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12-12-2019 Council Newsletter • ouncel Newsletter S Provided to the Tigard City Council on a weekly basis to stay abreast of current city issues. December 12, 2019 1. Reminder: No 12/24 Council meeting Tues. Dec. 24 MEETING CANCELLED December 17 is the final Council meeting for 2019. Wed. Dec. 25 City Offices Closed 2. Tigard Walks Holiday Lights Walk 12/14 Christmas If you're planning to join the big Holiday Lights walk Wed.January 1 City Offices Closed on Saturday, Dec. 14 at 6 p.m.,Tigard High School has New Year asked us to limit our use of their parking lot so parents have parking to attend the THS jazz concert. Tuesday,Jan. 7 Business Meeting One 6:30 p.m. -Town Hall Tigard Parking is available on 85`h Avenue, at Clean Water Services and the Tigard Community Friends Church has given us permission to use their large parking lot (15800 SW Hall Blvd.), then it's just a matter of crossing the street to walk to the high school for the start. 3. Audit Communication Letter to Council Jared Isaksen attached the Moss Adams (Auditor) report from their review of Tigard's financials for the year ended June 30,2019. 4. Construction Project Update Christina Zellmer attached an overview of road, trail and construction projects underway in the city. 5. Council Decisions &Next Steps 12110119 meeting: • Council approved Resolution No. 19-49,increasing the local storm and surface water utility rates fee from $2.00 per to$5.50 per equivalent dwelling unit, effective July 1,2020. Next steps: develop communication plan to prepare residents for increase,update utility statement template for launch in July,adjust revenue estimate in proposed 2020 budget,-More in next week's newsletter. • Council requested adding an Auto Reply to Council Mail correspondence that arrives over the weekend and long holidays. City mgmt.will work on the message and deploy next week. 6. Council Calendar Tuesday, Dec. 17 Workshop Meeting 6:30 p.m. -Town Hall 13125 SW Hall Blvd.Tigard,OR 97223 1 Web www.tigard-or.gov Phone:503.639.4171 FAX: 503.684.7297 TDD 503.684.2772 COMMUNICATION TO THOSE CHARGED WITH GOVERNANCE AND INTERNAL CONTROL RELATED MATTERS CITY OF TIGARD, OREGON June 30,2019 �� MOSSADAMS MOSSADAMS Communication to Those Charged with Governance and Internal Control Related Matters To the City Council Members City of Tigard, Oregon We have audited the financial statements of the governmental activities, the business-type activities, each major fund and the aggregate remaining fund information of the City of Tigard, Oregon (the City) as of and for the year ended June 30, 2019, and have issued our report thereon dated December 5, 2019. Professional standards require that we provide you with the following information related to our audit. Our Responsibility under Auditing Standards Generally Accepted in the United States of America As stated in our audit contract dated April 27, 2016, our responsibility, as described by professional standards, is to form and express an opinion about whether the financial statements prepared by management with your oversight are fairly presented, in all material respects, in conformity with U.S. generally accepted accounting principles. Our audit of the financial statements does not relieve you or management of your responsibilities. Our responsibility is to pian and perform the audit in accordance with generally accepted auditing standards and to design the audit to obtain reasonable, rather than absolute, assurance about whether the financial statements are free of material misstatement.An audit of financial statements includes consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the City's internal control over financial reporting. Accordingly, we considered the City's internal control solely for the purposes of determining our audit procedures and not to provide assurance concerning such internal control. We are also responsible for communicating significant matters related to the financial statement audit that, in our professional judgment, are relevant to your responsibilities in overseeing the financial reporting process. However, we are not required to design procedures for the purpose of identifying other matters to communicate to you. We are also responsible for performing tests of compliance with certain provisions of laws, regulations, contracts, and grant agreements, including provisions of Oregon Revised Statutes as specified in Oregon Administrative Rules OAR 162-10-000 to 182-10-330 of the Minimum Standards for Audits of Oregon Municipal Corporations, noncompliance of which could have a direct and material effect on the determination of financial statement amounts. 1 Planned Scope and Timing of the Audit We performed the audit according to the planned scope and timing previously communicated to you in the engagement letter. Significant Audit Findings Qualitative Aspects of Accounting Practices Management is responsible for the selection and use of appropriate accounting policies. The significant accounting policies used by the City are described in the notes to the financial statements. In November 2016, GASB issued statement No. 83, Certain Asset Retirement Obligations (GASB 83). The Statement requires governments to report a liability on the face of the financial statements for legal or contractual obligations in connection with the permanent retirement of tangible assets. Implementation of GASB 83 did not have an impact on the City's financial reporting for the current year. In March 2018, GASB issued statement No. 88, Certain Disclosures Related to Debt, including Direct Borrowings and Direct Placements{GASB 88}. The Statement defines debt for purpose of disclosure and requires additional essential information related to debt to be disclosed. Implementation of this Statement did not impact the balances or transactions recorded in the basic financial statements. No other new accounting policies were adopted and there were no changes in the application of existing policies during fiscal year 2019. We noted no transactions entered into by the City during the year for which there is a lack of authoritative guidance or consensus. There are no significant transactions that have been recognized in the financial statements in a different period than when the transaction occurred. Significant Accounting Estimates Accounting estimates are an integral part of the financial statements prepared by management and are based on management's knowledge and experience about past and current events and assumptions about future events. Certain accounting estimates are particularly sensitive because of their significance to the financial statements and because of the possibility that future events affecting them may differ significantly from those expected. The most significant estimates affecting the financial statements include: Net Pension Liability and Related Pension Expense—This represents the amount of annual expense recognized for pensions and the related pension asset or liability. The amount is actuarially determined, with OPERS management input. We have evaluated the key factors and assumptions used to develop the annual expense in determining that it is reasonable in relation to the combined and individual financial statements taken as a whole, Unbilled Revenue—Unbilled revenue is a measure of revenue earned through the end of the reporting period that has yet to be billed. This generally represents accounts with billing cycles that start in the reporting year and end in the subsequent year. We have evaluated the key factors and assumptions used to develop unbilled revenue in determining that it is reasonable in relation to the financial statements taken as a whole. 2 Allowance for Doubtful Accounts—This represents an estimate of the amount of accounts receivable that will not be collected. We have evaluated the key factors and assumptions used to develop the allowance in determining that it is reasonable in relation to the financial statements taken as a whole. Recovery Periods for the Cost of Capital Assets—This represents the depreciation of capital assets. We have evaluated the key factors and assumptions used to develop the recovery periods in determining that they are reasonable in relation to the financial statements taken as a whole. Other Post-Employment Benefit Obligations—This represents the amount of annual expenses recognized for post-employment benefits and the related asset or liability. The amount is actuarially determined with management input. We have evaluated the key factors and assumptions used to develop the annual expenses in determining that it is reasonable in relation to the financial statements taken as a whole. Financial Statement Disclosures The disclosures in the financial statements are consistent, clear, and understandable. Certain financial statement disclosures are particularly sensitive because of their significance to financial statement users, We did not note any disclosures in the financial statements which we consider sensitive to potential users. Dqfficulties Encountered in Performing the Audit We encountered no difficulties in dealing with management in performing and completing our audit. Corrected and Uncorrected Misstatements Professional standards require us to accumulate all known and likely misstatements identified during the audit, other than those that are trivial, and communicate them to the appropriate level of management. For purposes of this letter, professional standards define an audit adjustment as a proposed correction of the financial statements made subsequent to the start of audit final fieldwork. An audit adjustment may or may not indicate matters that could have a significant effect on the City's financial reporting process (that is, cause future financial statements to be materially misstated), We identified the following audit adjustments during the course of our audit procedures where management made the appropriate correcting entries: 1) To reverse duplicate entry for clean water services activity for February 2019—Decrease in utility revenues of$913,000. 2) To correct errors in posting of State payroll tax withholding accrual— Increase in accrued liabilities of$54,000. 3 Passed adjustments are those entries found during the course of the audit that management has decided to not post to the financial statements. We identified the following passed audit adjustments during the course of our audit procedures. 1) Recognize restricted donations as revenues that have been incorrectly recorded as deferred credits— Increase in beginning fund balance$184,000. 2) Record the impact on beginning fund balance and deferred outflows of resources for not recording a loss on refunding previously for the Series 2011 B Library Refunding Bonds— Increase in beginning net position of$322,000. Disagreements with Management For purposes of this letter, professional standards define a disagreement with management as a financial accounting, reporting, or auditing matter, whether or not resolved to our satisfaction, that could be significant to the financial statements or the auditor's report. We are pleased to report that no such disagreements arose during the course of our audit. Management Representations We have requested certain representations from management that are included in the management representation letter dated December 5, 2019. Management Consultation with Other Independent Accountants In some cases, management may decide to consult with other accountants about auditing and accounting matters, similar to obtaining a "second opinion" on certain situations. If a consultation involves application of an accounting principle to the City's financial statements or a determination of the type of auditor's opinion that may be expressed on those statements, our professional standards require the consulting accountant to check with us to determine that the consultant has all the relevant facts. 7o our knowledge, there were no such consultations with other accountants. Other Significant Audit Findings or Issues We generally discuss a variety of matters, including the application of accounting principles and auditing standards, with management each year prior to retention as the City's auditors. However, these discussions occurred in the normal course of our professional relationship and our responses were not a condition to our retention. 4 Communication of Internal Control Related Matters In planning and performing our audit of the financial statements of the City as of and for the year ended June 30, 2019, in accordance with auditing standards generally accepted in the United States of America, we considered the City's internal control over financial reporting (internal control) as a basis for designing our auditing procedures for the purpose of expressing our opinion on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the City's internal control. Accordingly, we do not express an opinion on the effectiveness of the City's internal control. A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the entity's financial statements will not be prevented, or detected and corrected on a timely basis. Our consideration of internal control was for the limited purpose described in the first paragraph and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies and therefore, material weaknesses or significant deficiencies may exist that were not identified, In addition to the required communications, we have identified the following matters for your consideration. Our recommendations are based on observations and testing during the course of our audit. These recommendations should be evaluated by management and the Council Members for implementation and the City should conduct a cost benefit analysis including consideration of the risks for the recommended action. Other Matters Utility Billing 1) During our review of the customer billing process, we noted that all members of the utility billing department have access to change billing rates in the system. We recommend that access to change rates be restricted to a limited number of employees outside of the utility billing function, and that any such changes to billing rates are reviewed for accuracy. (Repeat comment from 2018 audit). Work Orders 1) During our work order control testing, we noted that no evidence existed to demonstrate that a review of the quarterly capital assets to general ledger reconciliation was completed. We recommend that a review process be documented to ensure costs are closed properly in the accounting system and to the correct fund. (New comment in 2019). Public Works 1) During our internal control procedures,we noted that certain employees within the public works department have the ability to both invoice and receive cash from third parties. This creates a segregation of duties risk that could allow for cash payments to not be properly received and recorded in the City's records. We recommend that the City segregate the invoicing and cash receipting process and also not allow employees to 5 collect payment from third parties in the field. (New comment in 2019). Intergouernmental Agreement 1) During our discussion with management and review of the intergovernmental agreement and amendments between the City of Tigard and the City of Lake Oswego for the Lake Oswego-Tigard Water Partnership, we noted that although the project is in commercial operation at fiscal year-end, no governing agreement exists to clearly stipulate ownership of the assets and responsibilities for repairs and maintenance costs going forward. We recommend that both municipalities continue to enter into discussions and draft a governance agreement to ensure the intent of both parties for their respective rights and obligations for operational decisions, sharing of operating revenues and expenses, and respective responsibility for capital asset maintenance and major repairs are explicitly stated. Such an agreement will also help guide each municipality in the appropriate accounting treatment for the related assets. (Repeat comment from 2018 audit). Financial Close&Reporting 1) During our control procedures over the financial close and reporting cycle, we noted a lack of documentation of management's review and approval of the draft financial statements. We recommend that the financial statement document be reviewed and approved by someone other than the person drafting the financial statement, and that the approval be documented. (Repeat comment from 2018 audit). 2) During our subsequent disbursement testing, we noted that the state payroll tax withholding paid in July 2019 was not properly accrued for as of June 30, 2019. We recommend that management implement a review of payroll and related employee costs incurred in near year-end and related to the fiscal year have been properly accrued and expensed recognized in the proper period. (New comment in 2019). 3) During our analysis of utility sales, we noted that the City had improperly recorded a sewer liability twice related to Clean Water Service sewer and stormwater charges for February 2019. We recommend that the City implement a monthly reconciliation of all significant accruals and payables to ensure they are properly accounted for within the City's general ledger. (New comment in 2019). IT Security&Access 1) During our assessment of internal controls over the IT environment, we noted the City does not currently have a formal procedure requiring periodic review of user access. Reviewing user access on an annual basis, and documenting such review, serves as an important internal control to ensure that the list of active users is updated appropriately and that segregation of duties conflicts are identified and mitigated as necessary. We recommend the City establish formal user access reviews to ensure user access and security roles are appropriately updated. Such review should be formally documented and approved by someone other than the person performing the review. (New comment in 2019). 6 This communication is intended solely for the information and use of management and the Council Members and is not intended to be and should not be used by anyone other than these specified parties. Aa Ad LZ/ Portland, Oregon December 5, 2019 7 Item## (� Construction Project Update — December 11, 2019 Newslettif err This update is a listing of major construction projects with traffic impacts. If you do not see a project on the Est here are a few resources you can use to find more information: • Tigard Active Permits—interactive map with a list of planning, building, and engineering permits. https://v-ww.arcgis.com/apps/MabSeries/index.html2al2pid=d86ce38351 le430dalc050637040107c • Public Works Update— summary of work done by our Public Works crews. https://www.tigard- or.gov/community/nip hp • Capital Improvement Plan—Tigard's 6-year plan for large-scale improvements. h1tV�s/Zwww.tigatd- or.gov/city hall/ci ..php • ODOT Project Tracking—State Transportation Improvement Program projects. https.-//gis.c)dot-state.or.us/transgis/opt/ • Washington County Roads--Washington County projects impacting roads. https://www.wc-roads.com/ Greenfield Drive at Gaarde St Greenfield Drive is closed from Maplecrest Court to Gaarde Street, and 132'Avenue from Rockingham Drive to Greenfield Drive. It is estimated that roughly 500' of roadway sustained significant damage during a recent crater main break. The erosive forces of water from the water main break caused erosion of a substantial amount of gravel and soil from underneath the pavement,leaving large voids and the potential for sink holes. Detour Route: The signed detour route for this road closure will be Gaarde Street, to 129th Avenue, to Moningstar Drive, to Greenfield Drive. The city is currently working with consultants to determine the structural integrity of the roadway, and the extent of subterranean damage. Once the damage is understood, the city will put together a plan to reopen the road. However, needed repairs could take six months or more. Visit httDs://www.tigard orgov/coinmunity/pw news.php for news. 99W Intersections Photo Red Light cameras installation begins this week, starting at 99W/Hall Blvd before moving to 99W/Durham Rd and 99W/72 n'Ave. Most of the work will be done at night. Expect nighttime lane closures on 99W and the side streets. Visit https:/Zwww.tiggxd-or.gov/police/photo traffic enforcement.php for more information. Tigard Street Heritage Trail Tigard Street Heritage Trail is closed through December to complete paving operations, fencing,irrigation, and landscaping. Periodic openings between Grant Avenue and Main Street will occur to accommodate work in Tigard Street. Traffic on Tigard Street may be reduced to one lane with flaggers intermittently while concrete work is finished. Commercial Street Sidewalks ODOT is constructing sidewalks between Lincoln and Main St. Commercial Street is now open between Lincoln Ave and Main St. There may be light traffic impacts as construction is cleaned up. River Terrace Area Construction • Traffic on Roy Rogers Rd has been shifted to the east side of the roadway onto the newly widened portion, and work begun on installing a waterline and widening the west side of the road. • River Terrace subdivisions are under construction particularly on the cast side of Roy Rogers Rd south of Scholls Ferty Rd. See https://www.ti�;ard-ox,govZriver terrace.php for more information. A new sewer line is being installed along Clementine Street, out to Roy Rogers Rd and will impact Clementine Street, a section of Pumpkin Valley Terrace, and Sabrina Ave. Expect some delays and short closures while work is in the roadway. + A contractor is building a new subdivision on the crest side of 150t'Ave south of Hawksridge. There are other significant road, sewer and water projects underway or planned in the area. Visit GetC.sThere.org for information and updates.