Fairview Council Meeting | April 3, 2018 Overview

1. Presentation toTown of FairviewCouncil Meeting | April 3, 2018

2. Overview • Introduction • Audit Process • Required Communications • Audit Results • Financial Highlights • New Accounting Pronouncements • Questions

3. Introductions

4. The Firm of Texas Weaver is the largest independent accounting firm based in Texas and the Southwest. We’ve served Texas public sector entities for 66 years. Dallas Fort Worth Midland Houston Austin Conroe San Antonio

5. Engagement Leadership John DeBurro, CPA Partner, Assurance Services Claire Wootton, CPA Manager, Assurance Services

6. Engagement Team Town of Fairview John DeBurro, CPA Engagement Partner Consulting Audit Elisa Gilbertson, CPA Advisory Services -ACL Data Specialist Claire Wootton, CPA Audit Manager Kayce Stillings Audit Associate I

7. Audit Process

8. Engagement Timeline Initial Audit Planning Discuss Developments/ Issues Interim Fieldwork Jul 17 – Jul 21 Continuous Communication Council Meeting April 3 Final Fieldwork Jan 15 – Jan 26 Release Audit Opinion March 16

9. Audit Process • The audit was performed in accordance with Generally Accepted Auditing Standards (GAAS) and Generally Accepted Government Auditing Standards (GAGAS) • The audit process was a risk-based approach in which we identified potential areas of risk that could lead to material misstatement of the financial statements. We tailored our audit programs and resources to specifically address the following areas of risk: • Revenue recognition and related receivables • Capital projects, purchasing and compliance with bidding procedures • Payables, accrued liabilities, and expenditures

10. Audit Process Interim fieldwork and risk assessment were performed in July 2017. Procedures included: • Walkthrough of accounting controls over significant transaction cycles: • Budget • Purchasing and Accounts Payable • Payroll • Cash Receipts – taxes, municipal court, utility billing • Test of internal controls: • Cash disbursements • Payroll • Test of compliance • Public Funds Investment Act • Bidding procedures

11. Audit Process Final fieldwork- performed in January 2018 Procedures included: • Testing of significant account balances using a combination of vouching of material transactions, sampling transactions and applying analytical procedures. • Assisting with the preparation of the financial statements.

12. Auditor Communications for the year ended September 30, 2017

13. Required Communications to Those in Charge of Governance

14. Required Communications to Those in Charge of Governance

15. Required Communications to Those in Charge of Governance

16. Required Communications to Those in Charge of Governance

17. Required Communications to Those in Charge of Governance

18. Required Communications to Those in Charge of Governance

19. Auditor Results

20. Auditor Results • We have issued the Independent Auditor’s Report on the financial statements • Unmodified opinion or “clean” opinion • We have issued the Independent Auditor’s Report on Internal Control over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards • No material weaknesses noted • No significant deficiencies noted

21. Financial Highlights

22. Financial Highlights Comparison of Governmental Funds Expenditures by Fund (in millions of dollars) • Governmental Funds Expenditures for FY 2017 totaled $15 million, a $2.6 million or 21% increase • Principal retirement increased $2.5 million from FY16 due to the payoff of the 2012 CO’s. These bonds were paid off with the proceeds from the Noah’s building sale.

23. Financial Highlights Comparison of Governmental Funds Expenditures (3-year comparison – current year and two prior years – in millions)

24. Financial Highlights Comparison of Governmental Revenues by Source Governmental Revenues for FY 2017 totaled $10.4 million, a $0.2 million or 2% increase. Increase is primarily attributable to Property Tax increase (attributable to increase in property values as well as new TIF zone), along with decreases in Street Impact Fees and Miscellaneous Revenue.

25. Financial Highlights Comparison of Governmental Revenues by Source (3-year comparison – current year and prior year – in millions)

26. Financial Highlights Fund Balances • Governmental Funds’ Fund Balances • As of September 30, 2017, the Town’s governmental funds reported a combined ending fund balance of $10.3 million as follows: • General Fund $5,006,322 • Debt Service 247,290 • Capital Projects 4,805,146 • Other Funds 278,495 • $10,337,253 • Overall, fund balance of the Governmental Funds decreased by $1.2 million. • Fund balance in the Capital Projects Fund decreased by $1.3 million during fiscal year 2017. This decrease was due to the capital outlay in FY17 for continuation of the Fairview Pkwy/Frisco Rd design, East Stacy Rd construction, and road construction and equipment purchased in FY17.

27. Financial Highlights Budgetary Highlights – General Fund • The Town had a favorable budget variance of $614K (net change in fund balance): • Actual revenues were $193K more than budgeted. • Charges for Services were $94K more than budgeted. • Miscellaneous Revenue was $117K more than budgeted. • Actual expenditures were $429K less than budgeted.

28. Financial Highlights Comparison of Proprietary Funds Operating Revenues and Expenses – FY 2017 and the two prior years (in millions) • Proprietary funds’ net position increased by $376K during fiscal year 2017. • Operating revenues increased $562K primarily due to increased water rates and # of customers in FY17. Operating expenses increased $235K due to higher water purchase costs.

29. Standards Required to be Implemented in FY2018 Effective for the year ended September 30, 2018 • Statement No. 85, “Omnibus 2017” - This statement addresses a variety of topics including issues related to blending component units, goodwill, fair value measurement and application, and postemployment benefits (pensions and other postemployment benefits). The requirements of this Statement will enhance consistency in the application of accounting and financial reporting requirements. • Statement No. 86, “Certain Debt Extinguishment Issues” - The objective of this Statement is to improve consistency in accounting and financial reporting for in-substance defeasance of debt by providing guidance for transactions in which cash and other monetary assets acquired with only existing resources – resources other than the proceeds of refunding debt – are placed in an irrevocable trust for the sole purpose of extinguishing debt. This statement also improves accounting and financial reporting for prepaid insurance on debt that is extinguished and notes to financial statements for debt that is defeased in substance.

30. We appreciate the opportunity to work with Town of Fairviewand look forward to our continued relationship.

31. Questions? John DeBurro, CPA | Engagement Partner 972.448.6970| john.deburro@weaver.com Claire Wootton, CPA | Manager 972.448.6934 | claire.wootton@weaver.com