CITY OF ALAMEDA
REQUIRED COMMUNICATIONS
FOR THE YEAR ENDED JUNE 30, 2024
Exhibit 11
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CITY OF ALAMEDA
REQUIRED COMMUNICATIONS
For the Year Ended June 30, 2024
Table of Contents
Page
Required Communications .................................................................................................................. 1
Significant Audit Matters:
Qualitative Aspects of Accounting Practices ..................................................................... 1
Difficulties Encountered in Performing the Audit ............................................................. 3
Corrected and Uncorrected Misstatements ......................................................................... 3
Disagreements with Management ....................................................................................... 3
Management Representations .............................................................................................. 3
Management Consultations with Other Independent Accountants ................................... 3
Other Audit Findings or Issues ............................................................................................ 3
Other Ma tters .............................................................................................................................. 4
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REQUIRED COMMUNICATIONS
To the City Council of
the City of Alameda, California
We have audited the basic financial statements of th e City of Alameda for the year ended June 30, 2024.
Professional standards require that we provide yo u with information about our responsibilities under generally accepted auditing standards, Government Auditing Standards and the Uniform Guidance, as well as certain information related to the planned scop e and timing of our audit. We have communicated such information orally during our discussions with the Mayor, City Auditor, and City Manager in May 2024. Professional standards also require that we communicate to you the following information related to our audit.
Significant Audit Matters
Qualitative Aspects of Accounting Practices
Accounting Policies
– Management is responsible for the selection and use of appropriate accounting policies. The significant accounting policies used by the City are described in Note 1 to the financial statements. No new accounting policies were adopt ed, and the application of existing policies was not changed during the year.
The following pronouncements became effective, but did not have a ma terial effect on the financial statements:
GASB 99 – Omnibus 2022, paragraphs 4-10 (related to financial guarantees and the classification and reporting of derivative instruments) GASB 100 – Accounting for Changes and Error Corrections Unusual Transactions, Controversial or Emerging Areas - We noted no transactions entered into by the City during the year for which there is a lack of authoritative guidan ce or consensus. All significant transactions have been recognized in the financial statements in the proper period.
Accounting Estimates - Accounting estimates are an integral part of the financial statements prepared by management and are based on management’s knowledge and experience about past and current events and assumptions about future events. Certain accounting estimates are particularly sensitive because of their significance to the financial statements and beca use of the possibility that future events affecting them may differ significantly from those expected. The most sensitive estimates affecting the City’s financial statements were:
Estimated Net Pension Liabilities, Total Pens ion Liabilities and Pension-Related Deferred Outflows and Inflows of Resources: Management’s estimate of the net pension liabilities, total pension liabilities and deferred outflows/inflows of resources are disclosed in Note 9 to the financial statements and are based on accounting valuations determined by the California Public Employees Retirement System as well as actuarial studies determined by a consultant, which are based on the experience of the City. We eval uated the key factors and assumptions used to develop the estimate and determined that it is reasonable in relation to the basic financial statements taken as a whole.
1 Estimated Net OPEB Liabilities and OPEB-Related Deferred Outflows and Inflows of Resources:
Management’s estimate of the net OPEB liabilities and deferred outflows/inflows of resources is disclosed in Note 10 to the financial statements and is based on actuarial valuations determined by a consultant, which is based on the experience of the City. We evaluated the key factors and assumptions used to develop the estimate and determ ined that it is reasonable in relation to the basic financial statements taken as a whole.
Estimated Fair Value of Investments: As of June 30, 2024, the City held approximately $492.4 million of cash and investments as measured by fa ir value as disclosed in Note 2 to the financial statements. Fair value is essentially market pric ing in effect as of June 30, 2024. These fair values are not required to be adjusted for changes in general market conditions occurring subsequent to June 30, 2024.
Estimated Investment in Joint Ventures: Management’s estimate of the investment in joint ventures is disclosed in Note 12 to the financial statements and is based on the balances from the audited financial statements of Alameda Municipal Power.
Estimate of Depreciation: Management’s estimate of the depreci ation is based on useful lives determined by management. These lives have been determined by management based on the expected useful lives of assets as disclosed in No te 1G to the financial statements. We evaluated the key factors and assumptions us ed to develop the depreciation estimate and determined that it is reasonable in relation to the basic financial statements taken as a whole.
Estimate of Compensated Absences: Accrued compensated absences which are comprised of accrued vacation, holiday, and certain other comp ensating time is estimated using accumulated unpaid leave hours and hourly pay rates in effect at the end of the fiscal year as disclosed in Note 1I to the financial statements. We evaluated the key factors and assumptions used to develop the accrued compensated absences and determined that it is reasonable in relation to the basic financial statements taken as a whole.
Estimated Claims Liabilities: Management’s estimate of the claims liabilities payable is disclosed in Note 11 to the financial statements and is based on actuarial studies determined by a consultant, which are based on the claims experien ce of the City. We evaluated the key factors and assumptions used to develop th e estimate and determined that it is reasonable in relation to the basic financial statements taken as a whole.
Estimated Leases Receivable, Leases Payable and Deferred Inflows of Resources Related to Leases: Management’s estimates of leases receivable and leas es payable are based on the agreement term, including any assumptions related to whether extensions may be exercised, and the discount rate net present value calculation is based on the estimated borrowing rate at the measurement date. We evaluated the key factor s and assumptions used to develop the leases receivable and deferred inflows of resources related to leases estimates and determined that they are reasonable in relation to the basic financial statements taken as a whole.
Estimated Subscription Assets and Subscription Liabilities: Management’s estimate of subscription assets and subscription liabilities are based on the agreement term, including any assumptions related to whether extensions may be exercised, and the discount rate used in the net present value calculation is based on the estimate d borrowing rate at the measurement date. We evaluated the key factors and assumptions used to develop the subscription assets and subscription liability estimates and determined that they are reasonable in relation to the basic
financial statements taken as a whole.
2 Disclosures - The financial statement disclosures are neutral, consistent, and clear.
Difficulties Encountered in Performing the Audit
We encountered no significant difficulties in dealing with management in performing and completing our audit.
Corrected and Uncorrected Misstatements
Professional standards require us to accumulate all known and likely misstatements identified during the audit, other than those that are clearly trivial, and communicate them to the appropriate level of management. Management has corrected all such miss tatements. In addition, none of the misstatements detected as a result of audit procedures and corrected by management were material, either individually or in the aggregate, to each opinion unit’s financial statements taken as a whole.
Professional standards require us to accumulate all known and likely uncorrected misstatements identified during the audit, other than those that are trivial, and communicate them to the appropriate level of management. We have no such misstatements to report to the City Council.
Disagreements with Management
For purposes of this letter, a disagreement with ma nagement is a financial acc ounting, reporting, or auditing matter, whether or not resolved to our satisfaction, that could be significant to the financial statements or the auditor’s report. We are pleased to report that no such disagreements arose during the course of our audit.
Management Representations
We have requested certain representations from ma nagement that are incl uded in a management representation letter dated December 30, 2024.
Management Consultations with Other Independent Accountants
In some cases, management may d ecide to consult with other account ants about auditing and accounting matters, similar to obtaining a “second opinion” on certain situations. If a consultation involves application of an accounting principle to the City’s fi nancial statements or a dete rmination of the type of auditor’s opinion that may be expr essed on those statements, our professional standards require the consulting accountant to check with us to determine that the consultant ha s all the relevant facts. To our knowledge, there were no such consultations with other accountants.
Other Audit Findings or Issues
We generally discuss a variety of matters, including the application of accounting principles and auditing standards, with management each year prior to retention as the City’s auditors. However, these discussions occurred in the normal course of our pr ofessional relationship and our responses were not a condition to our retention.
3 Other Matters
We applied certain limited procedures to the requir ed supplementary information that accompanies and supplements the basic financial statements. Our procedures consisted of inquiries of management regarding the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We did not audit the required supplementary information and do not express an opinion or provide any assurance on the required supplementary information.
We were engaged to report on the supplementary information which accompany the financial statements, but are not required supplementary information. With respect to this supplementary information, we made certain inquiries of management and evaluated th e form, content, and methods of preparing the information to determine that the information complies with accounting principles generally accepted in the United States of America, the method of preparing it has not changed from the prior period, and the information is appropriate and complete in relation to our audit of the financial statements. We compared and reconciled the supplementary information to the underlying accounting records used to prepare the financial statements or to the financial statements themselves.
We were not engaged to report on the Introductory and Statistical Sections which accompany the financial statements, but are not required supplementary information. Such information has not been subjected to the auditing procedures applied in the audit of the basic financial statements, and accordingly, we do not express an opinion or provide any assurance on it.
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This information is intended solely for the use of City Council and management and is not intended to be, and should not be, used by anyone other than these specified parties.
Pleasant Hill, California
December 30, 2024
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