REQUIRED COMMUNICATION IN ACCORDANCE
WITH PROFESSIONAL STANDARDS (SAS 114)
To the Budget and Finance Committee,
Honorable Mayor, and
Members of the City Council
City of Bakersfield
Bakersfield, California
We have audited the financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City of Bakersfield (the City) for the year ended June 30, 2023. Professional standards require that we pro vide you with information about our responsibilities under auditing standards generally accepted in the United States of America, Government Auditing Standards, and the Uniform Guidance, as well as certain information relate d to the planned scope and timing of our audit. We h ave communicated such information in our letter to you dated April 9, 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
Management is responsible for the selection and use of appropri ate accounting policies. The significant accounting policies used by the City are described in Note 1 to the financial statements. During the year ended June 30, 2023, the City adopted the provisions of Governm ental Accounting Standards Board (GASB) Statement No. 91, Conduit Debt Obligations; GASB Statement No. 94, Public-Private Partnerships and Availability Payment Arrangements; and GASB Statement No. 96, Subscription Based Information Technology Arrangements. We noted no transactions entered into by the City during the year for which there is a lack of authoritative guidance or consensu s. All significant transactions have been recognized in the financial statements in the proper period.
Accounting estimates are an integral part of the financial stat ements prepared by management and are based on management’s knowledge and experience about past and c urrent events and assumptions about future events. Certain acc ounting estimates are particula rly sensitive because of their significance to the financial statements and because 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:
Management’s estimates in establishing allowances for accounts receivable, estimated date of collection to comply with the pe riod of availability for certai n revenues, estimated net pension liability and related pension expense and deferred inflows of resources and outflows of resources, establishing the net other post- employment benefits (OPEB) liab ility and related OPEB expense and deferred inflows of resources and outflows of resources, ma nagement’s estimate over self- insurance claims liabilities, m anagement estimates for the dete rmination of fair value of investments, and the estimated useful lives of capital assets, which are derived by various methods as detailed in the notes , and management’s estimate of the incremental borrowing rate as the discount rate for leases and the lease term. We evaluated the key factors and assumptions used to develop these estimates in determining that they are re asonable in relation to the financial statements taken as a whole.
Certain financial statement disclosures are particularly sensit ive because of their significance to financial statement users. The most sensitive disclosures affecting the financial statements were:
• Note 2 - Cash and Investments
• Note 5 - Capital Assets
• Note 12 - Pledged Revenues
• Note 13 - Deferred Inflows of Resources
• Note 16 - Employment Retirement Benefits
• Note 17 - Other Post-Employment Benefits (OPEB)
• Note 19 - Risk Management
• Note 20 - Commitments and Contingencies
• Note 23 - Prior Period Adjustments
The financial statement disclosures are neutral, consistent, and clear.
Difficulties Encountered in Performing the Audit
The completion of our audit was delayed because the Annual Comp rehensive Financial Report (ACFR) and certain supporting documentat ion were not available for our review within the anticipated timeline needed to complete the audit timely.
Corrected and Uncorrected Misstatements
Professional standards require u s to accumulate all known and l ikely misstatements identified during the audit, other than those that are clearly trivial, and communica te them to the appropriate level of management. The attached schedule summarizes uncorrected misstatements of the financial statements.
Management has determined that their effects are immaterial, bo th individually and in the aggregate, to the financial statements taken as a whole. The uncorrected misstatements or the matters underlying them could potentially cause future period financial statements to b e materially misstated, even though, in our judgment, such uncorrected misstatements are immaterial to the financial statements under audit.
Disagreements with Management
For purposes of this letter, a disagreement with management is a financial accounting, reporting, or auditing matter, whether or not resolved to our satisfaction, t hat could be significant to the financial statements or the auditor’s report. We are pleased to report th at no such disagreements arose during the course of our audit.
Management Representations
We have requested certain representations from management that are included in the management representation letter dated December 26, 2024.
Management Consultations with Other Independent Accountants In some cases, management may decide to consult with other accountants about auditing and accounting matters, similar to obtaining a “second opinion” on certain sit uations. If a consultation involves application of an accounting principle to t he City’s financial statements o r a determination of the type of auditor’s opinion that may be expressed on those statements, our professi onal standards require the consulting accountant to check with us to determine that the consultant has 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 applic ation 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 professional r elationship and our responses were not a condition to our retention.
Other Matters
We applied certain limited procedures to Management’s Discussio n and Analysis, the Budgetary Comparison Schedules for the General Fund and Major Special Rev enue Funds, the City’s Retirement Plans’ Schedules of Changes in the Net Pension Liability and Re lated Ratios, the Schedules of Pension Contributions, the Other Post-Em ployment Benefit (OPEB) Plan - Schedule of Changes in the City’s Net OPEB Liability and Related Ratios, and the Schedule of OPEB Con tributions, which are required supplementary information (RSI) that supplement the basic finan cial statements. Our procedures consisted of inquiries of manag ement regarding the methods of p reparing 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 RSI and do not express an opinion or provide any assurance on the RSI.
We were engaged to report on the Schedule of Expenditures of Fe deral Awards, Combining and Individual Major and Nonmajor Fund Financial Statements, Schedule of Long-Term Debt Recorded in the Private Purpose Trust Fund, and Other Supplementary Information , which accompany the financial statements but are not RSI. With respect to this supplementary information, we made certain inquiries of management and evaluated the form, content, and methods of prep aring the information to determine that the information complies wi th accounting principles genera lly accepted in the United States of America, the method of preparing it has not changed from the pr ior 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 reco rds used to prepare the financial statements or to the financial statements themselves.
We were not engaged to report on t he Introductory and Statistic al Sections, which accompany the financial statements but are not R SI. Such information has not been subjected to the auditing procedures applied in the audit of the basic financial statements, and acc ordingly, we do not express an opinion or provide any assurance on it.
Restriction on Use
This information is intended solely for the information and use of the Budget and Finance Committee, Honorable Mayor, City Council, and management of the City of Ba kersfield and is not intended to be, and should not be, used by anyone other than these specified parties.
BROWN ARMSTRONG
ACCOUNTANCY CORPORATION
Bakersfield, California
December 26, 2024
City of Bakersfield
Uncorrected Misstatements
June 30, 2023
Account Description Debit Credit
OPEB Contributions 1,241,992
Deferred Outflows - Contributions Subsequent to the Measurement Date 1,241,992 Total 1,241,992 1,241,992
Uncorrected Journal Entrie JE # 1
To adjust PY ending equity to agree to CY beginning balances