Lance, Soll & Lunghard, LLP 203N. BreaBlvd.,Suite 203 Brea,CA92821 Phone: 714.672.0022 January 18, 2023
To the Board of Directors
Barstow Fire Protection District
City of Barstow, California
We have audited the financial statements of the governmental activities and general fund information of the Barstow Fire Protection District (the District), a component unit of the City of Barstow, for the year ended June 30, 2022. Professional standards require that we provide you 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 scope and timing of our audit. We have communicated such information in our letter to you dated May 27, 2022. Professional standards also require that we communicate to you the following information related to our audit.
Significant Audit Matters
Qualitative Aspects of Significant Accounting Practices Management is responsible for the selection and use of appropriate accounting policies. The significant accounting policies used by the District are described in Note 1 to the financial statements. As described in Note 11 to the financial statements, the District changed its accounting policies related to leases by adopting Statement of Governmental Accounting Standards (GASB Statement) No. 87, Leases. Accordingly, the cumulative effect of the accounting change as of the beginning of the year is reported in the Statement of Net Position. All significant transactions have been recognized in the financial statements in the proper period.
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 because of the possibility that future events affecting them may differ significantly from those expected. The most sensitive estimates affecting the District’s financial statements were:
Management’s estimates of its net pension liability and net other post-employment benefits (OPEB) liability are based on actuarial valuation specialist assumptions. We evaluated the key factors and assumptions used to develop the net pension liability and net OPEB liability in determining that they are reasonable in relation to the financial statements taken as a whole.
Certain financial statement disclosures are particularly sensitive because of their significance to financial statement users. The most sensitive disclosure affecting the financial statements was:
The disclosure of negative fund balance in Note 10 to the financial statements identifies the large deficit of the District for the year ended June 30, 2022.
The financial statement disclosures are neutral, consistent, and clear.
To the Board of Directors
Barstow Fire Protection District
City of Barstow, California
Significant or Unusual Transactions
Management is responsible for the policies and practices used to account for significant or unusual transactions. No significant unusual transactions have occurred during fiscal year 2021-2022.
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 trivial, and communicate them to the appropriate level of management. We are pleased to report that no such misstatements were identified during the course of our 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, 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 management that are included in the management representation letter dated January 18, 2023.
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 situations. If a consultation involves application of an accounting principle to the District’s financial statements or a determination of the type of auditor’s opinion that may be expressed on those statements, our professional 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 significant events or transactions that occurred during the year, business conditions affecting the District and business plans and strategies that may affect the risks of material misstatements, the application of accounting principles and auditing standards, with management each year prior to retention as the District’s auditors. However, these discussions occurred in the normal course of our professional relationship and our responses were not a condition to our retention.
Emphasis of Matter Regarding Going Concern
The accompanying financial statements have been prepared assuming that the District will continue as a going concern. As discussed in Note 10 to the financial statements, the District has suffered recurring losses from operations and has a deficit fund balance of $4,996,664 in the General Fund and a deficit net position of $18,754,349 on the government-wide financial statements that raise substantial doubt about its ability to To the Board of Directors
Barstow Fire Protection District
City of Barstow, California
continue as a going concern. Management’s plans in regard to these matters are also described in Note 10. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. Our opinion is not modified with respect to this matter.
Other Matters
We applied certain limited procedures to the budgetary comparison schedules for the general fund, the schedule of proportionate share of the net pension liability, the schedule of plan contributions, the schedule of changes in net OPEB liability and related ratio, and the schedule of contributions – OPEB, which are required supplementary information (RSI) that 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 RSI and do not express an opinion or provide any assurance on the RSI.
We were not engaged to report on the introductory section, which accompany the financial statements but are not RSI. 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.
The following new Governmental Accounting Standards Board (GASB) pronouncements were effective for fiscal year 2021-2022 audit:
GASB Statement No. 87, Leases.
GASB Statement No. 89, Accounting for Interest Cost Incurred before the End of a Construction Period.
GASB Statement No. 97, Certain Component Unit Criteria, and Accounting and Financial Reporting for Internal Revenue Code Section 457 Deferred Compensation Plans.
The following GASB pronouncements are effective in the following fiscal years’ audits and should be reviewed for proper implementation by management:
Fiscal year 2023
GASB Statement No. 91, Conduit Debt Obligations.
GASB Statement No. 94, Public-Private and Public-Public Partnerships and Availability Payment Arrangement.
GASB Statement No. 96, Subscription-Based Information Technology Arrangements.
Fiscal year 2024
GASB Statement No. 99, Omnibus 2022.
GASB Statement No. 100, Accounting Changes and Error Corrections.
Fiscal year 2025
GASB Statement No. 101, Compensated Absences.
To the Board of Directors
Barstow Fire Protection District
City of Barstow, California
Restriction on Use
This information is intended solely for the use of the Board of Directors and management of the Barstow Fire Protection District and is not intended to be, and should not be, used by anyone other than these specified parties.
Very truly yours,
Brea, California