DATE:
December 19, 2023
TO:
Paul Buddenhagen, City Manager
FROM:
Lawrence Chiu, Finance Director
SUBJECT:
Resolution Of The City Council Of The City Of Emeryville Accepting The Annual Comprehensive Financial Report, Associated Compliance Audit Report And Auditor Correspondence For The Fiscal Year Ended June 30, 2023
RECOMMENDATION
Staff recommends that the City Council adopt the above-entitled resolution accepting the Annual Comprehensive Financial Report, associated compliance audit report and auditor correspondence for the City of Emeryville for the fiscal year ended June 30, 2023, including the following:
Annual Comprehensive Financial Report
Child Development Center Compliance Audit
Auditor’s Communication Letter
Auditor’s Memorandum on Internal Control
Auditor’s Report on Appropriations Limit Calculation
BACKGROUND
Each year, the City contracts with an independent certified public accounting (CPA) firm to conduct an audit of the City’s financial statements. At the completion of the annual audit process, the auditors issue communication documents to the City Council – the Auditor’s Communication Letter, the Memorandum on Internal Control, and the Appropriations Limit Compliance Letter. For the fiscal year ended June 30, 2023, the financial audit was conducted by an independent CPA firm, Maze & Associates. This was the third audit completed by Maze & Associates under an agreement approved by the City Council in April 2021.
Discussion
The items presented for City Council review and acceptance include the Annual Comprehensive Financial Report for the Fiscal Year Ended June 30, 2023, associated compliance audit report and auditor communication documents. Each of these items is discussed below.
Annual Comprehensive Financial Report
The Annual Comprehensive Financial Report provides detailed information on the financial position of the City of Emeryville. The Annual Comprehensive Financial Report is organized into the following four sections:
Introductory Section
The Introductory Section includes the City Manager’s Transmittal Letter discussing the City’s profile, current economic condition and economic outlook, major accomplishments over the past year and information on internal and budgetary controls. Also included in the Introductory Section is a listing of City officials, organizational chart and City map.
Basic Financial Section
This is the key section of the Comprehensive Annual Financial report and includes:
Independent Auditor’s Report stating that the financial statements accurately reflect the City’s financial position.
Management’s Discussion and Analysis which provides highlights of the financial statements and an overview of the City’s activities and financial performance.
Basic Financial Statements for the fiscal year ended June 30, 2023, including balance sheets, income and cash flow statements and notes to the financial statements providing additional information on the City’s financial operations.
The audited financial statements provide information on the City’s funds separated by fund classification:
Governmental Funds include the General Fund, Grant Funds, Housing Assets Fund, Property Based Improvement District (PBID) Fund, General Capital Improvement Fund, Redevelopment Agency Bond Fund and other nonmajor governmental funds.
Proprietary Funds which account for those activities financed and operated in a manner similar to a private business enterprise including the Sewer Enterprise Fund and Internal Service Funds.
Fiduciary Funds which account for assets held by the City as a trustee or agent for individuals, other governmental units or other funds. Fiduciary Funds include the Successor Agency Private-Purpose Trust Funds and Assessment District Custodial Funds.
For the fiscal year ended June 30, 2023, the City’s main operating fund, the General Fund, recorded revenue of $57.5 million, expenditures of $46.2 million and net inter-fund transfers out of $2.9 million which increased the year-end fund balance by $8.4 million. The General Fund unassigned fund balance in combination with the economic uncertainty fund balance totaled $46.7 million of the General Fund’s total $67.2 million year-end fund balance.
Combining and Individual Fund Statements and Schedules
The Combining and Individual Fund Statements and schedules Section provides detailed financial information for the City’s nonmajor governmental funds including special revenue funds, capital project funds and the debt service fund. Also included in this section of the Annual Comprehensive Financial Report are financial schedules for the internal service funds, the custodial fund for the 1999 Revenue Bonds Fund and Assessment District Funds and the private purpose trust funds.
Statistical Section
The Statistical Section provides current and historical information on financial trends, revenue and debt capacity, demographic, economic and other operating data over a ten-year period.
Child Development Center Compliance Audit
A separate review of the financial statements of the Emeryville Child Development Center was completed. The auditors found no instances of noncompliance with laws, regulations, contracts, and grant agreements. The auditors identified no audit findings or questioned costs charged to this program.
Auditor’s Communication Letter
Professional audit standards require that the auditors communicate directly with the City Council. In the Auditor’s Required Communication, Maze & Associates identifies new Governmental Accounting Standards Board pronouncements which will take effect in the next few years. The auditors confirm that there were no material audit adjustments required, misstatements or disagreements with management to report. The auditors have issued an unmodified (clean) opinion on the City’s financial statements.
Auditor’s Memorandum on Internal Control
In the Memorandum on Internal Control, Maze & Associates confirm that there were no material deficiencies in internal control identified. The auditors made two recommendations related to the reconciliation of pension related accounts and the compliance of the City’s Investment Policy. Staff has implemented both of these recommendations.
Appropriations Limit Calculation
In accordance with the provisions of the 1979 Gann Initiative (Proposition 4), the City Council annually approves an appropriations limit calculation. As part of the annual audit process, the auditors review and verify staff’s appropriations limit calculation. For the fiscal year ended June 30, 2023, the auditors have verified that the appropriations limit calculation is correct.
FISCAL IMPAct
None.
ADVISORY BODY REVIEW
There has been no communication with the budget committees.
PREPARED BY: Lawrence Chiu, Finance Director
APPROVED AND FORWARDED TO THE
CITY COUNCIL OF THE CITY OF EMERYVILLE:
Paul Buddenhagen, City Manager
ATTACHMENTS
Draft Resolution
Attachment 1: Fiscal Year 2023 Annual Comprehensive Financial Report Attachment 2: Child Development Center Compliance Audit Attachment 3: Auditor’s Communication Letter
Attachment 4: Auditor’s Memorandum on Internal Control Attachment 5: Auditor’s Report on Appropriations Limit Calculation Fiscal Year 2023 Annual Comprehensive Financial Report
City Council Meeting | December 19, 2023
City of Emeryville
CALIFORNIA
MEMORANDUM