Fiscal Year 2013-2015 Special Budget Meeting

CTTY OF OAKLAND Required Communications and Recommendations Fiscal Year Ended June 30,2009 REQUIRED COMMUNICATIONS (Continoed) HL Planned Scope and Timing of the Audit We performed the audh according to the planned scope and timing previously communicated to you in our meeting about planning matters on July 22,2009. IV. Significant Audit Findings Qualitative A^cts of Accounting PratMces Management is responsible for tiie selection and use of impropriate accounting policies. The significant accoiuiting policies used by the City are described in Note 2 to the basic financial statements. As described hi Note 12 to tiie basic financial statements, tiie Chy adopted tiie provisions of Governmental Accounting Standards Board (GASH) Statement No. 49, Accounting and Financial Reporting for Pollution Remediation Obligations^ effective July 1,2008. In addition, the City presMits the Port of Oakland (Port) in a unique manner as compared to other local governmental entities with port operations. All local government entities we sampled refiect tiieir ports as departments of the organization rather than as a discretely presented component unit. Some of these ports have sunilar management structures with a Board of Commissioners appointed by the sponsoring city's mayor/city council to oversee the (derations of the port Management's representation to us was tiiat the Port operates with a separate legal standing (i.e. ushig its own corporate powers) under the Charter, which would allow for fliis presentation. In addition, tiie City Attomey's Office has represented tiiat the Port operates very similar to a corporation with the Charter acting as its Articles of Incorporation aiul By-Laws. Uhimately, the Chy's presentation of tiie Port makes it less comparable to other cities tiiat have port operations, thus, bemg a unique presentation. We noted no transactions entered into by the City during the year for which there is a lack of authoritative guidance or consensus. All significant transactions have been recognized in tiie financial statements in the proper period Accounting estimates are an integral part of the financial statements prepared by manag^ent and are based on management's knowledge and experience about past and curreot ev^its and assumptions about fiiture events. Certain accounting estimates are particularly sensitive because of their significance to the financial statements and because of the possibility that fiiture events affecting them may differ significantiy fit)m those expected. The most sensitive estimates affecting the financial statements were: • Fair value of tnvestmerUs. The City's investments are generally carried at fair value, which is defined as tiie amount that tiie City could reasonably expect to receive for an investment in a current sale between a willing buyer and a willing seller and is generally measured by quoted market prices. • Estimated unbilled sewer service revenue. The estimates for unbilled sewer service revenue are based on an evaluation of the EBMUD reports, cash flows, monthly billing cycles and historical billings. " Estimated allowance for losses on accounts receivable. The allowance for losses on accounts receivable was based on management's estimate regarding tiie likelihood of collectibility.