1 Audited Financial Results for the Fiscal Year Ended June 30, 2015 December 8, 2015
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Audited Financial Results for theFiscal Year Ended June 30, 2015
December 8, 2015
Cherry Bekaert Comments FY 2015 Audited Financial Statements Entity Wide Statements – GASB 34 General Fund School Operating Fund Water & Sewer Fund Storm Water Fund Waste Management Fund TIP Fund
Debt – June 30, 2015
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Presentation toCity CouncilThe City of Virginia Beach, Virginia
December 8, 2015
Engagement Summary
You have engaged us to provide the following: Audit of the City's, School Board’s and Economic Development
Authority’s FY 2015 financial statements
Audit of the City’s major federal programs required by OMB Circular A-133
Audit of the City’s compliance with the laws, regulations, grants and other agreements, including the City’s compliance with the Auditor of Public Accounts’ Specifications for Audits of Counties, Cities and Towns
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Overall Audit Results Our opinion on the 2015 financial statements was unmodified or
“clean” opinion
Testing of material balances and transactions
Internal controls assessed for planning purposes only
Comparability of financial statements to FY14: Implementation of New Standards Reclassification of the Waste Management Fund
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Overall Audit Results Our opinions on compliance were unmodified or “clean” opinion
Internal control deficiencies over financial reporting and compliance None reported
Compliance with grants, agreements, laws and regulations: One instance detailed in the Schedule of Findings and Questioned Costs
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Auditor’s Required Communications
Accounting Policies Adoption of new accounting policies effective July 1, 2014
• GASB Stmt No. 68 – Accounting and Financial Reporting for Pensions – an amendment of GASB Stmt No. 27
• GASB Statement No. 71 – Pension Transition for Contributions Made Subsequent to Measurement Date – an amendment of GASB Stmt No. 68
Change in accounting policies• The application of existing policies was not changed during 2014
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Auditor’s Required Communications
Management Judgment and Accounting Estimates Allowance for Doubtful Accounts and Taxes Receivable Depreciation Expense Actuarially-computed Liabilities
Disagreements with Management There were no disagreements with management regarding
accounting or auditing issues
Consultation with Other Accountants We are not aware of any
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Auditor’s Required Communications
Audit Adjustments and Uncorrected Misstatements None
Difficulties Encountered in Performing the Audit We encountered no difficulties in preforming the audit
Material Client Communications Representation letter
Independence We are not aware of any relationship that we believe, based on
current authoritative guidance, would impair our independence
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GASB statements effective for FY 2016: GASB Statement No. 72 – Fair Value Measurement and Application
Significantly changes fair value measurement and disclosures• Use valuation techniques that are appropriate in the circumstances and for
which sufficient data are available to measure fair value• Established a hierarchy for measurement of assets or liabilities
– Level 1 – Quoted prices in active markets– Level 2 – Direct or indirect observations other than quoted prices– Level 3 – Unobservable inputs
GASB Statement No. 77 – Tax Abatement Disclosures The new standard will require detailed disclosure related to taxes that
were abated during the year, including type of tax being abated, a description of abatements, amount of abatements, eligibility criteria, and provisions for recapturing abated taxes
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New Accounting and Reporting Changes
GASB statements effective for FY 2017: GASB Statement No. 74 – Financial Reporting for Postemployment
Benefit Plans Other Than Pension Plans Covers reporting by OPEB plans that administer benefits on
behalf of governments
GASB statements effective for FY 2018: GASB Statement No. 75 – Accounting and Financial Reporting for
Postemployment Benefits Other Than Pensions Requires governments to report a liability on the face of the financial
statements for OPEB obligations
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New Accounting and Reporting Changes
Cherry Bekaert Comments FY 2015 Audited Financial Statements Entity Wide Statements – GASB 34 General Fund School Operating Fund Water & Sewer Fund Storm Water Fund Waste Management Fund TIP Fund
Debt – June 30, 2015
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14CAFR Exhibit 1
City Schools CDC Total
Assets 5,411.1$ 650.1$ 32.9$ 6,094.1$
Deferred Outflows of Resources 54.9 59.6 0.0 114.5
City Liabilities (1,604.9) (118.0) (16.6) (1,739.5)
GASB68 Pension Liabilties (333.8) (634.8) 0.0 (968.6)
Deferred Inflows of Resources (101.2) (117.7) 0.0 (218.9)
Net Position:Net Investment in Capital Assets 3,011.1 501.2 10.9 3,523.2 Restricted 556.1 29.9 0.0 586.0 Unrestricted (141.1) (692.0) 5.4 (827.7)
Total Net Position 3,426.1$ (160.9)$ 16.3$ 3,281.5$
Net Pension Liability Addition of Net Pension Liability due to GASB68
effective FY15 City Net Pension Liability of $333.8M distributed
amongst the entity-wide and enterprise funds The Net Pension Liability reduces the Net Position
(equity) of these funds
Waste Management Enterprise Fund Full accrual
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Fund Balance as a percent of FY 2016 Revenues is 9.3%
* Reflects encumbrances of $10.5 millionCAFR Exhibit 5
% of BUDGET ACTUAL VARIANCE Budget
LOCAL 849.5$ 849.8$ 0.3$ 0.0%STATE 150.7 147.8 (2.9) -1.9%FEDERAL 19.1 19.4 0.3 1.6%
TOTAL REVENUES 1,019.3$ 1,017.0$ (2.3)$ -0.2%
CITY 661.2$ 626.5$ 34.7$ 5.2%SCHOOLS 410.9 398.6 12.3 1.6%
TOTAL EXPENDITURES 1,072.1$ 1,025.1$ 47.0$ 4.4%
REVENUES OVER (UNDER) (52.8)$ (8.1)$ 44.7$
FUND BALANCE - JULY 1 171.9
LESS: RESERVATIONS (66.8) *
UNASSIGNED FUND BALANCE - JUNE 30 97.0$
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159.3
143.5 143.8 145.4 149.3 150.7156.1
140.7 144.1 143.4 145.9 147.8
$0
$25
$50
$75
$100
$125
$150
$175
FY 2010 FY 2011 FY 2012 FY 2013 FY 2014 FY 2015
Rev
enue
s $
Mill
ion
Budget Actual
Policy = 8-12% of Revenues 18
$123.4
$103.4
$117.8
$92.7$102.1
$113.0$104.0 $102.4
$96.1 $97.0
12.8%
10.1%
11.0%
8.9%
10.1%
11.9%
10.7% 10.4%9.5% 9.3%
0.0%
4.0%
8.0%
12.0%
16.0%
$0
$50
$100
$150
$200
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
% o
f Bud
gete
d G
F R
even
ue
Dol
lars
(Mill
ions
)
Unassigned GF Balance % of Budgeted GF Revenue
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Budget Actual VarianceREVENUES:City 390.2$ 390.2$ -$ Local 2.7 3.5 0.8 School's Reserve & Other Funds 19.2 19.1 (0.1) State Share of Sales Tax 70.1 70.4 0.3 Commonwealth 252.6 250.2 (2.4) Federal Government 16.0 14.3 (1.7)
Total Revenues 750.8$ 747.7$ (3.1)$
EXPENDITURES (756.8)$ (741.4)$ * 15.4$
Total Reversion to City 12.3$
* Reflects encumbrances of $9.3 million
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Budget Actual Diff
Charges for Services 70.1$ 75.7$ 5.6$ Sale of Water 45.9 45.3 (0.6)Other 4.3 7.2 2.9
Total Revenues 120.2$ 128.2$ 8.0$
Water Services Contract 25.0$ 23.8$ 1.2$ Operating Expenses 63.2 54.4 8.8Debt Service 24.4 15.0 9.4Transfers to CIP 13.8 13.8 0.0
Total Expenditures 126.4$ 107.0$ 19.4$
Net Change in Position 21.3$
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Budget Actual Diff
Charges for Services 38.9$ 39.1$ 0.2$ Other 0.5 0.9 0.4
Total Revenues 39.4$ 40.0$ 0.6$
Operating Expenses 19.0$ 17.5$ 1.5$ Debt Service 2.8 1.6 1.2Transfers to CIP 9.5 9.5 0.0
Total Expenditures 31.3$ 28.6$ 2.7$
Net Change in Position 11.4$
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Budget Actual Diff
Charges for Services 33.8$ 34.6$ 0.8$ SPSA Rebate 8.0 8.0 0.0Other 1.0 0.9 (0.1)
Total Revenues 42.8$ 43.5$ 0.7$
Program Support 1.1$ 0.5$ 0.6$ Waste Disposal 18.9 18.2 0.7Waste Collection 12.0 11.3 0.7Yard Debris/Hazardous Waste 2.2 1.9 0.3Recycling 5.0 4.7 0.3Transfers to Water & Sewer 0.5 0.5 0.0Transfers to General Fund 2.1 2.1 0.0
Total Expenditures 41.8$ 39.2$ 2.6$
Net Change in Position 4.3$
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Budget Actual Diff
Hotel Room Tax 15.3$ 15.8$ 0.5$ Restaurant Meal Tax 11.5 11.5 (0.0)Amusement Tax 5.8 5.9 0.1Cigarette Tax 0.9 1.0 0.1Other 1.5 1.3 (0.2)
Total Revenues 35.0$ 35.5$ 0.5$
Debt Service 24.2$ 24.1$ 0.1$ SGA Special Events 3.3 3.1 0.2Operating Expenses 2.4 2.2 0.2Transfer to Sandbridge SSD 2.3 2.5 (0.2)Transfer to CIP 2.8 2.8 0.0Transfer to General Fund 2.1 2.1 0.0
Total Expenditures 37.1$ 36.8$ 0.3$
Net Change in Fund Balance (1.3)$
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GeneralGovernment
54.1%
AgricultureReserveProgram3.2%
StormWater3.6%
WaterandSewer14.8%
Schools24.3%
TotalDebt‐ $1.305B
Fund Balance within Policy, lower than 2014 (9.3% FY15 vs 9.5% FY14) Reservations for FY16 operating budget include: SPSA - $5.2M FY16 CIP Budget - $16.0M School Reversion & Revenue Sharing - $12.9M
Actual revenues were 0.2% under budget Actual expenditures were 4.4% under budget Entity-wide statements represent the municipal
corporation Pension liabilities total $968.6M, which includes
$333.8M for the City and $634.8M for the Schools Next GASB75 – OPEB Liabilities
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December Interim - 6 months Jan 26, 2016
FY17 Budget Proposal Mar 22, 2016
FY17 Budget Adoption May 10, 2016
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