Other Auditor Reports 12/31/2006

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Accounting for Termination Benefits (GASB Statements No. 47) The Governmental Accounting Standards Board (GASB) has issued Statement No. 47, Accounting for Termination Benefits, to provide accounting guidance for state and local governmental employers regarding benefits (such as early- retirement incentives and severance benefits) provided to employees that are terminated. Statement No. 47 requires recognition of the cost of involuntary termination benefits in the period in which a government becomes obligated to provide benefits to terminated employees, which is not necessarily the same period as when the benefits are actually provided. The Statement requires recognition of the cost of voluntary termination benefits when the termination offer is accepted. The Statement provides an exception to the general recognition requirements for termination benefits that affect defined benefit post employment benefits, such as pensions or retiree healthcare. Those termination benefits should be accounted for in the same manner as defined benefit pensions or other post employment benefits, although any increase in an actuarial accrued liability associated with a termination benefit is required to be separately disclosed. The Statement also elaborates on how to measure the cost of termination benefits and requires disclosure of information about termination benefit arrangements, including a description of the plan and the cost of the benefits. Statement No. 47 is effective for financial statements for periods beginning after June 15, 2005. However, for termination benefits that affect defined benefit post employment benefits other than pensions, governments should implement Statement No. 47 simultaneously with Statement No. 45, Accounting and Financial Reporting by Employers for Post employment Benefits Other Than Pensions. Sales and Pledges of Receivables and Future Revenues and Intra - Entity Transfers of Assets and Future Revenues (GASB Statements No. 48) This statement is effective for periods beginning after December 15, 2006 and therefore, is applicable to the City for the year ended December 31, 2007. This statement clarifies accounting treatment for transactions involving the exchange of an interest in expected receivable or future revenue collections for immediate cash payments. Accounting and Financial Reporting for Pollution Remediation Obligations (GASB Statements No. 49) This statement is effective for periods beginning after December 15, 2007 and therefore, is applicable to the City for the year ended December 31, 2008. GASB Statement No. 49 requires governments to measure and report liabilities and expenditures resulting from pollution remediation obligations. The new standard is applicable to all pollution remediation except as associated with the following: Environmental obligations associated with landfills which are already covered under GASB Statement No. 18: Accounting for Municipal Solid Waste Landfill Closure and Post - closure Care Costs. Future pollution remediation activities that are required when an asset is retired except for newly retired assets where no liability has previously been recognized. Asset impairments which are already covered under GASB Statement No. 42: Accounting and Financial Reporting for Impairment of Capital Assets and for Insurance Recoveries. Any pollution prevention costs, fines, penalties, or any other non - remediation expenditures. Accounting for any environmental non - exchange transactions. (14)