in internal
control over financial reporting, we observed the following matters and offer these comments
and suggestions with respect to matters which came to our attention during the course of the
audit of the financial statements. Our audit procedures are designed primarily to enable us to
form an opinion on the financial statements and, therefore, may not bring to light all weaknesses
in policies and procedures that may exist. However, these matters are offered as constructive
suggestions for the consideration of management as part of the ongoing process of modifying
and improving financial and administrative practices and procedures. We can discuss these
Honorable Mayor and
Members of City Council and City Manager
City of Fort Collins, Colorado
Page 8
matters further at your convenience and may provide implementation assistance for changes or
improvements.
Future Accounting Pronouncements
GASB Statement No. 83, Certain Asset Retirement Obligations (GASB 83): GASB 83
establishes uniform criteria for governments to recognize and measure certain asset retirement
obligations (AROs). An ARO is defined as a legally enforceable liability associated with the
retirement of a tangible capital asset. Examples could be costs associated with decommissioning
a nuclear power plant or disposal of x-ray machine. An ARO is recognized when the liability is
incurred, which is manifested by the occurrence of both an external obligating event (such as a
legally binding contract or a court judgment) and an internal obligating event (such as placing a
tangible capital asset into service). A government also recognizes a deferred outflow of
resources when it recognizes an ARO liability. The ARO is measured at the best estimate of the
current value of outlays expected to be incurred. Additional note disclosures are required.
GASB 83 is effective for the City’s year ending December 31, 2019.
Governmental Accounting Standards Board Statement No. 84
GASB has issued Statement No. 84, Fiduciary Activities (GASB 84). GASB 84 establishes
criteria for identifying and reporting fiduciary activities. It presents separate criteria for
evaluating component units, pension and other postemployment benefit arrangements, and other
fiduciary activities. The focus is on a government controlling the assets of the fiduciary activity
and identification of the beneficiaries of those assets. Fiduciary activities are reported in one of
four types of funds: pension (and other employee benefit) trust funds, investment trust funds,
private-purpose trust funds, or custodial funds. Custodial funds are used to report fiduciary
activities that are not held in a trust. The agency fund designation will no longer be used.
GASB 84 also provides guidance on fiduciary fund statements and timing of recognition of a
liability to beneficiaries.
This statement will be effective for the City’s year ending December 31, 2019.
GASB Statement No. 87, Leases (GASB 87)
GASB 87 provides a new framework for accounting for leases under the principle that leases are
financings. No longer will leases be classified between capital and operating. Lessees will
recognize an intangible asset and a corresponding liability. The liability will be based on the
payments expected to be paid over the lease term, which includes an evaluation of the likelihood
of exercising renewal or termination options in the lease. Lessors will recognize a lease
Honorable Mayor and
Members of City Council and City Manager
City of Fort Collins, Colorado
Page 9
receivable and related deferred inflows of resources. Lessors will not derecognize the underlying
asset. An exception to the general model is provided for short-term leases that cannot last more
than 12 months. Contracts that contain lease and nonlease components will need to be separated
so each component is accounted for accordingly.
GASB 87 is effective for the City’s year ending December 31, 2020. Earlier application is
encouraged. Governments will be allowed to transition using the facts and circumstances in
place at the time of adoption, rather than retroactive to the time each lease was begun.
GASB Statement No. 88, Certain Disclosures Related to Debt, including Direct Borrowings and
Direct Placements (GASB 88)
GASB 88 specifies disclosures that should be made in the financial statements related to debt. It
also provides a definition of debt so that governments know which types of liabilities should be
included in those disclosures. If a government has direct borrowings or direct placements,
disclosures related to these should be provided separately from disclosures related to other types
of debt.
GASB 88 is effective for the City’s year ending December 31, 2019.
* * * * *
This communication is intended solely for the information and use of management, City Council,
and others within the City and is not intended to be and should not be used by anyone other than
these specified parties.
June 21, 2019
Before Subsequent to
Misstatements Misstatements Misstatements % Change
Total Assets & Deferred Outflows 1,218,633,909 (541,722) 1,218,092,187 -0.04%
Total Liabilities & Deferred Inflows (119,129,907) (119,129,907)
Total Net Position (1,099,504,002) 541,722 (1,098,962,280) -0.05%
General Revenues & Transfers (218,291,138) (226,000) (218,517,138) 0.10%
Net Program Revenues/ Expenses 191,415,677 (8,239,049) 183,176,628 -4.30%
Change in Net Position (26,875,461) (8,465,049) (35,340,510) 31.50%
City of Fort Collins
ATTACHMENT
This analysis and the attached "Schedule of Uncorrected Misstatements (Adjustments Passed)" reflects the effects on the financial
statements if the uncorrected misstatements identified were corrected.
Governmental Activities (Government-Wide Statements)
QUANTITATIVE ANALYSIS
Governmental Activities (Government-Wide Statements)
SCHEDULE OF UNCORRECTED MISSTATEMENTS (ADJUSTMENTS PASSED)
Assets Liabilities
General Revenues
& Transfers
Net Program
Revenues/
Expenses Net Position
Change in Net
Position Net Position
Description Financial Statement Line Item DR (CR) DR (CR) DR (CR) DR (CR) DR (CR) DR (CR) DR (CR)
Prior year work-in-process capital
assets that were capitalized twice
(corrected in current year)
F
0 0 0 (8,381,199) 8,381,199 0 0
Expense - Gain/Loss on Sale of Asset (8,381,199)
Net Position 8,381,199
Cultural Services Fund (Fund 273):
Current year and prior year work-in-
process assets that were
capitalized twice (not corrected in
current year)
F
(541,722) 0 0 142,150 399,572 0 0
Accumulated Depreciation 90,191
Capital Assets (631,913)
Gain/Loss on Sale of Asset - Current Year 193,724
Net Position - Prior Year 399,572
Depreciation Expense (51,574)
Turnaround effect - To adjust credit
card cash account out of balance
overstatement
F
0 0 (226,000) 0 226,000 0 0
Revenue (226,000) 226,000
Net Position
To adjust the net investment in
capital assets component of net
position for the inclusion of
retainage
F
0 0 0 0 0 0 0
Net investment in capital assets 1,105,806
Unrestricted net position (1,105,806)
Total passed adjustments (541,722) 0 (226,000) (8,239,049) 9,006,771 0 0
Impact on Change in Net Position (8,465,049)
Impact on Net Position 541,722
Client: City of Fort Collins
Period Ending: December 31, 2018
Net Effect on Following Year
Factual (F),
Judgmental (J),
Projected (P)
Before Subsequent to
Misstatements Misstatements Misstatements % Change
Current Assets 1,059,130,972 1,059,130,972
Non-Current Assets & Deferred Outflows 2,616,710 2,616,710
Current Liabilities (30,448,281) (30,448,281)
Non-Current Liabilities & Deferred Inflows (179,953,894) (179,953,894)
Current Ratio 34.79 34.79
Total Assets & Deferred Outflows 1,061,747,682 1,061,747,682
Total Liabilities & Deferred Inflows (210,402,175) (210,402,175)
Total Net Position (851,345,507) (851,345,507)
General Revenues & Transfers (6,544,250) (332,000) (6,876,250) 5.07%
Net Program Revenues/ Expenses (16,195,862) (16,195,862)
Change in Net Position (22,740,112) (332,000) (23,072,112) 1.46%
City of Fort Collins
ATTACHMENT
This analysis and the attached "Schedule of Uncorrected Misstatements (Adjustments Passed)" reflects the effects on the financial
statements if the uncorrected misstatements identified were corrected.
Business Type Activities (Government-Wide Statements)
QUANTITATIVE ANALYSIS
Governmental Activities (Government-Wide Statements)
SCHEDULE OF UNCORRECTED MISSTATEMENTS (ADJUSTMENTS PASSED)
Current Non-Current Current Non-Current
General Revenues
& Transfers
Net Program
Revenues/
Expenses Net Position
Change in Net
Position Net Position
Description Financial Statement Line Item DR (CR) DR (CR) DR (CR) DR (CR) DR (CR) DR (CR) DR (CR) DR (CR) DR (CR)
Turnaround effect - To adjust credit
card cash account out of balance
overstatement
F
0 0 0 0 (332,000) 0 332,000 0 0
Revenue (332,000)
Net Position 332,000
To adjust the net investment in
capital assets component of net
position for the inclusion of
retainage
F
0 0 0 0 0 0 0 0 0
Net investment in capital assets 1,328,894
Unrestricted net position (1,328,894)
Total passed adjustments 0 0 0 0 (332,000) 0 332,000 0 0
Impact on Change in Net Position (332,000)
Impact on Net Position 0
Factual (F),
Judgmental (J),
Projected (P)
Client: City of Fort Collins
Period Ending: December 31, 2018
Assets & Deferred Outflows Liabilities & Deferred Inflows Net Effect on Following Year
Before Subsequent to
Misstatements Misstatements Misstatements % Change
Current Assets 11,724,546 11,724,546
Non-Current Assets & Deferred Outflows 4,900,227 4,900,227
Current Liabilities (220,934) (220,934)
Non-Current Liabilities & Deferred Inflows (14,788,374) (14,788,374)
Current Ratio 53.07 53.07
Total Assets & Deferred Outflows 16,624,773 16,624,773
Total Liabilities & Deferred Inflows (15,009,308) (15,009,308)
Total Net Position (1,615,465) (1,615,465)
General Revenues & Transfers (6,715,647) (6,715,647)
Net Program Revenues/ Expenses 4,685,869 4,685,869
Change in Net Position (2,026,858) (2,026,858)
City of Fort Collins
ATTACHMENT
This analysis and the attached "Schedule of Uncorrected Misstatements (Adjustments Passed)" reflects the effects on the financial
statements if the uncorrected misstatements identified were corrected.
Discretely Presented Component Units (Government-Wide Statements)
QUANTITATIVE ANALYSIS
Governmental Activities (Government-Wide Statements)
SCHEDULE OF UNCORRECTED MISSTATEMENTS (ADJUSTMENTS PASSED)
Current Non-Current Current Non-Current
General Revenues
& Transfers
Net Program
Revenues/
Expenses Net Position
Change in Net
Position Net Position
Description Financial Statement Line Item DR (CR) DR (CR) DR (CR) DR (CR) DR (CR) DR (CR) DR (CR) DR (CR) DR (CR)
To adjust the net investment in
capital assets component of net
position for the inclusion of
retainage
F
0 0 0 0 0 0 0 0 0
Net investment in capital assets 103,218
Unrestricted net position (103,218)
Total passed adjustments 0 0 0 0 0 0 0 0 0
Impact on Change in Net Position 0
Impact on Net Position 0
Factual (F),
Judgmental (J),
Projected (P)
Client: City of Fort Collins
Period Ending: December 31, 2018
Assets & Deferred Outflows Liabilities & Deferred Inflows Net Effect on Following Year
Before Subsequent to
Misstatements Misstatements Misstatements % Change
Total Assets & Deferred Outflows 98,164,522 98,164,522
Total Liabilities & Deferred Inflows (31,108,990) (666,312) (31,775,302) 2.14%
Total Fund Balance (67,055,532) 666,312 (66,389,220) -0.99%
Revenues (149,784,626) (39,000) (149,823,626) 0.03%
Expenditures 129,296,370 666,312 129,962,682 0.52%
Change in Fund Balance 3,684,385 627,312 4,311,697 17.03%
City of Fort Collins
ATTACHMENT
This analysis and the attached "Schedule of Uncorrected Misstatements (Adjustments Passed)" reflects the effects on the
financial statements if the uncorrected misstatements identified were corrected.
General Fund
QUANTITATIVE ANALYSIS
General Fund
SCHEDULE OF UNCORRECTED MISSTATEMENTS (ADJUSTMENTS PASSED)
Assets & Deferred
Outflows
Liabilities &
Deferred Inflows
Change in Fund
Balance
Fund
Balance
Description Financial Statement Line Item DR (CR) DR (CR) DR (CR) DR (CR) DR (CR) DR (CR) DR (CR)
To adjust the developer escrows to
the more conservative tracking
spreadsheet amount
J
0 (666,312) 0 666,312 0 0 0
Expense 666,312
A/P Developer Escrows (666,312)
Turnaround effect - Credit card
cash account out of balance
overstatement
F
0 0 (39,000) 0 39,000 0 0
Revenue (39,000)
Fund Balance 39,000
Total passed adjustments 0 (666,312) (39,000) 666,312 39,000 0 0
Impact on Change in Fund Balance 627,312
Impact on Fund Balance 666,312
Client: City of Fort Collins
Period Ending: December 31, 2018
Revenues Expenditures Fund Balance
Net Effect on Following Year
Factual (F),
Judgmental (J),
Projected (P)
Before Subsequent to
Misstatements Misstatements Misstatements % Change
Total Assets & Deferred Outflows 256,767,257 (206,994) 256,560,263 -0.08%
Total Liabilities & Deferred Inflows (61,575,139) (61,575,139)
Total Fund Balance (195,192,118) 208,994 (194,983,124) -0.11%
Revenues (155,388,984) (220,000) (155,608,984) 0.14%
Expenditures 161,405,563 206,994 161,612,557 0.13%
Change in Fund Balance (6,002,665) (13,006) (6,015,671) 0.22%
City of Fort Collins
ATTACHMENT
This analysis and the attached "Schedule of Uncorrected Misstatements (Adjustments Passed)" reflects the effects on the
financial statements if the uncorrected misstatements identified were corrected.
QUANTITATIVE ANALYSIS
Aggregate Remaining Fund Information
SCHEDULE OF UNCORRECTED MISSTATEMENTS (ADJUSTMENTS PASSED)
Assets & Deferred
Outflows
Liabilities &
Deferred Inflows
Change in Fund
Balance
Fund
Balance
Description Financial Statement Line Item DR (CR) DR (CR) DR (CR) DR (CR) DR (CR) DR (CR) DR (CR)
HOME Fund - To reclassify the
cash that cleared the bank prior to
year-end from accounts receivable.
F
0 0 0 0 0 0 0
Cash 82,335
Accounts Receivable (82,335)
Mulitple Funds - To write off the
unreconciled amount in the credit
card clearing account
FJ
(81,500) 0 0 81,500 0 0 0
Expense 81,500
Cash (81,500)
Transportation Fund - To write off
the unreconciled amount in the
Customer AR Account.
F
(125,494) 0 0 125,494 0 0 0
Expense 125,494
Accounts Receivable (125,494)
Turnaround effect - Credit card
cash account out of balance
overstatement
F
0 0 (220,000) 0 222,000 0 0
Revenue (220,000)
Fund Balance 222,000
Total passed adjustments (206,994) 0 (220,000) 206,994 222,000 0 0
Impact on Change in Fund Balance (13,006)
Impact on Fund Balance 208,994
Client: City of Fort Collins
Period Ending: December 31, 2018
Revenues Expenditures Fund Balance
Net Effect on Following Year
Factual (F),
Judgmental (J),
Projected (P)
Before Subsequent to
Misstatements Misstatements Misstatements % Change
Current Assets 40,660,883 40,660,883
Non-Current Assets & Deferred Outflows 325,551,046 325,551,046
Current Liabilities (15,591,759) (15,591,759)
Non-Current Liabilities & Deferred Inflows (144,754,963) (144,754,963)
Current Ratio 2.608 2.608
Total Assets & Deferred Outflows 366,211,929 366,211,929
Total Liabilities & Deferred Inflows (160,346,722) (160,346,722)
Total Net Position (205,865,207) (205,865,207)
Operating Revenues (133,263,480) (133,263,480)
Operating Expenses 140,904,093 140,904,093
Nonoperating (Revenues) Exp 446,870 446,870
Change in Net Position 614,556 614,556
City of Fort Collins
ATTACHMENT
This analysis and the attached "Schedule of Uncorrected Misstatements (Adjustments Passed)" reflects the effects on the financial
statements if the uncorrected misstatements identified were corrected.
Electric & Telecommunications
QUANTITATIVE ANALYSIS
Electric & Telecommunications
SCHEDULE OF UNCORRECTED MISSTATEMENTS (ADJUSTMENTS PASSED)
Current Non-Current Current Non-Current
Operating
Revenues
Operating
Expenses
Nonoperating
(Revenues) Exp Net Position
Change in Net
Position Net Position
Description Financial Statement Line Item DR (CR) DR (CR) DR (CR) DR (CR) DR (CR) DR (CR) DR (CR) DR (CR) DR (CR) DR (CR)
To adjust the net investment in
capital assets component of net
position for the inclusion of
retainage
F
0 0 0 0 0 0 0 0 0 0
Net investment in capital assets 408,447
Unrestricted net position (408,447)
Total passed adjustments 0 0 0 0 0 0 0 0 0 0
Impact on Change in Net Position 0
Impact on Net Position 0
Client: City of Fort Collins
Period Ending: December 31, 2018
Assets & Deferred Outflows Liabilities & Deferred Inflows Net Effect on Following Year
Factual (F),
Judgmental (J),
Projected (P)
Before Subsequent to
Misstatements Misstatements Misstatements % Change
Current Assets 73,158,845 73,158,845
Non-Current Assets & Deferred Outflows 260,833,234 260,833,234
Current Liabilities (2,939,903) (2,939,903)
Non-Current Liabilities & Deferred Inflows (3,901,593) (3,901,593)
Current Ratio 24.885 24.885
Total Assets & Deferred Outflows 333,992,079 333,992,079
Total Liabilities & Deferred Inflows (6,841,496) (6,841,496)
Total Net Position (327,150,583) (327,150,583)
Operating Revenues (34,226,525) (46,000) (34,272,525) 0.13%
Operating Expenses 29,037,388 29,037,388
Nonoperating (Revenues) Exp 3,512,647 3,512,647
Change in Net Position (11,528,955) (46,000) (11,574,955) 0.40%
City of Fort Collins
ATTACHMENT
This analysis and the attached "Schedule of Uncorrected Misstatements (Adjustments Passed)" reflects the effects on the financial
statements if the uncorrected misstatements identified were corrected.
Water
QUANTITATIVE ANALYSIS
Water
SCHEDULE OF UNCORRECTED MISSTATEMENTS (ADJUSTMENTS PASSED)
Current Non-Current Current Non-Current
Operating
Revenues
Operating
Expenses
Nonoperating
(Revenues) Exp Net Position
Change in Net
Position Net Position
Description Financial Statement Line Item DR (CR) DR (CR) DR (CR) DR (CR) DR (CR) DR (CR) DR (CR) DR (CR) DR (CR) DR (CR)
Turnaround effect - To adjust credit
card cash account out of balance
overstatement
F
0 0 0 0 (46,000) 0 0 46,000 0 0
Revenue (46,000)
Net Position 46,000
To adjust the net investment in
capital assets component of net
position for the inclusion of
retainage
0 0 0 0 0 0 0 0 0 0
Net investment in capital assets 334,613
Unrestricted net position (334,613)
Total passed adjustments 0 0 0 0 (46,000) 0 0 46,000 0 0
Impact on Change in Net Position (46,000)
Impact on Net Position 0
Factual (F),
Judgmental (J),
Projected (P)
Client: City of Fort Collins
Period Ending: December 31, 2018
Assets & Deferred Outflows Liabilities & Deferred Inflows Net Effect on Following Year
Before Subsequent to
Misstatements Misstatements Misstatements % Change
Current Assets 46,656,352 46,656,352
Non-Current Assets & Deferred Outflows 164,867,457 164,867,457
Current Liabilities (3,893,088) (3,893,088)
Non-Current Liabilities & Deferred Inflows (23,130,253) (23,130,253)
Current Ratio 11.984 11.984
Total Assets & Deferred Outflows 211,523,809 211,523,809
Total Liabilities & Deferred Inflows (27,023,341) (27,023,341)
Total Net Position (184,500,468) (184,500,468)
Operating Revenues (21,023,097) (35,000) (21,058,097) 0.17%
Operating Expenses 21,023,097 21,023,097
Nonoperating (Revenues) Exp 190,525 190,525
Change in Net Position (5,891,334) (35,000) (5,926,334) 0.59%
City of Fort Collins
ATTACHMENT
This analysis and the attached "Schedule of Uncorrected Misstatements (Adjustments Passed)" reflects the effects on the financial
statements if the uncorrected misstatements identified were corrected.
Wastewater
QUANTITATIVE ANALYSIS
Wastewater
SCHEDULE OF UNCORRECTED MISSTATEMENTS (ADJUSTMENTS PASSED)
Current Non-Current Current Non-Current
Operating
Revenues
Operating
Expenses
Nonoperating
(Revenues) Exp Net Position
Change in Net
Position Net Position
Description Financial Statement Line Item DR (CR) DR (CR) DR (CR) DR (CR) DR (CR) DR (CR) DR (CR) DR (CR) DR (CR) DR (CR)
Turnaround effect - To adjust credit
card cash account out of balance
overstatement
F
0 0 0 0 (35,000) 0 0 35,000 0 0
Revenue (35,000)
Net Position 35,000
To adjust the net investment in
capital assets component of net
position for the inclusion of
retainage
F
0 0 0 0 0 0 0 0 0 0
Net investment in capital assets 336,745
Unrestricted net position (336,745)
Total passed adjustments 0 0 0 0 (35,000) 0 0 35,000 0 0
Impact on Change in Net Position (35,000)
Impact on Net Position 0
Factual (F),
Judgmental (J),
Projected (P)
Client: City of Fort Collins
Period Ending: December 31, 2018
Assets & Deferred Outflows Liabilities & Deferred Inflows Net Effect on Following Year
Before Subsequent to
Misstatements Misstatements Misstatements % Change
Current Assets 25,901,411 25,901,411
Non-Current Assets & Deferred Outflows 128,938,473 128,938,473
Current Liabilities (6,403,600) (6,403,600)
Non-Current Liabilities & Deferred Inflows (4,606,952) (4,606,952)
Current Ratio 4.045 4.045
Total Assets & Deferred Outflows 154,839,884 154,839,884
Total Liabilities & Deferred Inflows (11,010,552) (11,010,552)
Total Net Position (143,829,332) (143,829,332)
Operating Revenues (17,027,336) (25,000) (17,052,336) 0.15%
Operating Expenses 10,033,973 10,033,973
Nonoperating (Revenues) Exp 280,234 280,234
Change in Net Position (8,823,612) (25,000) (8,848,612) 0.28%
City of Fort Collins
ATTACHMENT
This analysis and the attached "Schedule of Uncorrected Misstatements (Adjustments Passed)" reflects the effects on the financial
statements if the uncorrected misstatements identified were corrected.
Storm Drainage
QUANTITATIVE ANALYSIS
Storm Drainage
SCHEDULE OF UNCORRECTED MISSTATEMENTS (ADJUSTMENTS PASSED)
Current Non-Current Current Non-Current
Operating
Revenues
Operating
Expenses
Nonoperating
(Revenues) Exp Net Position
Change in Net
Position Net Position
Description Financial Statement Line Item DR (CR) DR (CR) DR (CR) DR (CR) DR (CR) DR (CR) DR (CR) DR (CR) DR (CR) DR (CR)
Turnaround effect - To adjust credit
card cash account out of balance
overstatement
F
0 0 0 0 (25,000) 0 0 25,000 0 0
Revenue (25,000)
Net Position 25,000
To adjust the net investment in
capital assets component of net
position for the inclusion of
retainage
F
0 0 0 0 0 0 0 0 0 0
Net investment in capital assets 249,088
Unrestricted net position (249,088)
Total passed adjustments 0 0 0 0 (25,000) 0 0 25,000 0 0
Impact on Change in Net Position (25,000)
Impact on Net Position 0
Factual (F),
Judgmental (J),
Projected (P)
Client: City of Fort Collins
Period Ending: December 31, 2018
Assets & Deferred Outflows Liabilities & Deferred Inflows Net Effect on Following Year
City of Fort Collins
Single Audit Report
Year Ended December 31, 2018
ATTACHMENT 2
City of Fort Collins
December 31, 2018
Contents
Schedule of Expenditures of Federal Awards .................................................................... 1
Notes to Schedule of Expenditures of Federal Awards ..................................................... 5
Independent Auditor’s Report on Internal Control Over Financial
Reporting and on Compliance and Other Matters Based on an
Audit of the Financial Statements Performed in Accordance with
Government Auditing Standards – Independent Auditor’s Report ............................... 6
Independent Auditor’s Report on Compliance for Each Major
Federal Program; Report on Internal Control Over Compliance;
and Report on Schedule of Expenditures of Federal
Awards Required by the Uniform Guidance – Independent Auditor’s Report .............. 8
Schedule of Findings and Questioned Costs ................................................................... 11
Status of Prior Audit Findings ........................................................................................... 15
City of Fort Collins
Schedule of Expenditures of Federal Awards
Year Ended December 31, 2018
1
Department of Housing and Urban Development
CDBG Entitlements Grants Cluster
Community Development Block Grants/Entitlement Grants
Grant Year 2010 / 2011 Direct B-10-MC-08-0008 14.218 $ 65,466.00 $ 65,466
Grant Year 2013 / 2014 Direct B-13-MC-08-0008 14.218 85,543.00 85,543
Grant Year 2015 / 2016 Direct B-15-MC-08-0008 14.218 40,920.00 40,920
Grant Year 2016 / 2017 Direct B-16-MC-08-0008 14.218 110,176.00 110,176
Grant Year 2017 / 2018 Direct B-17-MC-08-0008 14.218 1,164,146.00 1,268,705
Grant Year 2018 / 2019 Direct B-18-MC-08-0008 14.218 50,190.00 81,256
Total CDBG Entitlement Grants Cluster 1,516,441.00 1,652,066
Home Investment Partnerships Program
Grant Year 2013 / 2014 Direct M-13-MC-08-0209 14.239 89,965.00 89,965
Grant Year 2016 / 2017 Direct M-16-MC-08-0209 14.239 112,500.00 112,500
Grant Year 2017 / 2018 Direct M-17-MC-08-0209 14.239 100,000.00 133,777
Grant Year 2018 / 2019 Direct M-18-MC-08-0209 15.239 72,000.00 96,319
Subtotal 374,465.00 432,561
Total Department of Housing and Urban Development 1,890,906.00 2,084,627
Department of Justice
Equitable Sharing Program Direct 15-5042-0-2-752 16.922 - 772,866
Edward Bryne Memorial Justice Assistance Grant (JAG) Program Pass-Through Larimer County 2017-DJ-BX-0785 16.738 - 23,174
Total Department of Justice - 796,040
Department of Treasury
Equitable Sharing Program Direct
15-6400-5-5-123-Forfeiture
Fund 21.016 - 1,826
Total Department of Treasury - 1,826
Department of Transportation
Highway Safety Cluster
Colorado Department
State and Community Highway Safety (Seatbelt Grant) Pass-Through of Transportation 18-NHTSA402.6102 20.600 - 4,893
Total Highway Safety Cluster - 4,893
Federal Grantor/
Pass-Through Grantor/Program Title
Federal CFDA
Number
Project/Grant (FAIN) No.
Pass-Through Entity Federal Expenditures
Pass-Through to
Direct/Pass-Through Pass-Through Entity Subrecipients
City of Fort Collins
Schedule of Expenditures of Federal Awards (continued)
Year Ended December 31, 2018
2
Federal Highway Administration
Highway Planning and Consruction Cluster
Jefferson Street/SH 14 Intersection Pass-Through
Colorado Department
of Transportation ACQ M455-088 (16525) 20.205 - 14,865
Pitkin Low Stress Corridor Pass-Through
Colorado Department
of Transportation TAP M455-120 (20664) 20.205 - 5,491
N.College PedestrianConnection Pass-Through
Colorado Department
of Transportation AQC M455-111 (19561) 20.205 - 357,385
Horsetooth/College Intstn Impv Pass-Through
Colorado Department
of Transportation STU M455-118 (20615) 20.205 - 3,201,295
Riverside Bridge Rplcmt Pass-Through
Colorado Department
of Transportation BRO M455-121 (20825) 20.205 - 1,110,551
Safe Routes to School (CSRTS) Pass-Through
Colorado Department
of Transportation PO 411016330 20.205 - 17,928
Regional Air Quality Council Pass-Through
Colorado Department
of Transportation 14-HTD-72849 20.205 - 354,517
Total Highway Planning and Construction Cluster - 5,062,032
Federal Grantor/
Pass-Through Grantor/Program Title Direct/Pass-Through Pass-Through Entity
Project/Grant (FAIN) No.
Pass-Through Entity
Federal CFDA
Number
Pass-Through to
Subrecipients Federal Expenditures
City of Fort Collins
Schedule of Expenditures of Federal Awards (continued)
Year Ended December 31, 2018
3
Federal Transit Administration
Federal Transit Cluster
5309 - 2009 Mason Corridor Small Starts (MAX) Direct CO-03-0206-01 20.500 - 117,418
Section 5339 - 2014 (Remaining funds-Wayfinding/Bicycle Racks/Roof Caulking) Direct CO-2017-033-00 20.526 - 4,665
Section 5339 - 2015/2016 (Bus and Bus Facilities Formula Apportionment) Direct CO-2018-002-00 20.526 - 256,886
Section 5339 - 2017 Facility and Asset Improvements Direct CO-2019-009-00 20.526 - 215,444
FY17 5307 Direct CO-2018-001-00 20.507 - 948,635
FY18 5307 Direct CO-2018-017-00 20.507 - 4,004,178
FY16/17/18 - 5307 (CMAQ) Operating Direct CO-2019-003-00 20.507 - 748,630
Total Federal Transit Cluster - 6,295,856
Transit Services Programs Cluster
Enhanced Mobility for Seniors and Individuals with Disabilities
FY15 5310 (Elderly and Disabled Large Urban) Direct CO-2017-025-00 20.513 - 162,784
FY16 5310 - (Large UZA/Paratransit Vehicles/Admin) Direct CO-2018-016-00 20.513 - 17,391
Total Transit Services Programs Cluster - 180,175
Metropolitan Transportation Planning and State and Non-Metropolitan Planning and Research
2016 5304 Station Area Planning Pass-Through
Colorado Department
of Transportation 18-HTR-ZL-00057 20.505 - 40,000
Total Department of Transportation - 11,582,956
Project/Grant (FAIN) No.
Pass-Through Entity
Pass-Through to
Direct/Pass-Through Pass-Through Entity Subrecipients Federal Expenditures
Federal Grantor/
Pass-Through Grantor/Program Title
Federal CFDA
Number
City of Fort Collins
Schedule of Expenditures of Federal Awards (continued)
Year Ended December 31, 2018
4
Environmental Protection Agency
Brownfields Assessment and Cleanup Cooperative Agreements Direct 96806101 66.818 - 105,652
Performance Partnership Grants Pass-Through CO Dept of Public
Health and
Environment
PO FAAA 201800005049 66.605 - 7,735
Total Environmental Protection Agency - 113,387
FEMA
Hazard Mitigation Grant Pass-Through CO Depart. of Public
Safety Division of
Homeland Security and
Emergency
Management
MG4145061126 97.039 - 705,398
Total FEMA - 705,398
Total Expenditures of Federal Awards $ 15,284,234
Pass-Through to
Subrecipients Federal Expenditures
Federal Grantor/
Pass-Through Grantor/Program Title Direct/Pass-Through Pass-Through Entity
Project/Grant (FAIN) No.
Pass-Through Entity
Federal CFDA
Number
City of Fort Collins
Notes to Schedule of Expenditures of Federal Awards
Year Ended December 31, 2018
5
Notes to Schedule
(1) Basis of Presentation
The information in this Schedule is presented in accordance with the requirements of
Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost
Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Because this
Schedule presents only a selected portion of the operations of the City, it is not intended to and does
not present the financial position, changes in net position or cash flows of the City. The Schedule
includes federally funded projects received directly from federal agencies and the federal amount of
pass-through awards received by the City through the State of Colorado or other non-federal
entities.
(2) Summary of Significant Accounting Policies
Expenditures reported on the Schedule are reported on the accrual basis of accounting. Such
expenditures are recognized following the cost principles contained OMB Circular A-87, Cost
Principles for State, Local and Indian Tribal Governments, or the cost principles contained in the
Uniform Guidance, wherein certain types of expenditures are not allowable or are limited as to
reimbursement. Pass-through identifying numbers are presented where available. The City elected
not to use the 10 percent de minimis indirect cost rate allowed under the Uniform Guidance.
6
Report on Internal Control Over Financial
Reporting and on Compliance and Other Matters Based on an
Audit of the Financial Statements Performed in Accordance with
Government Auditing Standards
Independent Auditor’s Report
Honorable Mayor and Members of City Council
City of Fort Collins
Fort Collins, Colorado
We have audited, in accordance with the auditing standards generally accepted in the United States of
America and the standards applicable to financial audits contained in Government Auditing Standards,
issued by the Comptroller General of the United States, the basic financial statements of the governmental
activities, the business-type activities, the aggregate discretely presented component unit, each major fund
and the aggregate remaining fund information of the City of Fort Collins (the City), as of and for the year
ended December 31, 2018, and the related notes to the financial statements, which collectively comprise
the City’s basic financial statements, and have issued our report thereon dated June 21, 2019.
Internal Control Over Financial Reporting
In planning and performing our audit of the financial statements, we considered the City’s internal control
over financial reporting (internal control) to determine the audit procedures that are appropriate in the
circumstances for the purpose of expressing our opinion on the financial statements, but not for the
purpose of expressing an opinion on the effectiveness of the City’s internal control. Accordingly, we do
not express an opinion on the effectiveness of the City’s internal control.
A deficiency in internal control 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 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 entity’s 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.
Honorable Mayor and Members of City Council
City of Fort Collins
7
Our consideration of internal control was for the limited purpose described in the first paragraph of this
section and was not designed to identify all deficiencies in internal control that might be material
weaknesses or significant deficiencies, and therefore, material weaknesses or significant deficiencies may
exist that have not been identified.. Given these limitations, during our audit we did not identify any
deficiencies in internal control that we consider to be material weaknesses. We did identify certain
deficiencies in internal control, described in the accompanying schedule of findings and questioned costs
as item 2018-001 that we consider to be a significant deficiency.
Compliance and Other Matters
As part of obtaining reasonable assurance about whether the City’s financial statements are free of
material misstatement, we performed tests of its compliance with certain provisions of laws, regulations,
contracts and grant agreements, noncompliance with which could have a direct and material effect on the
determination of financial statement amounts. However, providing an opinion on compliance with those
provisions was not an objective of our audit and, accordingly, we do not express such an opinion. The
results of our tests disclosed no instances of noncompliance or other matters that are required to be
reported under Government Auditing Standards.
City’s Response to Findings
The City’s response to the findings identified in our audit are described in the accompanying schedule of
findings questioned costs. The City’s response was not subjected to the auditing procedures applied in
the audit of the financial statements, and accordingly, we express no opinion on it.
Purpose of this Report
The purpose of this report is solely to describe the scope of our testing of internal control and compliance
and the results of that testing, and not to provide an opinion on the effectiveness of the City’s internal
control or on compliance. This report is an integral part of an audit performed in accordance with
Government Auditing Standards in considering the City’s internal control and compliance. Accordingly,
this communication is not suitable for any other purpose.
Denver, Colorado
June 21, 2019
8
Report on Compliance for Each Major
Federal Program; Report on Internal Control Over Compliance;
and Report on Schedule of Expenditures of Federal
Awards Required by the Uniform Guidance
Independent Auditor’s Report
Honorable Mayor and Members of City Council
City of Fort Collins
Fort Collins, Colorado
Report on Compliance for Each Major Federal Program
We have audited the City of Fort Collins’s (the City) compliance with the types of compliance
requirements described in the OMB Compliance Supplement that could have a direct and material effect
on each of the City’s major federal programs for the year ended December 31, 2018. The City’s major
federal programs are identified in the summary of auditor’s results section of the accompanying schedule
of findings and questioned costs.
Management’s Responsibility
Management is responsible for compliance with federal statutes, regulations and the terms and conditions
of its federal awards applicable to its federal programs.
Auditor’s Responsibility
Our responsibility is to express an opinion on compliance for each of the City’s major federal programs
based on our audit of the types of compliance requirements referred to above. We conducted our audit of
compliance in accordance with auditing standards generally accepted in the United States of America; the
standards applicable to financial audits contained in Government Auditing Standards, issued by the
Comptroller General of the United States; and the audit requirements of Title 2 U.S. Code of Federal
Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for
Federal Awards (Uniform Guidance). Those standards and the Uniform Guidance 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 a major federal
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.
Honorable Mayor and Members of City Council
City of Fort Collins
9
We believe that our audit provides a reasonable basis for our opinion on compliance for each major
federal program. However, our audit does not provide a legal determination of the City’s compliance.
Opinion on Each Major Federal Programs
In our opinion, the City complied, in all material respects, with the types of compliance requirements
referred to above that could have a direct and material effect on each of its major federal programs for the
year ended December 31, 2018.
Report on Internal Control Over Compliance
Management of the City is responsible for establishing and maintaining effective internal control over
compliance with the types of compliance requirements referred to above. In planning and performing our
audit of compliance, we considered the City’s internal control over compliance with the types of
requirements that could have a direct and material effect on each major federal program to determine the
auditing procedures that are appropriate in the circumstances for the purpose of expressing our opinion on
compliance for each major federal program and to test and report on internal control over compliance in
accordance with the Uniform Guidance, 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’s internal control over compliance.
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 a
federal 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 a federal
program will not be prevented, or detected and corrected, on a timely basis. A significant deficiency in
internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over
compliance with a type of compliance requirement of a federal program that is less severe than a material
weakness in internal control over compliance, yet important enough to merit attention by those charged
with governance.
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 material weaknesses or significant deficiencies. We did not identify any
deficiencies in internal control over compliance that we consider to be material weaknesses. However,
material weaknesses may exist that have not been identified.
The purpose of this report on internal control over compliance is solely to describe the scope of our
testing of internal control over compliance and the results of that testing based on the requirements of the
Uniform Guidance. Accordingly, this report is not suitable for any other purpose.
Honorable Mayor and Members of City Council
City of Fort Collins
10
Report on Schedule of Expenditures of Federal Awards Required by the Uniform
Guidance
We have audited the financial statements of the governmental activities, the business-type activities, the
aggregate discretely presented component unit, each major fund and the aggregate remaining fund
information of the City, as of and for the year ended December 31, 2018 and the related notes to the
financial statements, which collectively comprise City’s basic financial statements. We issued our report
thereon dated June 21, 2019 which contained unmodified opinions on those financial statements. Our
audit was conducted for the purpose of forming opinions on the financial statements that collectively
comprise the basic financial statements. The accompanying schedule of expenditures of federal awards is
presented for purposes of additional analysis as required by the Uniform Guidance and is not a required
part of the basic financial statements. Such information is the responsibility of management and was
derived from and relates directly to the underlying accounting and other records used to prepare the basic
financial statements. The information has been subjected to the auditing procedures applied in the audit
of the financial statements and certain additional procedures, including comparing and reconciling such
information directly to the underlying accounting and other records used to prepare the basic financial
statements or to the basic financial statements themselves, and other additional procedures in accordance
with auditing standards generally accepted in the United States of America. In our opinion, the schedule
of expenditures of federal awards is fairly stated in all material respects in relation to the basic financial
statements as a whole.
Denver, Colorado
June 21, 2019
City of Fort Collins
Schedule of Findings and Questioned Costs
Year Ended December 31, 2018
11
Summary of Auditor’s Results
Financial Statements
1. The type of report the auditor issued on whether the financial statements audited were prepared in
accordance with accounting principles generally accepted in the United States of America (GAAP)
was (were):
Unmodified Qualified Adverse Disclaimer
2. The independent auditor’s report on internal control over financial reporting disclosed:
Significant deficiency(ies)? Yes None reported
Material weakness(es)? Yes No
3. Noncompliance considered material to the financial statements
was disclosed by the audit?
Yes No
Federal Awards
4. The independent auditor’s report on internal control over compliance for major federal awards programs
disclosed:
Material weakness(es) identified? Yes No
Significant deficiency(ies) identified? Yes None reported
5. The opinions expressed in the independent auditor’s report on compliance for major federal awards
were:
Unmodified Qualified Adverse Disclaimed
6. The audit disclosed findings required to be reported by
2 CFR 200.516(a)?
Yes No
7. Identification of major programs:
CFDA Number Name of Federal Program or Cluster
20.500, 20.526, 20.507 Federal Transit Cluster
16.922 Equitable Sharing Program
City of Fort Collins
Schedule of Findings and Questioned Costs (continued)
Year Ended December 31, 2018
12
8. The threshold to distinguish between Type A and Type B programs was $750,000.
9. Auditee qualified as low-risk auditee?
Yes No
City of Fort Collins
Schedule of Findings and Questioned Costs (continued)
Year Ended December 31, 2018
13
Findings Required to be Reported by Government Auditing Standards
Number
2018-001 Finding: Accounting for Capital Assets
Criteria or Specific Requirement: Accounting principles generally accepted in the United States of America (US GAAP) that
address the proper recognition and accounting of capital assets include:
Condition: The City originally passed an ordinance in 2005 allocating 0.25% tax for the construction of capital assets in the
Community Capital Improvement Program Fund (CCIP), a special revenue fund. The tax was later extended by Ordinance No.
013-2015 commencing January 1, 2016 and expiring December 31, 2025. When the initiative was extended, the City created a
separate fund for the proceeds until which time the proceeds were expended for the approved capital projects. When the
approved projects were completed, the taxes were transferred from the CCIP Fund to a capital projects fund. During the year-
end financial reporting process, when the City identified capital asset-related expenditures for capitalization, it inadvertently
capitalized the same cost twice; once when the expenditure was initially recorded in the CCIP Fund and a second time when
those same costs were transferred to the capital projects fund.
Views of Responsible Officials: The City agrees with the finding. See separate report for planned corrective actions.
Cause: Transfers were recorded in the financial accounting system in such a manner that City personnel included all capital
asset expenditures in total capital asset additions in the governmental activities.
Recommendation: We recommend that internal controls be strengthened and systems be revised to properly identify these
costs in the future and avoid double counting these costs. Adequate training should be provided to all employees as necessary to
eliminate this error.
Effect: The condition noted above resulted in a proposed adjustment to reduce the capital asset balances by approximately
$11.7 million. Of this amount $8.4 million related to prior periods.
Finding
• Governmental Accounting Standards Board (GASB) Statement No. 34, Basic Financial Statements — and Management’s
Discussion and Analysis — for State and Local Governments (GASB 34)
• Governmental Accounting Standards Board (GASB) Statement No. 37, Basic Financial Statements — and Management’s
Discussion and Analysis — for State and Local Governments: Omnibus — an amendment of GASB Statements No. 21 and No.
34 (GASB 37)
• Governmental Accounting Standards Board (GASB) Statement No. 51, Accounting and Financial Reporting for Intangible
Assets (GASB 51)
• Various implementation guidance issued by GASB
City of Fort Collins
Schedule of Findings and Questioned Costs (continued)
Year Ended December 31, 2018
14
Findings Required to be Reported by the Uniform Guidance
Reference
Number Finding
No matters are reportable.
City of Fort Collins
Status of Prior Audit Findings
Year Ended December 31, 2018
15
Reference
Number Summary of Finding Status
No matters are reportable.
-1-
RESOLUTION 2019-088
OF THE COUNCIL OF THE CITY OF FORT COLLINS
ACKNOWLEDGING COMPLETION AND RECEIPT OF THE CITY’S
2018 AUDITED COMPREHENSIVE ANNUAL FINANCIAL REPORT AND
FEDERAL COMPLIANCE AUDIT REPORT PREPARED BY BKD LLP,
AN INDEPENDENT PUBLIC ACCOUNTING FIRM
WHEREAS, Article II, Section 17 of the City Charter requires the City Council to
provide for an independent audit of all the City’s financial books and accounts to be conducted at
least once annually by a certified public accountant; and
WHEREAS, the City contracted with the independent certified public accounting firm of
BKD LLP (“BKD”) to conduct this audit for the City’s 2018 fiscal year; and
WHEREAS, BKD has completed its independent audit of the City’s 2018 financial
records and has delivered to the City’s Financial Officer its Independent Auditor’s Reports on
the Financial Statements and on Compliance with Federal Programs, both of which are on file
with the City Clerk (jointly, the “2018 Audited Financial Reports”); and
WHEREAS, Article II, Section 17 also required that a summary of the results of the audit
be published once in the manner provided for legal notices within five months after the end of
the City’s 2018 fiscal year, which summary was so published in the Coloradoan on May 30,
2019; and
WHEREAS, BKD expressed an opinion in the 2018 Audited Financial Reports that the
financial statements present fairly, in all material respects, the financial position and changes in
the City’s financial position in accordance with accounting principles generally accepted in the
United States of America.
NOW, THEREFORE, BE IT RESOLVED BY THE COUNCIL OF THE CITY OF
FORT COLLINS as follows:
Section 1. That the City Council hereby makes any and all determinations and
findings contained in the recitals set forth above.
Section 2. That the City Council hereby acknowledges the completion and the City’s
receipt of the 2018 Audited Financial Reports.
-2-
Passed and adopted at a regular meeting of the Council of the City of Fort Collins this
20th day of August, A.D. 2019.
_________________________________
Mayor
ATTEST:
_____________________________
City Clerk