Page 8 - 2018 Comprehensive Annual Financial Report - City of Winston-Salem

Letter of Transmittal

October 31, 2018

To the Honorable Mayor and Members of City Council
and Citizens of the City of Winston-Salem
Ever since the merger of Winston and Salem in 1913, the twin City has prospered through the cooperation of its public and private
institutions. This was true in the years following the incorporation of Winston-Salem, and it remains true today. The enduring
veracity of our City motto was underscored again during the past year, as our community continues to see the tangible benefits
of the past decade of efforts by City government and private institutions to diversify our economy, increase our tax base, bring
new jobs to our City, and breathe new life into our downtown.
Financial Report

It is our pleasure to submit the Comprehensive Annual Financial Report for the City of Winston-Salem, North Carolina for the
fiscal year ended June 30, 2018. Management of the City of Winston-Salem, North Carolina, is responsible for the integrity and
objectivity of financial statements and other representations contained in this annual report. The City’s Comprehensive Annual
Financial Report, prepared in accordance with generally accepted accounting principles for units of local government, consists of
management’s representations concerning the financial position and results of operations for the fiscal year ended June 30, 2018.
North Carolina general statutes require each unit of local government to publish within four months after the close of the fiscal
year a complete set of financial statements presented in conformity with generally accepted accounting principles (GAAP) and
audited in accordance with generally accepted auditing standards by a firm of certified public accountants. The City engaged
Dixon Hughes Goodman LLP, independent auditors, to perform an audit of the City’s reported financial position and results of
operations contained in the government-wide and fund financial statements and notes to the financial statements. Their audit
consists of an objective outside review in order to provide reasonable rather than absolute assurance that the financial statements
are free from material misstatements. Working with the City’s professional financial and auditing staff, they reviewed and made
appropriate tests of data included in the financial statements, and evaluated the overall financial statement presentation. The
independent auditor concluded, based upon the audit, that there was a reasonable basis for rendering an unmodified opinion that
the financial statements of the City of Winston-Salem for the fiscal year ended June 30, 2018, are fairly presented in conformity
with GAAP. The report of independent auditors is presented as the first component of the financial section of this report.
Management assumes full responsibility for the completeness and reliability of the information contained in this report, based
upon a comprehensive framework of internal control that it has established for this purpose. Because the cost of internal control
should not exceed anticipated benefits, the objective is to provide reasonable, rather than absolute, assurance that the financial
statements are free of any material misstatements.
The independent audit of the financial statements of the City of Winston-Salem was part of a broader, federally mandated “Single
Audit” designed to meet the special needs of federal grantor agencies. The standards governing Single Audit engagements require
the independent auditor to report not only on the fair presentation of the financial statements, but also on the City’s internal
controls and compliance with legal requirements, with emphasis on administration of federal grants.
Assuring legal compliance requires an accounting system that contains a variety of distinctly different fiscal and accounting
entities. Formal budgetary accounting is employed for all funds for management planning and control required by North Carolina
General Statutes. Budgets are legally enacted by passage of Annual Budget and Project Budget Ordinances and formally amended
as required. The City Manager is authorized to transfer budget amounts within functions, but changes between functions and total
budgets of any fund require approval by the City Council.
The City’s financial statements also present the financial position and results of operations of two nonprofit corporations, North
Carolina Municipal Leasing Corporation and Risk Acceptance Management Corporation, which provide services under contract
to the City. Although legally separate they are included because they have significant financial relationships with the City.
Additional information on these entities can be found in the notes to the financial statements.

2 2018 AN NUAL R E P O R T