1 March 18, 2025
To the City Council and Audit Committee
City of Fairfield, California
We have audited the financial statements of the City of Fairfield, California (City) as of and for the year ended June
30, 2024, and have issued our report thereon dated December 12, 2024. Professional standards require that we advise you of the following matters relating to our audit.
Our Responsibility in Relation to the Financial Statement Audit under Generally Accepted Auditing Standards and Government Auditing Standards and our Compliance Audit under the Uniform Guidance As communicated in our letter dated July 23, 2024, our responsibility, as described by professional standards, is to form and express an opinion about whether the financial statements that have been prepared by management with your oversight are presented fairly, in all material respects, in accordance with accounting principles generally accepted in the United States of America and to express an opinion on whether the City complied with the types of compliance requirements described in the OMB Compliance Supplement that could have a direct and material effect on each of the City’s major federal programs. Our audit of the financial statements and major program compliance does not relieve you or management of its respective responsibilities.
Our responsibility, as prescribed by professional standards, is to plan and perform our audit to obtain reasonable, rather than absolute, ass urance ab out whether the financial statements are free of material misstatement. An audit of financial statements includes consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control over financial reporting. Accordingly, as part of our audit, we considered the internal control of the City solely for the purpose of determining our audit procedures and not to pr ovide a ny assurance concerning such internal control.
Our responsibility, as prescribed by professional standards as it re lates to the audit of the City’s major federal program compliance, is to express an opinion on the compliance for each of the City’s major federal programs based on our audit of the types of compliance requirements referred to above. An audit of major program compliance includes consideration of internal control over compliance with the types of compliance requirements referred to above as a basis for designing audit procedures th at are ap propriate in the circumstances and to test and report on internal control over compliance in accordance with the Uniform Guidance, but not for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, as a part of our major program compliance audit, we considered internal control over compliance for these purposes and not to provide any assurance on the effectiveness of the City’s internal control over compliance.
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2151 River Plaza Dr., Ste. 308 | Sacramento, CA 95833-4133 | T 916.570.1880 | F 916.570.1875 | EOE 2 We are also responsible for communicating significant matters related to the audit that are, in our professional judgment, relevant to your responsibilities in overseeing the financial reporting process. However, we are not required to design procedures for the purpose of identifying other matters to communicate to you.
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e have provided our comments regarding internal controls during our audit in our Independent Auditor’s Report on Internal Control over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards dated December 12, 2024.
We have also provided our comments regarding compliance with the types of compliance requirements referred to above and internal controls over compliance during our audit in our Independent Auditor’s Report on Compliance with Each Major Federal Program and Report on Internal Control Over Compliance Required by the Uniform Guidance dated March 18, 2025.
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lanned Scope and Timing of the Audit
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e conducted our audit consistent with the planned scope and timing we previously communicated to you.
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ompliance with All Ethics Requirements Regarding Independence T
he engagement team, others in our firm, as appropriate, our firm, and other firms utilized in the engagement, if applicable, have complied with all relevant ethical requirements regarding independence.
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ualitative Aspects of the Entity’s Significant Accounting Practices S
ignificant Accounting Policies
Management has the responsibility to select and use appropriate accounting policies. A summary of the significant accounting policies adopted by the City is included in Note 1 to the financial statements. There have been no initial selection of accounting policies and no changes in significant accounting policies or their application during 2024. No matters have come to our attention that would require us, under professional standards, to inform you about (1) the methods used to account for significant unusual transactions and (2) the effect of significant accounting policies in controversial or emerging areas for which there is a lack of authoritative guidance or consensus.
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unting Estimates
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ccounting estimates are an integral part of the financial statements prepared by management and are based on management’s current judgments. Those judgments are normally based on 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 markedly from management’s current judgments.
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e most sensitive accounting estimates affecting the financial statements are:
• The net pension liability and related deferred inflows of resources and deferred outflows of resources and disclosures are based on actuarial valuations.
• Self-insurance claims liabilities are based on actuarial studies performed by the City's independent actuaries.
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e evaluated key factors and assumptions used to develop the estimates in determining that they are reasonable in relation to the financial statements taken as a whole. 3 Financial Statement Disclosures
Certain financial statement disclosures involve significant judgment and are particularly sensitive because of their significance to financial statement users. The most sensitive disclosures affecting the City’s financial statements relate to:
The City’s disclosure of the defined benefit pension plans, net pension liability and related deferred in
flows of resources and deferred outflows of resources in Note 14 to the financial statements. The valuation of the net pension liability and related deferred outflows/inflows of resources are sensitive to the underlying actuarial assumptions used, including, but not limited to, the investment rate of return and discount rate. As disclosed in Note 14, a 1% increase or decrease in the discount rate has a material effect on the City’s net pension liability.
Significant Difficulties Encountered during the Audit
We encountered no significant difficulties in dealing with management relating to the performance of the audit.
Uncorrected and Corrected Misstatements
For purposes of this communication, professional standards require us to accumulate all known and likely misstatements identified during the audit, other than those that we believe are trivial, and communicate them to the appropriate level of management. Further, professional standards require us to also communicate the effect of uncorrected misstatements related to prior periods on the relevant classes of transactions, account balances or disclosures, and the financial statements as a whole. Uncorrected misstatements or matters underlying those uncorrected misstatements could potentially cause future-period financial statements to be materially misstated, even though the uncorrected misstatements are immaterial to the financial statements currently under audit. There were no uncorrected or corrected misstatements identified as a result of our audit procedures.
Disagreements with Management
For purposes of this letter, professional standards define a disagreement with management as a matter, whether or not resolved to our satisfaction, concerning a financial accounting, reporting, or auditing matter, which could be significant to the financial statements or the auditor’s report. No such disagreements arose during the course of the audit.
Circumstances that Affect the Form and Content of the Auditor’s Report For purposes of this letter, professional standards require that we communicate any circumstances that affect the form and content of our auditor’s report.
We modified our Auditor’s report over the City’s compliance with the types of compliance requirements described in the OMB Compliance Supplement that could have a direct and material effect on the City’s major federal programs. Based on our testing, the City did not comply with requirements regarding the Community Economic Adjustment Assistance for Responding to Threats to the Resilience of a Military Installation program (Assistance Listing No. 12.003) as described in finding 2024-003 for Procurement, Suspension and Debarment.
As a result of the noncompliance, we qualified our opinion on compliance with the program requirements.
Representations Requested from Management
We have requested certain written representations from management which are included in the management representation letter dated December 12, 2024, for the basic financial statements and March 18, 2025, for the single audit.
4 Management’s Consultations with Other Accountants
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n some cases, management may decide to consult with other accountants about auditing and accounting matters. Management informed us that, and to our knowledge, there were no consultations with other accountants regarding auditing and accounting matters.
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ther Significant Matters, Findings, or Issues
In the normal course of our professional association with the City, we generally discuss a variety of matters, including the application of accounting principles and auditing standards, significant events or transactions that occurred during the year, operating conditions affecting the entity, and operating plans and strategies that may affect the risks of material misstatement. None of the matters discussed resulted in a condition to our retention as the City’s auditors.
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ther Information Included in Annual Reports
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ursuant to professional standards, our responsibility as auditors for other information, whether financial or nonfinancial, included in the City’s annual reports, does not extend beyond the financial information identified in the audit report, and we are not required to perform any procedures to corroborate such other information.
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dditionally, in accordance with such standards, we read the other information and considered whether such information, or the manner of its presentation, was materially inconsistent with its presentation in the financial statements.
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ur responsibility also includes communicating to you any information which we believe is a material misstatement of fact. Nothing came to our attention that caused us to believe that such information, or its manner of presentation, is materially inconsistent with the information, or manner of its presentation, appearing in the financial statements.
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roup Audits
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he financial statements include the financial statements of the Fairfield Public Financing Authority, Fairfield Water Facilities Improvement District No. 1, Fairfield Municipal Park Improvement District No. 1, Fairfield Storm Drain Facilities Improvement District No. 1, Fairfield Community Facilities Districts, and Housing Authority of the City of Fairfield, which are blended component units of the City, which for the purposes of our audit we did not consider to be significant components within the financial statements. Consistent with the audit of the financial statements as a whole, our audit included obtaining an understand of the component units and their environment, including internal control, sufficient to assess the risks of material misstatements of the financial statements and completion of further audit procedures.
This report is intended solely for the information and use of the City Council, Audit Committee, and management of the City and is not intended to be, and should not be, used by anyone other than these specified parties.
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acramento, California