City of Detroit Files 2013 Comprehensive Annual Financial Report Audited by KPMG Report Shows Conclusively that City was Insolvent at the End of Fiscal Year 2013
DETROIT, July 28, 2014 /PRNewswire/ -- The City of Detroit ("the City") has filed the 2013 Comprehensive Annual Financial Report ("CAFR") prepared by the City and audited by the independent outside auditing firm KPMG. The report provides an unqualified opinion about the City's financial position for its fiscal year ended June 30, 2013.
The CAFR was initially due at the end of calendar year 2013, but the number of subsequent events affecting the City's balance sheet required a much more thorough and time-consuming review to allow KPMG to render its opinion. As a result, the CAFR was filed with the State of Michigan late Friday evening, July 25, 2014.
"Although there is still much to be done to continue the improvement of the City of Detroit's financial position and financial operations, the release of our 2013 CAFR represents an important milestone in our commitment to financial transparency and gives us a clean start to our reporting for fiscal year 2014," said the City of Detroit's Chief Financial Officer, John Hill.
Mr. Hill added that the financial statements reflect that the City was insolvent as of June 30, 2013, as the General Fund liabilities exceeded its assets and cash and investments on hand were insufficient to meet obligations that were due at the time. The City's accumulated unassigned General Fund deficit was more than $130 million as of June 30, 2013. These deficits led to the City defaulting on several of its obligations to its creditors that summer.
The City's General Fund agencies made substantial efforts to reduce the deficit for the year ended June 30, 2013, including:
- Salary and wage reductions of $81 million through 10 percent pay-cuts, furlough days, attrition and other measures;
- Income tax revenue increases totaling $15 million due to stronger collection efforts and an improving local economy;
- An increase of $9.7 million in State Revenue sharing; and
- Benefit cost reductions of $13.3 million.
"These efforts and others outlined in the financial statements, although significant, were not sufficient to address the magnitude of the City's financial deficiencies at the end of fiscal year 2013," Hill said.
A copy of KPMG's audit opinion and CAFR can be found online at http://goo.gl/uuY3vk .
SOURCE City of Detroit