110706 CAFRCity of Virginia Beach
City of Virginia Beach
Comprehensive Annual
Financial Report
2005-06
Prepared in Accordance with
GASB Statement 34
Core Strategy
“Act as Stewards of Community and Organizational
Resources”
Audited Financial Statements
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External Auditor Report
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Internal Auditor Comments
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GASB 34
Entity-Wide vs Fund Presentation
Entity-Wide: Consolidates governmental and business activities
Governmental Activities Column
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Business Activities Column
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Program revenues for each activity
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Fund Statements: Legal compliance
Separate financial reporting units
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No program revenues identified for governmental
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activities
Did the City’s Entity-Wide Financial
Did the City’s Entity-Wide Financial
Condition Improve during
Condition Improve during
Fiscal Year Ended June 30, 2006
Fiscal Year Ended June 30, 2006
YES!
YES!
Net Assets of the Primary Government Increased
Net Assets of the Primary Government Increased
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by $100.4 million to a Total of $2.9 billion
by $100.4 million to a Total of $2.9 billion
Invested in Capital Assets Increased $83.8 million
Invested in Capital Assets Increased $83.8 million
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Unrestricted Net Assets Increased $18.8 million
Unrestricted Net Assets Increased $18.8 million
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Revenues Totaled $1.15 billion, an Increase of
Revenues Totaled $1.15 billion, an Increase of
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$38.4 million
$38.4 million
Expenses Totaled $1.05 billion, a Decrease of
Expenses Totaled $1.05 billion, a Decrease of
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$25.8 million
$25.8 million
Statement of Net Assets –Primary Government
Statement of Net Assets –Primary Government
June 30, 2006 (in millions)
June 30, 2006 (in millions)
GovernmentalBusinessTotal
Assets$3,120.1$930.7$4,050.8
Liabilities1,003.8168.01,171.8
Net Assets$2,116.3$762.7$2,879.0
Primary Government
Primary Government
Infrastructure and Other Capital Assets
Infrastructure and Other Capital Assets
at June 30, 2006 –Net of Accumulated Depreciation (in millions)
at June 30, 2006 –Net of Accumulated Depreciation (in millions)
Net
BalanceAdditions/Balance
June 30, 2005DeletionsJune 30, 2006
Land and Improvements729.714.7744.4
Buildings479.5.3479.8
Site Improvements99.116.3115.4
Machinery and Equipment38.65.944.5
Infrastructure873.1(20.3)852.8
Utility System550.713.1563.8
Construction in Progress519.090.0609.0
Total Infrastructure & Capital Assets3,289.7120.03,409.7
Infrastructure = Roadways, Bridges, Landfill, Hurricane Protection
Statement of Activities –Primary Government
Statement of Activities –Primary Government
June 30, 2006 (in millions)
June 30, 2006 (in millions)
Program Net
ExpensesRevenuesExpenses
Governmental Expenses$ 947.3$ 232.3$ (715.0)
Business Type Expenses107.0115.68.6
Total Primary Govt$1,054.3$ 347.9$ (706.4)
General Revenues:
Taxes716.4
Other90.4
Net Increase100.4
Net Assets -Beginning2,778.6
Net Assets -Ending$2,879.0
General Fund Highlights
General Fund Highlights
Undesignated Fund Balance: $123.4 million
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-increase of $26.8 million
Revenues: over budget by $34.6 million
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Expenditures: less than budget by $26.8M.
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General Property Taxes:
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57.2% of total revenue
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Increase 5.6% from prior year
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Other Local Taxes:
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27.0% of total revenue
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Increase 5.7% from prior year
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General Fund Statement of Revenues, Expenses &
Changes in Fund Balance
For the Fiscal Year Ended June 30, 2006 (in millions)
% of
BudgetActualVarianceBudget
Revenues$874.1$908.6$34.54.0
Expenses914.3875.438.94.3
Excess Revenues Over
(Under) Expenses(40.2)33.2$73.4
Fund Balance –July 1139.4139.4
Fund Balance –June 30$ 99.2$172.6
Less: Reservations49.2
Undesignated Fund Balance$ 123.4
Fund Balance as a percent of Budgeted FY2007 Revenues is 12.9%
General Fund Revenues
For Fiscal Year Ended June 30, 2006 (in millions)
BudgetActualVariance
Local$770.5$805.8$35.3
State80.179.4(0.7)
Federal23.523.4(0.1)
Total Revenues$874.1$908.6$34.5
General Fund Expenditures*
For Fiscal Year Ended June 30, 2005 (in millions)
BudgetActualVariance
City Expenses$614.8$587.1$27.7
School (City Funding)299.5294.15.4
Total Expenditures$914.3$881.2$33.1
* Includes Encumbrances
GENERAL FUND
GENERAL FUND
Local Revenues Exceed Budget by $35.3 million
Local Revenues Exceed Budget by $35.3 million
Millions
Real Estate $(0.4)
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Personal Property Taxes17.4
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Utility Taxes(1.2)
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Business Licenses3.5
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General Sales Taxes0.5
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City Tax on Deeds4.3
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Hotel Tax1.0
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Restaurant Meal Taxes2.4
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Cigarette (0.2)
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Interest and Rent7.8
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Other Local Revenue0.2
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General Fund
General Fund
Undesignated Fund Balance
Undesignated Fund Balance
June 30, 2006 (in millions)
June 30, 2006 (in millions)
Total Fund Balance June 30, 2006$172.6
Less: Reservations and Designations
Loans, Advances & Other12.4
Future Programs9.7
City CIP –2005-20069.9
School Revenue Sharing 17.249.2
Undesignated Fund Balance $123.4
Percent of Budgeted FY2007 Revenues12.9%
Fund Balance Issues
Fund Balance Issues
Retiree Healthcare –GASB 45
Virginia Retirement System –Direction
Future Capital Needs –Transportation, Fire Stations, etc.
Economy –BRAC
Rating Agency Concerns
Undesignated General Fund Balance
20016.0%
12.9%
11.2%
15012.0%
% of Budgeted GF Revenue
9.3%
Dollars (Millions)
8.9%
8.6%
8.5%
$123.4
1008.0%
$96.6
$73.0
$63.1
$62.3
50$59.5 4.0%
00.0%
200120022003200420052006
Undesignated GF Balance% of Budgeted GF Revenue
Water & Sewer Enterprise Fund Comparative Statement
Water & Sewer Enterprise Fund Comparative Statement
of Revenues, Expenses & Changes in Fund Net Assets
of Revenues, Expenses & Changes in Fund Net Assets
for the Years Ended June 30, 2006 and 2005(in millions)
for the Years Ended June 30, 2006 and 2005(in millions)
20062005
Total Revenues$ 93.2$ 84.4
Total Expenses(90.4)(84.7)
Capital Contributions5.93.1
Increase in Net Assets8.72.8
Total Net Assets –July 1542.9540.1
Total Net Assets –June 30$551.6$542.9
Storm Water Enterprise Fund Comparative Statement
Storm Water Enterprise Fund Comparative Statement
of Net Assets
of Net Assets
for the Years Ended June 30, 2006 and 2005 (in millions)
for the Years Ended June 30, 2006 and 2005 (in millions)
2005
2006
Current & Other Assets$ 7.1$ 12.0
Capital Assets, Net211.2204.4
Total Assets218.3216.4
Liabilities 13.413.9
Net Assets$ 204.9$ 202.5
Storm Water Enterprise Fund Comparative Statement
Storm Water Enterprise Fund Comparative Statement
of Revenues, Expenses & Changes in Fund Net Assets
of Revenues, Expenses & Changes in Fund Net Assets
for the Years Ended June 30, 2006 and 2005 (in millions)
for the Years Ended June 30, 2006 and 2005 (in millions)
20062005
Total Revenues$ 17.9$ 18.9
Total Expenses(15.5)(13.5)
Capital Contributions-0.1
Increase in Net Assets2.75.5
Total Net Assets –July 1202.5197.0
Total Net Assets –June 30$204.9$202.5
School Operating Fund-Statement of Revenues, Expenses & Encumbrances
For the Fiscal Year Ended June 30, 2006 (in millions)
REVENUESBudgetActualVariance
City$272.3$266.9$(5.4)*
Local2.73.40.7
From Commonwealth316.6314.6(2.0)
From Federal Government14.416.01.6
Total Revenues$606.0$600.9$ (5.1)
EXPENDITURES AND
ENCUMBRANCES$616.2$611.1$ 5.1
In addition, there is $11.8 million in revenue sharing and debt
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service, for a total Reservation in the General Fund of $17.2 million.
Outstanding Debt By Purpose
June 30, 2006
Agriculture
Reserve Program
General
2.24%
Government
56.15%
Storm Water
1.20%
Water and Sewer
13.58%
Schools
26.83%
Capital Improvement Program
Capital Improvement Program
Expenditures (in millions)
Expenditures (in millions)
Fiscal Year 2006
Fiscal Year 2006
General Government Projects$169.0
School Projects41.8
Water and Sewer Projects23.9
StormwaterProjects10.1
Total Capital Project Expenditures$244.8
Capital Improvement Program
Capital Improvement Program
Expenditures
Expenditures
Fiscal Year 2006
Fiscal Year 2006
(continued)
(continued)
Key Projects
Street Resurfacing and Signalization
Street Resurfacing and Signalization
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Laskin Road Gateway
Laskin Road Gateway
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Pavilion Theater Replacement
Pavilion Theater Replacement
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Various Site Acquisitions
Various Site Acquisitions
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Correction Center Addition
Correction Center Addition
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New Princess Anne Park Athletic Fields
New Princess Anne Park Athletic Fields
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Open Space Program Site Acquisitions
Open Space Program Site Acquisitions
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Convention Center
Convention Center
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Various Drainage and Utility Projects
Various Drainage and Utility Projects
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Communication Tax Audit
House Bill 568 replaces current local
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communications taxes with a new state-wide tax
Multiple rates will be imposed by the State, the largest of
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which is 5% for communication services.
Funds collected by the State will be distributed to the City
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after administrative and other fees are deducted.
City was required to report to the Auditor of Public Accounts
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the amounts collected for communication taxes during
FY2006.
The APA will determine each locality’s percentage share
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based upon audited receipts.
Distributions will begin after January 2007.
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Robert Bielat, Partner
Cherry Bekaert& Holland
Audit Presentation
City of Virginia Beach
Virginia
Solutions.Character.
November 7, 2006
Depth.
The Firm of Choice.
Overview
Overview of Auditors’Opinion
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Required communication of significant audit
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matters
Questions
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Auditors’Opinion on the Financial Statements
Unqualified Opinion
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Accounting principles generally accepted in the United States of
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America
Material Transactions and balances
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Compliance with laws and regulations material to the financial
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statements
Required Communications
Our responsibility under generally accepted auditing
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standards:
We assessed risk that the financial statements may contain a
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material misstatement, either intentional or unintentional
We documented and considered internal controls to assist us with
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our audit approach, not for the purpose of providing assurance on
those controls.
Required Communications
Our Responsibility under Government Auditing Standards (The
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Yellow Book)
We reviewed and tested the City’s compliance with laws and
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regulations, noncompliance with which could have a material
impact on the financial statements.
We reviewed compliance with applicable laws and regulations
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identified in the Specifications for Audit of Counties, Cities and
Townsissued by the Auditor of Public Accounts of the
Commonwealth of Virginia
Required Communications
Our Responsibility under OMB A-133
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We performed procedures in order to express an opinion on the
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City’s compliance with requirements applicable to major Federal
programs. Our opinion was unqualified.
We performed tests of controls to assess the City’s ability to
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detect material noncompliance with program requirements, not to
express an opinion on controls.
Required Communications
Independence
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In accordance with AICPA Rule 101, and the independence
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standards contained in Government Auditing Standards, we
were, and continue to be, independent with respect to the
City of Virginia Beach.
Accounting Policies
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No new significant policies adopted.
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No transactions that lacked authoritative consensus.
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The new statistical section
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Required Communications
Estimates
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These statements include estimates, including:
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Allowance for doubtful accounts
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Depreciation
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Value of infrastructure assets
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Required Communications
Significant Audit Adjustments
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There were no significant audit adjustments proposed by us
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that would indicate a weakness in the City’s reporting
process.
There were no misstatements that were not corrected.
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Audit Presentation
City of Virginia Beach
Virginia
Solutions.Character.
November 7, 2006
Depth.
The Firm of Choice.
Joanne Griggs, City Auditor
External Audit Contract