Board of Directors Regular Meeting Agenda


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Meeting Date: 08/24/2016  

SUBJECT MATTER:
Receive, consider and act upon a recommendation from the Audit Committee on the Comprehensive Annual Financial Report and the Report on Schedule of Expenditures of Federal Awards for the year ended December 31, 2015;
FISCAL IMPACT:
Not applicable
BACKGROUND:
An audit of The Woodlands Township’s financial records is conducted annually by an independent audit firm to ensure the Township’s financial transactions and statements are properly documented, recorded and presented in conformity with generally accepted accounting principles.
 
Blazek & Vetterling, Certified Public Accountants, conducted an audit of the Township’s 2015 financial records and reviewed the resulting Comprehensive Annual Financial Report (CAFR) with the Audit Committee on August 18, 2016.  The Audit Committee consists of Director Bass, Director Long, and Director McMullan.
 
The auditors reported that the financial statements “present fairly, in all material respects, the respective financial position of the governmental activities, each major fund, and the aggregate remaining fund information of the Township, as of December 31, 2015, and the respective changes in financial position for the year then ended in accordance with accounting principles generally accepted in the United States of America”.  A copy of the CAFR is attached for review.  The Independent Auditors’ Report can be found on page 13.  Although the attached CAFR is in “Draft” form, no revisions are anticipated other than some minor formatting changes.  The final version of the CAFR will be published by the auditors by August 31, 2016.
 
The most significant change in the Township’s audited financial statements from fiscal year 2014 to 2015 was the implementation of GASB Statement No. 67, Financial Reporting for Pension Plans (an amendment to GASB Statement No. 25); and GASB Statement No. 68, Accounting and Financial Reporting for Pensions (an amendment to GASB Statement No. 27).  The provisions of these GASB statements require the Township to record financial activity and related financial notes pertaining to The Woodlands Firefighters Retirement System (TWFRS), even though the Township has no legal responsibility for the assets or liabilities of TWFRS.  As reflected on page 29 of the CAFR, a net pension asset of $281,498 existed at 12/31/2015.  Additional information regarding TWFRS is contained in the footnotes to the financial statements on pages 52-54.    
 
In conjunction with the audit, the auditors also performed additional analysis specific to the expenditure of federal awards (grants) related to the Township’s transportation services.  This additional analysis is required by the federal Office of Management and Budget Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards.  The resulting Report on Schedule of Expenditures of Federal Awards is attached for review.  The auditors reported to the Audit Committee that “the schedule of expenditures of federal awards is fairly stated in all material respects in relation to the financial statements as a whole”. 
 
The auditors also reviewed the required “Audit Communications” report with the Committee, which is attached for the Board’s reference.  The auditors informed the committee that there were no difficulties encountered in performing or completing the audit, and there were no disagreements with management regarding the application of generally accepted accounting principles or auditing standards.  An adjustment of $397,000 was made to the 2015 financial statements to accrue an invoice that was not received until March 2016 but related to work performed on the Ice Rink project during 2015.
 
RECOMMENDATION:
Consider and act upon a recommendation from the Audit Committee to accept the Comprehensive Annual Financial Report and the Report on Schedule of Expenditures of Federal Awards for the year ended December 31, 2015. 
 
Attachments
2015 Audit Communications
2015 Report on Schedule of Expenditures of Federal Awards
2015 Comprehensive Annual Financial Report


    

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