HomeMy WebLinkAbout#04 - GFOA Certificate of Achievement Program
STAFF REPORT
DATE: June 10, 2025
TO: Mayor and Councilmembers
FROM: Clarissa Hadler, Finance Director
AGENDA ITEM: GFOA Certificate of Achievement
CORE STRATEGIES:
☐ Vibrant, inclusive, connected community ☒ Efficient, reliable, innovative services
☐ Responsive, transparent, adaptive governance ☒ Balanced Finances now and future
☐ Managed Growth ☐ Resilient Infrastructure
BACKGROUND:
The city has been applying and receiving the GFOA Government Finance Officers’ Association (GFOA)
Certificate of Achievement for Excellence in Financial Reporting (COA) since 2013. During the 2024
ACFR process, staff has been contemplating the cost and benefits of this certificate.
(From GFOA website) The GFOA established the Certificate of Achievement for Excellence in Financial
Reporting Program (COA) in 1945 to encourage and assist state and local governments to go beyond the
minimum requirements of generally accepted accounting principles to prepare annual comprehensive
financial reports that evidence the spirit of transparency and full disclosure and then to recognize
individual governments that succeed in achieving that goal. The goal of the program is not to assess the
financial health of participating governments, but rather to ensure that users of their financial statements
have the information they need to do so themselves.
More information on the program can be found here; https://www.gfoa.org/coa-award
There are a number of reporting processes that have been added to the city’s ACFR (Annual Comprehensive
Financial Report) in response to the requirements of the COA program and the comments of the reviewers
of our past COA applications. Each of the processes are addressed by either the city’s auditors, at a cost of
$150-$325 per hour, or high-level city staff. It’s difficult to say exactly what the financial impact is, but
we’ve estimated around 10 hours of auditor time and around 60-80 hours of staff time by the Finance
Director and Finance Coordinator. The application is due June 30 of each year, so much of this staff time
is used during a time when we are still wrapping up the audit and doing other time-consuming annual
reporting.
Removing the COA from our auditing process should not diminish the value of the ACFR. Minnesota
Statutes require all cities to issue an annual report on its financial position and activity prepared in
accordance with generally accepted accounting principles (GAAP), under the guidance of the
Governmental Accounting Standards Board (GASB), and audited in accordance with generally accepted
auditing standards (GAAS) by a firm of licensed certified public accountants or the Office of the State
Auditor. It is our auditor’s role to ensure that our reports meet those standards.
Staff inquired with our consultants as to the importance of this certification. Ryan Schmidt, Partner at
Schlenner Wenner, the city’s auditing firm, stated that it is largely only their metro cities that apply for the
certification. Tammy Omdahl, Managing Director at Northland, the city’s municipal financial advisor,
stated that the award is not a factor for the city’s credit rating or impactful for interest rates when issuing
bonds.
ISSUE BEFORE COUNCIL:
Staff requests Council direction as to whether to continue to apply for the GFOA Certificate of
Achievement.
Options;
1. Apply for the program in 2025 (2024 ACFR). Cost of $460 out of pocket for application,
approximately 2 more hours of auditor time, and another 20 hours of staff time. Stop applying
for the program in 2026 (2025 ACFR).
2. Do not apply for the program in 2025 (2024 ACFR) or beyond, until it is decided by future
staff or Councils to revisit the program.
3. Keep applying for the program indefinitely.
ATTACHMENTS:
• Results from the 2023 ACFR application.
3/6/2025
Clarissa Hadler
Finance Director
City of Lake Elmo, Minnesota
Dear Clarissa:
We are pleased to notify you that your December 31, 2023 fiscal year end annual comprehensive financial
report has been awarded GFOA's Certificate of Achievement for Excellence in Financial Reporting.
However, our review noted one or more serious deficiencies, which required that the Certificate be issued
on a qualified basis. While these deficiencies do not disqualify your report from receiving the Certificate,
failure to correct them in your next submission will almost certainly preclude award of the Certificate. If
you have any questions, or do not understand precisely what changes are required, we strongly suggest
that you contact us promptly in order to have sufficient time to correct the identified deficiencies for your
next submission, keeping in mind that additional work by your staff and/or contractors (including
possibly actuaries and auditors) may be necessary to do so.
The GFOA established the Certificate of Achievement for Excellence in Financial Reporting Program
(Certificate Program) in 1945 to encourage and assist state and local governments to go beyond the
minimum requirements of generally accepted accounting principles to prepare annual comprehensive
financial reports that evidence the spirit of transparency and full disclosure and then to recognize
individual governments that succeed in achieving that goal. The Certificate of Achievement is the highest
form of recognition in governmental accounting and financial reporting. Congratulations on having
satisfied the high program standards.
Your electronic award packet contains the following:
A "Summary of Grading" form and a confidential list of comments and suggestions for
possible improvements. These documents note the specific deficiency or deficiencies that caused
the award qualification. We strongly encourage you to implement the recommended
improvements in your next report. Certificate of Achievement Program policy requires that
written responses to this year’s comments and suggestions for improvement be included when
submitting your next report. If a comment is unclear or there appears to be a discrepancy, please
contact the Technical Services Center at (312) 977-9700 and ask to speak with a Certificate of
Achievement Program in-house reviewer.
Certificate of Achievement. A Certificate of Achievement is valid for a period of one year. A
current holder of a Certificate of Achievement may reproduce the Certificate in its immediately
subsequent annual comprehensive financial report. Please refer to the instructions for reproducing
your Certificate in your next report.
Award of Financial Reporting Achievement. When GFOA awards a government the Certificate
of Achievement for Excellence in Financial Reporting, we also present an Award of Financial
Reporting Achievement (AFRA) to the department identified in the application as primarily
responsible for achievement of the Certificate.
Sample press release. Attaining this award is a significant accomplishment. Attached is a sample
news release that you may use to give appropriate publicity to this notable achievement.
In addition, award recipients will receive via mail either a plaque (if first-time recipients or if the
government has received the Certificate ten times since it received its last plaque) or a brass medallion to
affix to the plaque (if the government currently has a plaque with space to affix the medallion). Plaques
and medallions will be mailed separately.
Thank you for participating in and supporting the Certificate of Achievement Program. If we may be of
any further assistance, please contact the Technical Services Center at (312) 977-9700.
Sincerely,
Michele Mark Levine
Director, Technical Services
Certificate of Achievement for Excellence in Financial Reporting
Summary of Grading
City of Lake Elmo, Minnesota
Member ID: 300148809
Report #: COA-2023-03940
The Certificate of Achievement Program Special Review Committee (SRC) has completed its review of your annual
comprehensive financial report. The grades awarded for each grading category are listed below, followed by
comments and suggestions for improvement grouped by category.
Any category showing a grade of “Needs Significant Improvement” indicates an area of particular concern to the
SRC. On the detailed listing of comments and suggestions for improvement, further notation will indicate which
comment or comments gave rise to the areas of concern and the degree of severity of the deficiency noted by those
comments. We encourage you to give special attention to these comments in order to be eligible to win the
Certificate going forward.
Grading Category Grade
101 - Cover, table of contents, and formatting Proficient
102 - Introductory section Proficient
103 - Report of the independent auditor Proficient
104 - Management's discussion and analysis (MD&A)Proficient
105 - Basic financial statements (preliminary considerations)Proficient
106 - Government-wide financial statements Needs Significant Improvement
107 - Fund financial statements (general considerations)Proficient
108 - Governmental fund financial statements Proficient
109 - Proprietary fund financial statements Proficient
110 - Fiduciary fund financial statements Not Applicable
111 - Summary of significant accounting policies (SSAP)Proficient
112 - Note disclosure (other than the SSAP and pension-related
disclosures)
Proficient
113 - Pension-related note disclosures Proficient
114 - Required supplementary information (RSI)Proficient
115 - Combining and individual fund information and other
supplementary information
Proficient
118 - Statistical section Proficient
119 - Other considerations Proficient
Certificate of Achievement for Excellence in Financial Reporting
Detailed Listing of Comments and Suggestions for Improvement
City of Lake Elmo, Minnesota
Member ID: 300148809
Report #: COA-2023-03940
102 - Introductory section
Comment Number: 2238 Checklist Question: 2-001-04-7
Page 3 - It appears that an annual budget is legally adopted for the general fund only. Please clarify. This comment is
provided as a reminder.
It is recommended that the letter of transmittal identify which governmental funds are annually (or biennially) appropriated.
[Certificate Program requirement; eGAAFR Chapter 33 - Introductory section-Formal transmittal]
106 - Government-wide financial statements
Comment Number: 1247
Page 26 - This comment is provided as a reminder.
The major categories of restricted net position should be displayed on the face of the statement of net position. [GASB Cod.
Sec. 2200.117]
Comment Number: 1261
Page 27.
Losses on the sale of capital assets of governmental activities should be reported either as an expense of the general
government or as a direct expense of the related function or program, as appropriate, depending on the specific
circumstances. [GASB Cod. Sec. 2200.149; GASB-S62: 49]
Comment Number: 2698 Checklist Question: 6-002-09-1
This comment, if repeated in the next report for the same or a similar deficiency, will preclude the entity from receiving the
Certificate of Achievement.
Page 26 - Refer to page 53 and the worksheet with the calculation of the net investment in capital assets submitted with the
application to the Certificate Program. The City's worksheet indicates that the City reports unspent bond proceeds in the
amount of $1,017,836. According to page 25 of the ACFR, it appears that all long-term debt of the governmental activities
(including debt related to the unspent bond proceeds) is included in the calculation of the net investment in capital assets of
the governmental activities. This comment was provided last year and again this year, and must be implemented in the next
year's ACFR for the City to receive the certificate.
Debt that was issued for capital purposes should not be part of the calculation of the net investment in capital assets until the
proceeds have been used to acquire capital assets. Note that the unspent bond proceeds should be reported as either restricted
(most often) or unrestricted (sometimes) assets, as appropriate, and the related portion of the bonded debt should be reported
in the same component of net position as the unspent proceeds, and therefore will not have any net effect on any
classification of net position. [GASB Cod. Sec. 2200.118, .708-10; GASB-S63: 9; Q&A 7.23.2; eGAAFR Chapter 19 -
Presentation of net position]
107 - Fund financial statements (general considerations)
Comment Number: 1291 Checklist Question: 7-001-05
Refer to page 38. The EDA does not appear to meet the criteria to be blended. Please explain how the EDA provides services
entirely or almost entirely to the City government rather than to the citizens. This comment is provided as a reminder.
One criterion for blending is that a component unit provides services entirely or almost entirely to the primary government.
The purpose of this criterion is to identify situations where a component unit has the characteristics of an internal service
fund (i.e., it exists to serve the government or its employees as an administrative entity). Consequently, component units that
provide services directly to citizens or other parties outside the government do not meet this criterion. [GASB Cod. Sec.
2600.112-.113; GASB-S61: 8b; GASB-S80: 5; Q&A 4.30.2 and 4.32.2; eGAAFR Chapter 6 - Blended component units]
109 - Proprietary fund financial statements
Comment Number: 1463 Checklist Question: 9-003-05
Page 35 - The "capital contributions from private sources."
Capital contributions should be reported after nonoperating revenues and expenses. [GASB Cod. Sec. 2200.191; GASB-S34:
100-101; eGAAFR Chapter 15 - Revenue]
Comment Number: 1492 Checklist Question: 9-005-08
Page 37 - Refer to the City's response to this comment. Include the capital accounts and retainage payable. This comment is
provided as a reminder.
Information should be provided (either on the face of the statement or on an accompanying schedule) about any noncash
investing or financing activities that affected assets and liabilities reported on the statement of fund net position (e.g., the
increase of assets and liabilities resulting from the initiation of a lease). [GASB Cod. Sec. 2450.133; GASB-S9: 37; Q&A
2.32.2; eGAAFR Chapter 15 - Statement of cash flows-Format]
Comment Number: 1530
Page 35 - Report the capital assets transferred from the governmental activities as "capital contributions" rather than
"transfers" in the operating statement of the proprietary funds, even though the amount is reported as a transfer on the
statement of activities.
A capital contribution from a governmental fund to a proprietary fund should be reported as a contribution rather than as a
transfer. [Q&A 7.74.4]
Comment Number: 1545
Page 36 - Refer to the City's response to a related comment provided last year. Normally, the "other receipts from customers"
(i.e., the connection fees) are for capital purposes and reported as cash flows from capital and related financing activities.
However, if the connection fees are not properly reported in some other category, they should be included as part of cash
flows from operating activities. Please clarify.
All cash flows not properly reported in some other category should be included as part of cash flows from operating
activities, regardless of how the related amount is presented (i.e., operating vs. nonoperating) on the operating statement.
[GASB-S9: 18g; Q&A 2.20.5]
Comment Number: 2977
Page 35 - Refer to the "special assessments" and "intergovernmental" revenues. Refer to page 27. This comment is provided
as a reminder.
It is unclear why the proprietary funds report a nonoperating revenue rather than a capital contribution related to the capital
grants and contributions reported in the business-type activities on the government-wide statement of activities. [Q&A
7.72.8]
111 - Summary of significant accounting policies (SSAP)
Comment Number: 3619
Page 44.
Modify the note disclosure for deferred inflows and outflows of resources to read that deferred outflows of resources
"represent a consumption of net assets that applies to future periods" and that deferred inflows of resources "represent an
acquisition of net assets that applies to future periods," rather than "represent a consumption of net position that applies to
future periods" and "represent an acquisition of net position that applies to future periods," respectively. [GASB Cod. Sec.
1100.109; GASB-S63: 2; GASB Concepts Statement Nos. 4: 32 and 34]
112 - Note disclosure (other than the SSAP and pension-related disclosures)
Comment Number: 3593 Checklist Question: 12-100-13
Page 48 - Describe the valuation techniques used to measure "Level 2" investments: for example, the matrix pricing method.
The note disclosure should include a description of the valuation techniques used in the fair value measurement for Level 2
and/or Level 3 inputs. Refer to Illustrations 2, 3, and 5 in Appendix C of GASB Statement No. 72 for guidance. [GASB Cod.
Sec. I50.141; GASB-S67: 30; GASB-S72: 81; eGAAFR Chapter 30 - Assets, Fair value measurement; GAAFR, Appendix
D, page 58]
113 - Pension-related note disclosures
Comment Number: 3446 Checklist Question: 13-620-01
Page 67 - This comment is provided as a reminder.
For a defined benefit pension/OPEB plan that is NOT administered through a trust or equivalent arrangement, the notes
should clearly indicate the fact that there are no assets accumulated in a GASB-compliant trust. [GASB Cod. Sec. P22.133-
.136 and .154-.158; GASB Cod. Sec. P52.131-.138 and .157-.162; GASB-S73: 41-44 and 61-65; GASB-S75: 162-169 and
185-190]
Comment Number: 3570 Checklist Question: 13-600-01
Page 61 - It's unclear how the amount of total pension expense for all pension plans disclosed on page 61 is traceable to
pages 59, 60, and 64. Please clarify. This comment was provided last year.
The notes should provide the aggregate amount of pension expense/expenditures or OPEB expense/expenditures for all
defined benefit plans, since the total amount is not otherwise identifiable from information presented in the financial
statements. [GASB Cod. Sec. P20.137, .176; GASB Cod. Sec. P22.130; GASB Cod. Sec. P50.144, .189; GASB Cod. Sec.
P52.131; GASB-S68: 37 and 74; GASB-S73: 38; GASB-S75: 47, 89, and 162; eGAAFR Chapter 30 - Liabilities-Defined
benefit plans]
115 - Combining and individual fund information and other supplementary information
Comment Number: 2104
Page 98 - The 2012B GO Improvement Bonds Fund.
It is not appropriate to report a negative cash balance as an asset. Overdrafts from a common cash and investment pool
should be treated as an interfund liability of the borrowing fund and as an interfund receivable of some other fund
participating in the pool (to be selected by management). [Audits of State and Local Governments 5.27]
119 - Other considerations
Comment Number: 2213 Checklist Question: 19-001-01
The City's responses on the application form indicate that the City legally adopted annual budgets for 10 debt service funds.
However, per page 41 of the ACFR, an annual budget is adopted for the general fund only and no annual budgets are adopted
for the debt service funds. Please clarify. This comment is provided as a reminder.
The budgetary presentations included in the annual comprehensive financial report should be consistent with the
government’s budgeting as described in the Certificate of Achievement Application Form. [Certificate Program requirement]
120 - New Pronouncements
Comment Number: 3739
The GASB has issued the following statements and implementation guides:
1. Statement No. 100, "Accounting Changes and Error Corrections—an amendment of GASB Statement No. 62." The
requirements of this Statement will take effect for financial statements starting with the fiscal year that ends June 30, 2024.
2. Statement No. 101, "Compensated Absences." The requirements of this Statement will take effect for financial statements
starting with the fiscal year that ends December 31, 2024.
3. Statement No. 102, "Certain Risk Disclosures." The requirements of this Statement will take effect for financial statements
starting with the fiscal year that ends June 30, 2025.
4. Implementation Guide No. 2023-1, "Implementation Guidance Update—2023." The requirements of this Implementation
Guide will take effect for financial statements starting with the fiscal year that ends June 30, 2024.
Earlier application of these statements and implementation guides is encouraged. For the original pronouncements and the
implementation guides, please visit the GASB’s website, www.gasb.org.
************ END OF COMMENTS FOR COA-2023-03940 ************
Government Finance Officers Association
Certificate of
Achievement
for Excellence
in Financial
Reporting
Presented to
City of Lake Elmo
Minnesota
For its Annual Comprehensive
Financial Report
For the Fiscal Year Ended
December 31, 2023
Executive Director/CEO