AgdaPkt 2005-01-24 - Laserfiche WebLink

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. The reliability of financial records for preparing financial statements and maintaining accountability for assets. The concept of reasonable assurance recognizes that: . The cost of a control should not exceed the benefits likely to be derived, and . The evaluation of costs and benefits requires estimates and judgments by management. All internal control evaluations occur within the above framework. We believe that all of the City's internal accounting controls adequately safeguard assets and provide reasonable assurance of proper recording of financial transactions. Budgetary control is maintained at the program level by encumbering estimated purchase amounts prior to the release of purchase orders to vendors. Purchase orders that result in an overrun of budget balances are not released until additional appropriations are made available. Open encumbrances are reported as reservations of fund balance at year-end. The independent audit of the financial statements of the City of Redwood City was part of a broader, federally mandated "Single Audit" designed to meet the special needs of federal grantor agencies. The standards governing Single Audit engagements require the independent auditor to report not only on the fair presentation of the financial statements, but also on the audited government's internal controls and compliance with legal requirements, with special emphasis on internal controls and legal requirements involving the administration of federal awards. These reports are available in the City of Redwood City's separately issued Single Audit Report. As a recipient of federal, state, and county financial assistance, the City is also responsible for ensuring that an adequate internal control structure is in place to ensure compliance with applicable laws and regulations related to those programs. This internal control structure is subject to periodic evaluation by management and the internal audit staff of the government. As demonstrated by the statements and schedules included in the financial section of this report, the City of Redwood City continues to meet its responsibility for sound financial management. F ACTORS AFFECTING FINANCIAL CONDITION Local Economy The City of Redwood City is currently affected by the economic recession that has enveloped the San Francisco Bay Area and which is having a pronounced impact on the information technology industry. Although Redwood City's unemployment rate (not seasonally adjusted) as of June 2004 was a respectable 3.7%, this low rate does not reveal the decline in the number of jobs in the county over the past three years (420,100 jobs as of June 2001 to 352,500 as of June 2004). It is our hope and expectation the local economy has "bottomed out" and that the local economy will soon be participating in the nationwide recovery. Two new high profile retailers have announced their plans to open establishments later this calendar year or in early 2005. The Jewelry Exchange, a high volume nationwide jewelry retailer, hopes to open a store in Redwood City before the 2004 holiday season. Also, construction is underway on a Ferrari automobile dealership, which is expected to open in January 2005. Both of these businesses will generate sales tax revenue for the City and the decisions to locate here are interpreted as expressions of the confidence that these organizations have in the economic strength of our area. Abbot Labs has secured all entitlements to construct a 541,000 square foot office and manufacturing facility in the City (subject to the City's design review process). This project is expected to be built in phases over a 20 year period with the first phase beginning in 2006. The first phase of the Westport Marina project, consisting of constructing a 408-slip marina, is under construction and is expected to be completed before the fall of 2005. A boat repair and maintenance yard, the second phase, is 111