Financial Reporting Overview & Documents
The Comprehensive Annual Financial Report, better known as the CAFR, is prepared annually to provide the City Council, citizens, representatives of financial institutions and others with detailed information concerning the financial condition and performance of the City of Rialto. The report also provides assurance that the City presents fairly its financial position as verified by independent auditors.
Each year the City's financial records are audited in accordance with generally accepted auditing standards, Government Auditing Standards issued by the Controller General of the United States, and the provisions of the Single Audit Act, Office of Management and Budget (OMB) Circular A-133 and OMB's Compliance Supplement. These standards require that auditors plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The audit also includes assessing the accounting principles used in the significant estimates made by management, as well as evaluating the overall financial statement presentation.
Governmental Accounting Standards Board (GASB) 34
The Annual Financial Statement summarizes the activity of all City funds. The statements have changed in format as a result of implementing GASB 34. The discussion on the implications of GASB 34 can be extensive. For the purposes of the report, a brief overview is included here.
In June 1999, the Governmental Accounting Standards Board (GASB) - which sets "generally accepted accounting principles" (financial reporting rules) for all state and local governments - established a new framework for the financial reports of state and local governments. The new framework or financial reporting model represents the biggest single change in the history of governmental accounting. GASB 34, known as Statement Number 34: Basic Financial Statements - and Management's Discussion and Analysis (MD&A) - for State and Local Governments, represents a fundamental revision of the current financial reporting model, which has been in place since 1979.
The GASB 34 model includes new features, such as government-wide financial reporting, narrative overview and analysis (management's discussion and analysis - MD&A), and infrastructure reporting.
Government-Wide Financial Reporting
For the first time, users of state and local government financial reports have access to government-wide financial statements that present the government as a single, unified entity. These are consolidated financial statements for all of the City's operations on a full accrual basis of accounting. They will not be presented on a fund basis; instead, fiscal operations will be organized into two major activities: governmental and business-type.
These statements will have a "net asset" focus and include a number of interfund eliminations such as internal service and fiduciary funds. A reconciliation of the Net Assets is a part of the report. These new government-wide financial statements complement rather than replace the traditional fund-based financial statements. In addition to the infrastructure described below, they represent the long-term financing obligations of the City.
The new governmental financial reporting model requires that governments report their infrastructure assets as an asset in the financial statements. In the past, these were expensed. Infrastructure assets include roads, bridges, tunnels, drainage systems, water and sewer systems, dams, and lighting systems. Normally, capital assets including infrastructure must be depreciated. The full implementation of capturing streets, roads, and sidewalks infrastructure was implemented in 2007.
Narrative Overview & Analysis
The new governmental financial reporting model provides financial report users with a narrative introduction, overview, and analysis of the City's financial activities in the form of management's discussion and analysis (MD&A). The intent is to provide information similar to what the private sector organizations provide.
The financial statements include not only significant changes in the presentation of the financial condition of the City but also include expanded footnotes that describe additional GASB standards the City will be required to implement. The intent of the GASB is to provide reporting to City officials, staff, and external users of the reports that better convey the City's fiscal condition.
Redevelopment Agency (RDA) Financial Statement
The Redevelopment Agency Financial Statements have also been reported under the new GASB 34 model. The RDA is a component unit of the City of Rialto and, as such, its activities are blended into the financial statements of the City.