To the Honorable Mayor and
Members of the City Council
City of Bakersfield
Bakersfield, California
In planning and performing our audit of the financial statement s of the governmental activities, the business-type activities, each major fund, and the aggregate re maining fund information of the City of Bakersfield (the City) as of and for the year ended June 30, 20 23, in accordance with auditing standards generally accepted in the United St ates of America, we consider ed the City’s system of internal control over financial reporting (internal control) as a basis for desi gning audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the Ci ty’s internal control. Accordingly, we do not express an opinion on the effectiveness of the City’s internal control.
Our consideration of internal c ontrol was for the limited purpo se described in the preceding paragraph and was not designed to identify all deficiencies in internal c ontrol that might be material weaknesses or significant deficiencies and, therefore, material weaknesses or significant deficiencies may exist that were not identified. However, during our audit, we became aware of a nother matter that is an opportunity for strengthening internal controls and operating efficiencies. The recommendation is listed in this report summarize our comments and suggestions regarding this matter.
A deficiency in internal control exists when the design or oper ation of a control does not allow management or employees, in the normal course of performing the ir assigned functions, to prevent, or detect and correct misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies in internal cont rol, such that there is a reaso nable possibility that a material misstatement of the entity’s financial statements will not be prevented, or detected and corrected, on a timely basis. We did not identify any deficiencies in internal control that we consider to be material weaknesses.
However, during our audit, we became aware of certain matters t hat are opportunities for strengthening internal controls and operating efficiencies. The recommendatio ns listed in this report summarize our comments and suggestions regarding these matters.
We will review the status of thes e comments duri ng our next aud it engagement. We have already discussed these comments and suggestions with various personnel s of the City, and we will be pleased to discuss these matters in further detail at your convenience, to perform any additional study of these matters, or to assist you in implementing the recommendations.
Current Year Agreed Upon Condition and Response
Condition – Ineffective Financial Closing and Reporting Process
During audit procedures performed, we noted there was an ineffe ctive operation of the financial closing and reporting process, resulting in untimely financial statemen ts preparation and delays in finalizing the Annual Comprehensive Financial Report for the fiscal year ended June 30, 2023. These delays created challenges in developing and executing timely audit procedures and results.
Recommendation
We recommend the City implement a more structured closing proce ss with comprehensive year-end close checklists, assigned dut ies, and adhere to strict due dat es. Implementing processes to close the City’s financial records prior to the start of the audit will a llow audit procedures and risk assessment procedures to be appropriately developed, and audit work completed in a timely manner.
Management Response and Planned Correction
The City agrees with the recomme ndation. There are a number of mitigating circumstances that the Finance Department has had to wor k through and is still working through. Loss of experienced staff, an ongoing implementation project for a new Enterprise Resouce Pla nning (ERP) software, and deficient training processes all have played a factor in the delays from FY 2022 to today. The department has reordered priorities to focus on annual reporting needs, puttin g the ERP secondary to anything related to the financial close and the completion of the next year’s finan cial statements. In addition, training regimens have been initiated to build stronger capacity for sta ff, specifically with regards to governmental accounting and reporting requirements.
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This communication is intended solely for the information and u se of management, the City Council, and others within the City, and is not intended to be and should no t be used by anyone other than these specified parties.
BROWN ARMSTRONG
ACCOUNTANCY CORPORATION
Bakersfield, California
December 26, 2024