Davis and Associates Certified Public Accountants, PLLC THE CITY OF FRANKLIN, VIRGINIA 2013 FINANCIAL STATEMENT AUDIT

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1 Davis and Associates Certified Public Accountants, PLLC THE CITY OF FRANKLIN, VIRGINIA 2013 FINANCIAL STATEMENT AUDIT JANUARY 13, 2014 PRESENTATION TO THE GOVERNING BODY

2 AGENDA Meeting Objective Overall Audit Scope Audit Findings FY2013 Highlights Recommendations Conclusion

3 MEETING OBJECTIVE The purpose of this meeting is to Conduct the Formal Exit Conference for the City of Franklin, Virginia s FY 2013 Audit; Present the Audit Findings; and Discuss Relevant Issues.

4 OVERALL AUDIT SCOPE Perform an audit to determine whether the City s financial statements and related footnotes, taken as a whole, are fairly presented in all material respects, and in conformity with GAAP Review the City s system of internal controls and compliance with laws and regulations related to the financial statements Issue Management Representation Letter Perform certain procedures and issue Schedule of Expenditures of Federal Awards (SEFA)

5 AUDIT FINDINGS There were no Findings or Reportable Conditions. The Firm issued an Unqualified Audit Opinion. There were no Findings related to Compliance with Applicable Laws and Regulations. There were no Findings related to the SEFA.

6 NET POSITION The assets of the Primary Government exceeded its liabilities at June 30, 2013 by $30.3 million $11.5 million (38 percent) unrestricted Net position for governmental activities of $22.0 million Decrease of $391,000 from prior year Unrestricted net position of $9.8 million The net position of the City s business-type activities were $8.4 million Decrease of $181,000 Unrestricted net position of $1.7 million

7 NET POSITION (CONTINUED) The School Board s net position was $8.8 million $9.0 million reported as invested in capital assets Remaining ($177,000) unrestricted. Net position decreased by $728,000 from previous year

8 REVENUES Revenues from governmental activities totaled $21.4 million General Revenues, specifically Property Taxes and Other Local Taxes, are the largest components of revenues (56 percent) Overall increase in revenue from Real Estate and Personal Property Taxes from $6.5 million in 2012 to $6.8 million in 2013

9 REVENUES (CONTINUED) Revenue sharing from counties 1% Revenues by Source Governmental Activities Grants & gifts - non-restricted 8% Use of money & property 2% Other local taxes 25% Miscellaneous 2% Charges for Services 13% Operating grants & contributions 18% Real estate & personal property taxes 31%

10 EXPENSES Expenses for governmental activities totaled $23.3 million Decrease of $118,000 from previous year Public Safety largest expense function (same as previous year)

11 EXPENSES (CONTINUED) $7,000,000 $6,000,000 $5,000,000 $4,000,000 $3,000,000 $2,000,000 $1,000,000 $- Expenses and Program Revenues Governmental Activities $2,464,954 $314,069 $390,639 $69,127 $6,477,498 $876,230 $4,042,630 $3,612,797 $2,029,046 $1,782,579 $4,757,834 $987,498 $15,356 $1,238,138 $862,901 $88,315 Expenses Revenues

12 BUSINESS-TYPE ACTIVITIES Total revenues of $17.5 million Total expenses of $16.1 million Expenses and Program Revenues $14,000,000 $12,000,000 $10,000,000 $8,000,000 $6,000,000 $4,000,000 $2,000,000 $2,784,937 $3,154,656 $12,742,843 $13,996,271 $599,945 $356,609 Expenses Revenues $- Water and Sewer Electric Airport

13 GENERAL FUND Fund balance of $8.7 million Actual revenues and other financing sources, including transfers, were less than amended budget revenues by $1.6 million Expenditures, transfers and other uses of funds were $3.4 million less than amended budget

14 LONG-TERM DEBT The City s total outstanding general obligation debt was $20.4 million Includes $5.3 million of business-type activity debt supported by the enterprise fund Of remaining amount, $7.4 million is school-related and $7.7 million is general government debt Total outstanding general obligation grew by $3.7 million from previous year

15 RECOMMENDATIONS The City has a good focus on Internal Controls, which is essential to ensuring that any potential misstatements or errors are detected; keep these practices in place. Personnel responsible for the accounting and finance functions within the City are well trained and knowledgeable; this is important for ensuring the proper management of this function.

16 CONCLUSION Thank you for allowing Davis and Associates to support this important audit engagement.