Fiscal Year 2013-2015 Special Budget Meeting

CITY OF OAKLAND Required Communications and Recommendations Fiscal Year Ended June 30,2009 STATUS OF PRIOR YEARS* RECOMMENDATIONS (Continued) Statii^: 2008^2 Comment: Condition/Effect/ Recommei^ation: Status: During our substantive procedures, we determined that foe City did not have an adequate understanding of foe EBMUD collection process and the timing of remittances to foe City. We recommended foat foe City document its internal controls over sewer service revenues, which included (1) performing risk assessments; (2) establishing controls, such as monitoring foe bilUng and collecting activities performed by EBMUD; (3) establishing proper communication within tiie City Departments; and (4) establishmg accrual procedures at year-end foat capture all billed receivables and a basis for estimating foe unbilled receivables. Management held a meeting among CEDA, foe Public Works Agency, and foe Finance and Maiu^ement Agency to identity foe most appropriate way to monitor foe sewer system revenues collected by EBMUD on behalf of foe City. The inter-agency meeting resulted in a monitoring process that was implemented during fiscal year 2008-09. This has been fully implemented. Accounting for the City's Net Pension Asset During our review of foe Oakland Police and Fire Retu^ment System (PFRS) financial statements for foe year ended June 30, 2008, we noticed a change m reporting of actuarial foformation. The FY2008 PFRS report disclosed a six- year trend of actuarial required contribution (ARC) requirements in its required supplementary mformation, which had previously been reported as zero in past PFRS reports. Upon fiirfoer investigation, it was determined that the past PFRS reports were incorrect and that there has been past ARC requirements for foe City which were not communicated or considered in its calculation of foe net pension asset on foe statement of net assets of its governmental activities. The net pension asset is foe resuh of City contribution to PFRS that exceeded foe actuarially determined annual required contribution, which originated fixim the bond proceeds of foe 1997 Pension Obligation Bonds. This amount should t l ^ be amortized along wifo Impact of subsequent annual ARC requirements to recognize foe effects of excess/deficient contributions as pension costs over time. We recommended going forward that foe City's Finance and Management Agency accounting and retirement staff woii wifo foe PFRS actuary to calculate foe aimual pension cost and changes to net pension assets, This has been fully unplemented.